New Delhi, May 29, 2025 — India’s electricity demand is projected to grow at a compound annual growth rate (CAGR) of 6.0–6.5% over the next five years, driven by the rapid adoption of electric vehicles (EVs), expansion of data centers, and development of green hydrogen projects, according to a recent report by credit rating agency ICRA.
In a webinar, Vikram V, Vice President & Co-Group Head – Corporate Ratings at ICRA, stated, “Over the next five years, ICRA expects the electricity demand to achieve a CAGR of 6–6.5%, driven by the demand from rising adoption of electric vehicles (EVs), green hydrogen (GH), and the increase in data centre capacity.”
These three sectors are anticipated to contribute 20–25% of the incremental electricity demand between FY2026 and FY2030.
For FY2026, ICRA projects electricity demand growth at 5.0–5.5%, slightly lower than the expected GDP growth of 6.5% for the same period. This is attributed to the anticipated early onset and above-average monsoon, which typically reduces the demand for cooling and from the agricultural sector.
To meet the rising demand, India is expected to add a record 44 GW of power generation capacity in FY2026, surpassing the previous high of 34 GW in FY2025. The thermal segment is projected to contribute 9–10 GW, with the remaining capacity additions coming from renewable energy sources.
Despite the growth in renewable energy, coal remains a significant source of electricity generation in India, accounting for over 70% of the country’s electricity as of 2023.
India’s national electric grid had an installed capacity of 475.211 GW as of March 31, 2025, with renewable energy plants, including large hydroelectric power plants, constituting 46.3% of the total installed capacity.
The government has set ambitious targets to increase renewable energy capacity to 500 GW by 2030, requiring significant investments in capacity additions and transmission infrastructure.
As India continues its transition toward cleaner energy solutions, the projected growth in electricity demand underscores the need for substantial investment and expansion in power infrastructure to meet the evolving energy landscape.
