Power demand growth likely around 2 pc this fiscal due to early monsoon

New Delhi, Nov 25 The electricity demand is set to grow 1.5–2 per cent in FY26 down from the earlier estimate of 4–4.5 per cent, due to early monsoon and high base effect, a report said on Tuesday.

The forecast from the ratings agency ICRA also cited that India doubled its power capacity addition in H1 FY25 to 25.7 GW, led by renewables, and is on track for 45-50 GW this fiscal year.

India’s electricity demand fell by 3 per cent YoY in the first 10 days of November 2025, according to Power System Operation Corporation (POSOCO) data.

"The early and prolonged monsoon and high base effect have kept demand growth muted throughout FY2026, with overall flat growth for the first seven months. Reflecting this slowdown, the full-year demand growth forecast has been revised, with expectations of some seasonal recovery during winter," said Ankit Jain, Vice President & Co Group Head - Corporate Ratings, ICRA Ltd.

The growth in India's power capacity addition was primarily driven by the renewable energy (RE) segment, supported by developers rushing to commission projects before the expiry of the complete waiver on transmission charges on June 30, 2025.

With a strong RE project pipeline, full-year capacity addition is expected to reach around 45-50 GW in FY2026, significantly higher than FY2025 levels.

Coal inventories at power plants increased to 16.6 days as of November 10, compared to 15.6 days at the end of October. While stocks remain slightly below normative levels due to monsoon-related mining disruptions, they are higher than in September 2024 and September 2023 levels, indicating a relatively stable supply position.

Average spot power tariffs on the Indian Energy Exchange stood at Rs 3.1 per unit on November 10, up from Rs 2.7 in October but below November 2024 level of Rs 3.3 per unit, reflecting subdued demand and higher renewable generation, the firm noted.

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