New Delhi, India’s electricity demand is expected to grow modestly by 4 per cent in 2025, after consumption slows due to cool summer temperatures in the first half of the year and peak load shifts to September, the International Energy Agency (IEA) has said.
In its mid-year update on electricity, the IEA said global electricity demand is growing far faster than forecast for the 2025-2026 period over the past decade, but electricity demand in China and India is expected to grow more slowly in 2025 than the rapid growth seen in 2024.
“Electricity demand in India is forecast to grow by 4 per cent this year, after growing by 6 per cent in 2024,” the agency said.
The IEA forecasts China’s consumption to grow by 5 per cent in 2025, down from 7 per cent last year. However, China alone will account for 50 per cent of global electricity demand growth, as it did in 2024.
“In India, electricity demand grew by 1.4 per cent year-on-year in the first half of 2025 due to the impact of global economic uncertainties on industrial activity and lower temperatures in summer compared to 2024. Demand is projected to grow more strongly in the rest of the year, reaching an annual growth rate of 4 per cent,” the IEA said. The IEA forecasts a robust 6.6 per cent growth in 2026 due to strong activity in industry and services and an increase in AC stock.
Citing power ministry projections for 2025, the Paris-based agency said peak load could reach 270 gigawatts (an 8 per cent rise year-on-year) and shift to September instead of summer this year, although rising generation capacity should make up for it.
To manage peak load growth, the government is considering a proposal on AC standards that would limit temperature settings to between 20 and 28 degrees Celsius, potentially reducing peak load by up to 60 gigawatts (GW) in 2035.
With regard to generation, the IEA said combined generation from solar PV and wind power was up 20 per cent year-on-year in the first half of 2025, rising to nearly 14 per cent from 11 per cent in the first half of 2024.
Solar PV generation grew by 25 per cent and wind power by a little under 30 per cent. Hydropower generation increased by 16 per cent year-on-year between January and June as a result of significant improvements in hydroelectric conditions from mid-2024 onwards. Additional capacity, including the 700-megawatt Unit-7 of Rajasthan Atomic Power Station, which was connected to the northern grid in March, contributed to a 14 per cent rise in nuclear generation in the same period.
As part of the Indian government’s plan to reach 100 gigawatts of nuclear capacity by 2047 announced under its Atomic Energy Mission, a twin unit, RAPP-8, is expected to start operations in 2025-26.
“Amid a sharp rise in generation from low-emission sources and relatively low growth in demand, coal-fired generation fell by 3 per cent in the first six months of the year – the first decline in the first half of a year since 2020. Gas-fired generation fell by nearly 30 per cent in the first half of 2025, returning to 2023 levels,” it said.
The IEA expects coal-fired generation to rise again in the second half of 2025, recording growth of around 0.5 per cent for the full year, followed by a 1.6 per cent increase in 2026. Gas-fired generation is forecast to fall by 3 per cent in 2025 and rise by 7 per cent in 2026.
The increase in nuclear power capacity is expected to drive growth in generation from this source, which is up 15 per cent this year and 19 per cent in 2026.
Generation from renewable energy sources will continue to grow in the second half of 2025, with solar PV rising by 40 per cent year-on-year in 2025 and 28 per cent in 2026, while wind power is forecast to see moderate growth of around 10 per cent in both 2025 and 2026. Hydropower generation is also projected to continue to grow in the second half of 2025, resulting in a 7 per cent annual growth rate this year, followed by 10 per cent in 2026,” the IEA said.
India’s emissions intensity is expected to decline by 3.8 per cent annually.
A fall in marine thermal coal prices to a four-year low has lowered the cost of coal-fired power generation. On the supply side, increased availability from thermal and renewable capacity additions strengthened market liquidity and put upward pressure on prices, the IEA further said.
