Power demand to increase by 6-6.5% over next five years, says ICRA

ICRA attributes the growth in demand to greater adoption of electric vehicles and green hydrogen segments, and the expansion of power-hungry data centres

India's energy demand is expected to grow in the range of 6–6.5 per cent over the next five years, ratings agency ICRA said on Wednesday.

 

ICRA said that the growth in demand is attributable to the growing adoption of electric vehicles and green hydrogen segments, as well as the expansion of data centres, which require sizeable amounts of electricity to power their servers.

 

"Over the next five years, ICRA expects the electricity demand to achieve a CAGR (compound annual growth rate) of 6–6.5 per cent, driven by the demand from rising adoption of electric vehicles (EVs), green hydrogen (GH), and the increase in data centre capacity," said Vikram V, vice president & co-group head (corporate ratings) at ICRA, in a webinar. 

 

These three segments are expected to contribute to 20–25 per cent of the incremental demand over the next five-year period from FY26 to FY30, he said.

 

Vikram said that the demand for grid capacity is expected to slightly reduce due to more people using rooftop solar panels and off-grid projects, as the government is promoting clean energy generation schemes such as the PM Surya Ghar Yojana. 

 

The generation capacity expansion is projected to reach an all-time high of 44 GW in FY26, beating the record of 34 GW in FY25, with the overall installed power generation capacity reaching close to 520 GW by March 2026.

 

On the other hand, as Business Standard reported on May 27, due to the early onset of monsoon in India, the power demand in the country this year has not taken off as expected, leading to excess stock with coal production companies in the week.

 

The national grid has not seen aggregate demand soar beyond 220 GW even on the worst of days so far this summer. The softer demand for power has also kept the price of coal imports low.

 

Even as India is pushing for renewable energy, ICRA, however, maintains a stable outlook for the thermal power segment.