IEA sees India’s electricity demand rising 4% in 2025

Electricity demand growth by region (2020–2026). | Source: International Energy Agency, Electricity Mid-Year Update 2025. Licensed under CC BY 4.0.

Shift in peak demand and new load management measures

India’s Ministry of Power has projected that peak load could touch 270 gigawatts (GW) in 2025, marking an 8% year-on-year increase. Unlike previous years, peak demand is expected to occur in September instead of during summer. The IEA notes that this peak should be met by available generation capacity, supported by new capacity additions across fuel sources.

To manage future peak loads, the Indian government has introduced standards for air conditioners that would restrict temperature settings to between 20°C and 28°C. The IEA estimates this measure could reduce peak demand by up to 60 GW by 2035.

Coal and gas generation trends diverge

In the first half of 2025, coal-fired generation in India declined by 3% year-on-year. This marks the first H1 decline in coal generation since 2020. The decrease was driven by slower demand growth and significant expansion in output from low-emissions sources.

However, coal output is expected to recover in the second half of the year, resulting in a 0.5% rise for the full year. Further growth of 1.6% is forecast in 2026. The Ministry of Power’s repeated extensions of its mandate requiring imported coal-based power plants to operate at full capacity also contributed to supply availability.

Gas-fired generation fell sharply in the first half of 2025, declining by about 30% to levels last seen in 2023. The IEA expects a 3% drop for the full year, followed by a 7% rebound in 2026.

Renewables, hydro, and nuclear drive supply growth

The output from solar and wind power in India rose 20% year-on-year in the first half of 2025, raising their combined share in the electricity mix to nearly 14%, up from 11% in the same period in 2024. Solar photovoltaic (PV) generation increased by 25%, while wind generation rose by just under 30%.

Hydropower generation rose 16% in the first six months of the year, supported by improved water availability since mid-2024. Nuclear output also expanded by 14%, helped by the commissioning of Unit 7 (700 MW) at the Rajasthan Atomic Power Project, which was connected to the Northern grid in March 2025.

The IEA notes that a twin unit, RAPP-8, is expected to become operational in FY 2025–26. These additions are part of India’s Nuclear Energy Mission, which targets 100 GW of nuclear capacity by 2047. Nuclear generation is forecast to grow by 15% in 2025 and 19% in 2026.

The agency projects solar PV output to grow by 40% in 2025 and 28% in 2026, while wind energy is expected to grow more moderately at 10% annually. Hydropower generation is forecast to rise 7% in 2025 and 10% in 2026.

Electricity prices fall on improved supply and lower fuel costs

India’s wholesale electricity prices fell by around 15% in the first half of 2025 compared to the previous year, averaging USD 51 per megawatt-hour (MWh). This decline was driven by a drop in seaborne thermal coal prices, which reached a four-year low, easing generation costs for coal-based plants.

Increased thermal and renewable capacity also boosted supply, improving market liquidity and pushing prices downward. On May 25, strong output from low-emissions sources and unseasonal rainfall drove hydropower generation up sharply, resulting in near-zero wholesale prices during several time intervals.

Despite the fall, wholesale prices in India remain above pre-2022 levels. The IEA expects India’s emissions intensity to continue declining, with an annual reduction of 3.8%.