New Delhi: India’s electricity demand is expected to grow by about 4–4.5 percent in FY2025-26, supported by a strong rebound in the second half of the fiscal year after subdued consumption during the early months, according to ratings agency ICRA.
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ICRA said electricity demand rose by only 1 percent in the first half of FY2025-26, dampened by an early and extended monsoon as well as an unfavourable base effect. However, as weather patterns normalise and economic activity stabilises, the agency expects a “robust recovery” in the latter half of the year.
“Following a muted 1 percent growth in H1 FY2026 due to an unfavourable base and an early monsoon, we foresee a robust recovery in H2. As weather patterns normalise and underlying economic activity remains stable, we project full-year electricity demand growth to settle at a healthy 4.0–4.5 percent,” said Ankit Jain, Vice President and Co-Group Head – Corporate Ratings at ICRA.
The full-year projection trails India’s estimated GDP growth of 6.5 percent, suggesting that power demand growth will moderate from the sharp 8–9 percent levels seen in the previous two fiscal years.
Provisional data from the Power System Operation Corporation (POSOCO) shows a 5 percent year-on-year decline in electricity demand during the first 20 days of October 2025. Analysts attribute this to lingering monsoon effects and a high base from the same period last year.
Despite the short-term softness, ICRA expects demand to pick up as temperatures fall and industrial and agricultural load increases during the winter months.
On the supply side, domestic coal inventory levels remain adequate despite some moderation. As of October 10, 2025, coal stocks at power plants were sufficient for 14.7 days of consumption — significantly higher than levels observed in previous years during the same period. The agency said this reflects sustained improvements in coal supply coordination and logistics.
A key bright spot is the renewable energy sector, which continues to expand rapidly. Renewable generation rose 24.8 percent year-on-year during April–August 2025, supported by a strong pipeline of projects and continued policy backing from the government.
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ICRA noted that this growth trend reinforces the structural shift in India’s power mix toward cleaner sources, even as conventional power demand stabilises in line with broader economic activity.
