El Niño impact keeps India's hydropower generation weak through July

Weak monsoon rains linked to El Niño have lowered reservoir levels, curbing hydropower generation and increasing India's reliance on coal to meet rising electricity demand

India's hydropower generation remained constrained in July because of the El Niño effect which has weakened the country's southwest monsoon, reducing reservoir levels.

 

In June 2026, hydropower generation declined by around 21 per cent year-on-year (YoY) to 13,361 gigawatt-hour (GWh) from 16,775 GWh in June 2025. This trend continued in July as well, with generation reducing by 19 per cent on average compared with the corresponding days last year, according to Central Electricity Authority (CEA) data.

 

Hydro generation stood at 550.24 million units (MU) on July 12, down 22 per cent YoY from 706.2 MU. It was also nearly 16 per cent below the day’s target of 651.20 MU.

 

 

Between April and July 12, hydro generation was 43,441 MU, down 9 per cent YoY from 47,690 MU in 2025.

 

Reservoir storage levels have also declined on a YoY basis. Out of the 166 reservoirs in the country, 20 are for hydroelectric projects, with a total live storage capacity of 35.299 billion cubic metres (cbm). Storage in 7 of the 20 reservoirs was less than or equal to normal, compared with 4 out of 20 reservoirs last year.

 

“The impact is visible across hydro-rich regions such as Himachal Pradesh, Uttarakhand, Jammu & Kashmir, Karnataka and the Northeast,” said Sambitosh Mohapatra, partner and leader, climate and energy, PwC India.

 

In addition to affecting hydro generation, El Niño raises power demand owing to higher temperatures while also weakening wind generation. “India’s decline in hydropower generation comes at a time of rising electricity demand driven by urbanisation, industry, electric vehicles (EVs), data centres and cooling loads,” said Mohapatra. Peak power demand touched an all-time high of 271 Gw in May driven by heatwave conditions and higher cooling demand. It broke the record for four consecutive days in just one week in May. Power demand trends for June have also exceeded last summer’s peak of 243 Gw.

 

This has also pushed up the spot prices. Market clearing price in the day-ahead market at the Indian Energy Exchange jumped 32 per cent YoY to '5.2 per unit in June.

 

Power demand is expected to grow at around 6 per cent annually over the next four to five years, according to Centrum Institutional Research. Moreover, Union Minister of Power Manohar Lal last week said the country will need to prepare for a peak power demand of about 300 Gw next year.

 

Amid growing demand, the reduced hydro output is forcing greater reliance on coal generation while also weakening grid flexibility.

 

According to a recent report by S&P Global, India’s hydropower generation fell by 6.3 Gw YoY in June 2026, accounting for almost half of the 13 Gw decline in key Asian markets due to El Niño. It added that a 24.3 Gw YoY rise in power demand, combined with a 6.3 Gw decline in hydropower generation and a 0.8 Gw reduction in gas-fired output, was balanced by a 20.7 Gw increase in coal-fired generation, while solar and wind generation rose by a combined 9.4 Gw in June.

 

Hydro provides rapid ramping power that helps to balance solar and wind generation, and in meeting peak demand. “The key challenge is, therefore, not energy availability but system flexibility and reliability,” Mohapatra said.

 

While experts expect July to be better than June in terms of rainfall, it will not be sufficient to reverse the weakness on account of the

El Niño effect. The India Meteorological Department forecasts for June to September point towards below-normal rainfall citing continuing El Niño conditions.

 

However, experts believe that one year's decline should not be interpreted as a structural trend since hydropower generation has fluctuated significantly over the years. The country must nevertheless plan alternative flexible power generation options to compensate for the loss on account of below-normal hydro generation.

 

“India should accelerate pumped hydro storage and battery deployment, expand transmission networks, strengthen demand-side management through smart meters, flexible tariffs and energy efficiency measures, and maintain flexible thermal capacity while building a more climate-resilient and diversified power system,” Mohapatra said.