Heatwaves, urbanisation drive record power demand, reshape energy planning

A record peak demand of 271 GW in May underscores the growing impact of heatwaves, urbanisation and electrification, while raising fresh questions about grid resilience and energy planning

May 2026 marked a first for India’s power sector: As peak demand galloped from 238 gigawatt (Gw) on May 17 to 270 Gw on May 21, demand surged to record highs not once but four times, on May 18, 19, 20 and 21. 

Electricity demand is a key barometer of economic growth and climate change-induced erratic weather. The unprecedented and rapid nature of the demand jump has raised many crucial questions: The cause, whether the trend is here to stay, and, if so, what the implications are for India’s energy source mix as well as the national grid. 

India witnessed a peak power demand of 242.49 Gw last financial year (FY26). For the summer of 2026, the power ministry had projected peak demand to reach 277 Gw. Sustained summer heat has already pushed daytime peak demand past the 270 Gw mark. 

According to a report from research and consultancy firm Climate Trends, rising temperatures alone do not explain why cities and towns are becoming increasingly unliveable during summers — rapid urbanisation is significantly amplifying heat stress, turning cities into giant heat traps, creating an Urban Heat Island (UHI) effect and driving a sharp rise in electricity demand.

“Air conditioners, the use of which is rising every year at an astronomical rate, are also a key culprit in rising UHI. It is projected to cover up to 40 per cent of households by 2030,” the report said. 

Urban drives growth 

According to the 2011 Census, nearly 31 per cent of Indians live in urban areas, and they contribute 63 per cent of the country’s gross domestic product (GDP). By 2030, this population group is likely to grow to around 40 per cent, and its contribution to GDP to 75 per cent. 

To be sure, the rate of demand growth has declined massively from 9.6 per cent in 2022-23 to 0.8 per cent in 2025-26. But analysts project demand growth to pick up to over 5 per cent in the current financial year, on the back of expectations of higher industrial activity and heavy load from air conditioners. Power demand is also likely to remain weather-sensitive in FY27, according to ratings agency Crisil. 

“Power demand is estimated to rise 5.5-6.5 per cent year-on-year in FY27 to 1,815-1,825 billion units, because of the expected emergence of El Nino in July, which will increase temperatures and reduce rainfall, in turn pushing up cooling demand. Steady economic growth and a low base are also estimated to boost power demand growth in FY27,” Crisil said. 

While India’s current power generation capacity stands at 537 Gw, the 270-Gw peak reflects the demand at a specific time of the day, around 3.30 pm, when the peak occurred. Also, thermal power plants operate at an average 65 per cent plant load Factor (PLF) — the ratio of average power generated by a plant to the maximum power that could have been generated for a given time period. Renewable energy plants work at an even lower PLF of around 35 per cent, further reducing the quantum of capacity available for generation. 

The highest-ever peak demand of 271 Gw, recorded on May 21, was an 18 per cent jump over the previous high of 245 Gw peak recorded in January 2026 and is significantly higher than what could have been estimated using the demand growth rate of 5 per cent CAGR observed during FY21 to FY26. 

“If the heatwave persists in June, as is being indicated as per the India Meteorological Department’s Extended Range Heatwave Outlook dated May 28, recording a higher national-level peak demand cannot be ruled out in the ongoing month,” said Anujesh Dwivedi, partner at Deloitte India. He added that, as per the figures reported by the Central Electricity Authority’s Long-Term National Resource Adequacy Plan (LT-NRAP), peak demand is expected to continue its upward trajectory and increase at a CAGR of 5.58 per cent during 2024-25 through 2035-36, and is anticipated to reach 459 Gw by 2035-36.

“Sustained growth in electricity demand over the next few decades is key to the economic growth being targeted by 2047 under the Viksit Bharat mission, which would invariably involve a substantially increased share of electricity in overall energy end-use in the country,” Dwivedi said. 

Managing power 

Experts pointed out that India’s power grid has been successful in managing the rising peak demand so far, with no major shortages reported from anywhere, but sharp increases in peak demand continue to test the grid’s capabilities, especially during non-solar hours. 

“Demand from cooling, both commercial and residential, which starts from noon and does not come down till the wee hours, has put grid planning in a knot. When India touched 270 Gw last week, solar power was the second-largest source in the supply mix, contributing 80 Gw, approximately 22 per cent of the total electricity. But as the sun goes down, this 80 GW disappears and the grid has to scale up conventional sources,” the Climate Trends report pointed out. 

It added that record-high demand days during a heatwave are forcing grid planners to rewrite their plans. Meanwhile, with rising renewable energy (RE) injection, the grid is swinging between two strong pushes and pulls. This problem is exacerbated by weak infrastructure in states that see the highest demand but have low capacity to absorb renewable energy supply. 

Dwivedi also pointed to Grid India’s Short-Term National Resource Adequacy Plan (ST-NRAP) for FY27, which concludes that the power system is largely adequate, but time-specific challenges persist, particularly during summer non-solar hours.

“A key concern is the lack of inter-regional transfer capacity in transmission systems, which currently stands at around 120 Gw, while CEA’s National Electricity Plan (NEP) Vol-II Transmission (published in October 2024) had projected a requirement of 143 GW by the end of FY27,” he said. 

Defining moment 

Nonetheless, industry executives point out that India successfully meeting a peak power demand of over 270 Gw without disruption marks a defining moment for the country’s power sector and reflects the transformation it has undergone over the years. With over 30 per cent of this demand being met through RE, the achievement also reflects the progress of India’s clean energy transition. 

“At the same time, it signals the next frontier ahead, which is matching the rapid renewable capacity addition with storage and grid flexibility,” said Anil Rawal, managing director and chief executive officer of Intellismart, a joint venture between National Investment and Infrastructure Fund (NIIF) and Energy Efficiency Services Ltd (EESL), which operates in the smart metering and digital energy solutions space. 

“The challenge is no longer only about how much clean power can be generated, but how reliably it can be delivered when needed. Battery energy storage systems, pumped storage and grid modernisation will be critical in making renewable energy truly dispatchable and dependable,” he added. 

Overall, the record peak power demand seen in May is significant because it signals a structural shift in India’s electricity consumption rather than a temporary weather-related spike. It reflects the combined impact of rising temperatures, increased air-conditioning usage, economic growth, urbanisation and growing electrification across sectors, while for power sector planners, it highlights the urgent need to strengthen generation capacity, transmission infrastructure and grid flexibility, according to Sonam Chandwani, managing partner, KS Legal and Associates. 

“These demand records are unlikely to be a one-off occurrence. Higher temperatures, increasing energy consumption and India’s ongoing electrification efforts suggest that elevated peak demand levels will become more frequent. Future planning must therefore focus not only on overall energy requirements but also on managing increasingly intense peak-load conditions,” she said. 

Finally, as the implications for grid security are substantial, maintaining reliability will require stronger forecasting, adequate reserve margins, enhanced transmission networks, energy storage deployment and demand-side management measures. Also, grid resilience will depend as much on flexibility and balancing capability as on installed capacity.

According to Chandwani, RE can play a central role in meeting future peak demand, particularly through solar generation during daytime peaks, but its contribution to grid reliability will increasingly depend on the integration of battery storage, pumped hydro and other flexible resources. 

A well-designed regulatory framework that incentivises storage and grid-support services will be critical to ensuring that RE contributes to both sustainability and energy security,

she said.