As the fastest-growing main economic system in a quickly heating world, India’s electrical energy demand is rising quick. Since FY21, India’s electrical energy consumption has risen at roughly 9% each year, in comparison with a median of 5% yearly within the previous decade. The Central Electricity Authority (CEA) had projected electrical energy demand to develop at a 6% CAGR between 2022 and 2030. However, current tendencies counsel a powerful probability of overshooting these estimates. Can India’s power sector sustain with this demand and transition to renewables on the similar time?
What’s driving India’s electrical energy demand?
Besides financial development and urbanisation, local weather change-induced warmth stress, marked by more and more hotter summers, is among the key elements driving electrical energy demand. Currently, industries, households, and agriculture comprise 33%, 28%, and 19% of complete electrical energy use in India, respectively. Yet, family electrical energy demand has grown the quickest over the previous decade. The summer season of 2024 witnessed a 40-50% year-on-year development in room air conditioner gross sales, pushed by rising incomes and record-breaking temperatures. All-India peak demand crossed 250 GW on May 30, 2024, which was 6.3% increased than projections. In 2025, after recording the warmest-ever February in 125 years, India should now brace for prolonged heatwaves and a peak electrical energy demand development of 9-10%.
In quick, India’s electrical energy demand is rising quick and turning into an increasing number of unsure.
How has India met rising demand up to now?
Since the early 2000s, power technology capability has quadrupled to 460 GW, making India the third-largest electrical energy producer globally. Driven by the imperatives of unpolluted power transition, India’s power sector is present process a serious shift with the rise of Renewable Energy (RE) applied sciences like photo voltaic and wind. In 2010, the Indian authorities set a goal of 20 GW of RE by 2020, which was revised upwards in 2014 to 175 GW by 2022. In 2021, India additional amped its goal to attain 500 GW of non-fossil gasoline power capability by 2030.
The authorities has repeatedly adopted a number of long-term and short-term measures to meet the spikes in demand. For occasion, to handle the height in 2022, it elevated coal allocation to the power sector and prioritised its transportation via railways. It additionally directed imported coal-based power vegetation to function at full capability. States which have added substantive photo voltaic capacities utilised the excess photo voltaic power to meet day peaks. Nights peaks proceed to pose a problem.
In some ways, 2024 was a landmark 12 months — India added a report 28 GW of latest RE capability, bumping up the share of RE within the electrical energy combine to 13.5%. The share of coal within the capability combine fell beneath half, although it nonetheless caters to 75% of power demand. India’s RE capability now stands at 165 GW. Another 32 GW of RE is anticipated to be commissioned in 2025. In the next 5 years, India would wish so as to add about 50 GW of RE yearly to meet its 2030 aim.
Why ought to India additional elevate its clear power ambitions?
Episodes of power shortages within the final two years amid fast development in demand pose an necessary query. How ought to India act and plan to meet its rising power demand reliably and cost-effectively?
A brand new examine by the Council on Energy, Environment and Water (CEEW) solutions this query by simulating six eventualities of India’s power sector in 2030. CEEW discovered that failure to attain 500 GW of unpolluted power capability by 2030 will result in power shortages and better power prices, even when demand grows reasonably. For occasion, 0.26% of the demand won’t be met if we obtain solely 400 GW. Just this small proportion alone may impression the power provide to ~1 million households for two.5 hours every day. States in northern India could be the worst affected due to community constraints.
If demand grows quicker (at 6.4% CAGR between 2023 and 2030 as an alternative of 5.8%) and the five hundred GW goal is achieved, India will nonetheless want further technology capability to keep away from main power shortages. Here, India has two selections — add six GW of latest coal (past the under-construction capacities now) or 100 GW of latest RE capability (past the acknowledged 500 GW). The first selection will meet the demand, however the coal fleet will stay underneath excessive stress with a probability of elevated downtime. This may end in sudden shortages and elevated prices. The examine finds that the latter selection of 100 GW of latest RE capability, distributed throughout States, is a greater possibility.
How can India goal for 600 GW by 2030?
India should obtain 600 GW of unpolluted power by 2030 to maintain tempo with demand. This will assist the nation ship dependable power at decrease prices, saving as much as ₹42,400 crore ($5 billion) in procurement prices in 2030 alone. It can even yield increased social and well being advantages, with 1,00,000 new jobs (throughout 2025-2030) and as much as 23% decrease emission of air pollution in 2030.
However, a 600 GW goal would require 70 GW of RE addition yearly till 2030 which can sound wishful. Several on-ground and grid-related challenges are already limiting the tempo of RE deployment and have dwindled offtake curiosity amongst distribution firms. These embrace delays in securing appropriate and conflict-free land, delays within the availability of transmission tools, uncertainty round incentives for inter-State RE vegetation, and complexities of grid balancing. Given these challenges, counting on polluting coal power vegetation could seem extra tenable. However, this strategy would neither be reasonably priced nor dependable. Historical tendencies present that coal initiatives take over seven years to begin operations. In comparability, RE vegetation, being modular, could possibly be deployed quicker and provide cheaper electrical energy.
How can India add renewables quicker?
Scaling to 600 GW is pressing and attainable with the fitting market alerts. Below are three key methods to unlock the tempo of RE deployment in India.
First, new RE initiatives must be unfold throughout extra Indian States. Currently, 5 Indian States home three-fourths of the entire RE capability. State-agnostic reverse bids and full waiver of inter-State transmission system (ISTS) costs have crowded investments to some areas, placing stress on land. The authorities should work with extra States, like Odisha, Madhya Pradesh, Bihar, Punjab, and Kerala, to create a conducive RE atmosphere. For this objective, the ISTS waiver shouldn’t be prolonged past June 2025, barring storage vegetation, which might additionally encourage distributed RE vegetation underneath the PM-KUSUM (Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan) and PM Surya Ghar Scheme.
Second, the Central and State governments should promote the co-location of wind and power storage methods with present and new photo voltaic initiatives. This would assist successfully utilise land and transmission networks and help grid integration of renewables. CEEW’s examine estimates that India will want 280 GWh of battery power storage methods (BESS) and 100 GWh of pumped hydro storage to combine 600 GW of RE by 2030. Here, we should prioritise BESS, which can be constructed inside six months and is rapidly turning into reasonably priced.
Third, there may be an pressing want for innovation in bidding and contract designs for quicker RE procurement and RE availability in power exchanges. Several giant photo voltaic and hybrid RE tenders, concluded in FY24 by intermediaries just like the Solar Energy Corporation of India, didn’t generate offtake curiosity from States. The Union authorities should work with States to generate demand for RE procurement, devise appropriate tender designs, and proactively resolve bottlenecks. Besides bilateral RE procurement, we should enhance RE availability on our power exchanges. Here, the federal government may contemplate supporting a Contract-for-Difference pool that can de-risk service provider RE capacities.
India’s tryst with RE has seen many successes within the final decade. Hopefully, it can additionally obtain the unthinkable — double the share of unpolluted power in its technology combine from 25% to 50% by 2030.
Disha Agarwal is senior programme lead and Shalu Agrawal is Director of Programmes at CEEW. Views are private.
Published – March 14, 2025 08:30 am IST
