Nomura has projected robust growth for India’s power sector, forecasting a compound annual growth rate (CAGR) of over 7% in electricity demand from FY24 to FY27.
This surge is fueled by rising economic activity, increased electrification, and demand growth in emerging sectors such as data centres, electric vehicle (EV) charging, and green hydrogen production. Changing weather patterns, which have contributed to recent supply shortages, are also anticipated to drive demand. Electricity consumption is expected to increase by 7.2% year-on-year in FY25, slightly up from the 7.1% recorded in FY24.
India’s renewable energy sector is on an accelerated path, with renewables expected to contribute 35% of electricity supply in FY25, up from 33.5% in FY24. Solar and wind power are set to meet around 75% of incremental demand by FY25, with solar energy alone projected to grow by 23% year-on-year. This progress aligns with India’s target of achieving 500 GW of renewable capacity by 2030, integral to its goal of net-zero emissions by 2070. By FY30, renewables are forecast to make up 55% of India’s total installed capacity.
Growth drivers include the rapid expansion of data centres, EVs, and green hydrogen production. Data centres, spurred by increasing digital activities, are projected to boost power consumption in the sector significantly. Nomura estimates data centre capacity will grow from 960 MW to between 7.5 GW and 9 GW by FY30, with power usage rising from 8.4 TWh to as much as 80 TWh in a bullish scenario.
Green hydrogen is set to add 150–300 TWh of power demand as production scales up to support industrial decarbonization. EV adoption, particularly in transportation and logistics, will further boost electricity requirements.
To meet the demand surge, India’s transmission infrastructure is poised for upgrades, with an estimated USD 110 billion investment from FY22 to FY32. The National Electricity Plan (2023-32) includes adding 162,646 ckm of transmission lines and 1,094 GVA of transformation capacity, alongside an increase in inter-regional transmission capacity from 119 GW to 168 GW by 2032. New HVDC lines, with a combined 33.25 GW capacity, will enhance efficient long-distance transmission.
Nomura predicts India’s energy transformation will continue beyond FY30, with renewable sources providing 49% of the country’s electricity by 2040. Supported by advances in battery storage and lower solar installation costs, India’s installed power capacity is expected to reach 777 GW by FY30, with renewables forming the core of the nation’s energy landscape.