India's power demand is projected to rise 6-7% year-on-year in FY27, driven by hotter weather conditions and the expected impact of El Niño from July 2026. According to Crisil, rising use of air-conditioners and other cooling appliances across households, businesses and industries is expected to boost power consumption significantly. The projection builds on the strong performance in May 2026, when demand surged 11.2% year-on-year to 165 billion units (BUs) due to prolonged heatwave conditions and higher manufacturing activity.
India achieved its highest-ever peak power demand of 271 gigawatts (GW) in May, representing a 10% increase from the 245 GW peak recorded in 2025-26 (FY26). This milestone demonstrates the country's growing electricity consumption despite seasonal relief measures. The current demand level also remains above the 259 GW peak registered on June 9, as reported by Grid Controller of India, indicating sustained high demand throughout the summer months. The moderation in demand from May peaks has been attributed to seasonal rains that have dropped temperatures across parts of the country and curbed heavy use of air conditioners and other cooling appliances.
Spot electricity market activity reflected the broader power demand trend during May 2026. The real-time electricity market (RTM) volume increased to 5,529 million units (MUs) in May, up 15.9% from 4,770 MUs a year ago. The average market clearing price (MCP) during solar hours was ₹2.1 per unit this May, compared with ₹2.2 per unit in May 2025, while the average MCP during non-solar hours was ₹4.8 per unit, compared with ₹3.8 per unit in May 2025. The MCP for the day-ahead market (DAM) also rose 18.3% to ₹4.8 per unit. These competitive rates allowed distribution companies and commercial consumers to meet demand at lower costs while replacing costlier power through exchange procurement.
All major power generation sources except gas saw year-on-year increases in May 2026. Renewable energy generation rose about 20% during the month, while power generation increased about 12% to 178 BUs. Coal-based generation increased 12% year-on-year, accounting for 68.25% of total generation in May 2026, compared with the FY26 average of 68.36%. Hydro and nuclear power generation also increased by about 11% and 4% respectively during the month. Thermal power plants' coal stock declined to 49 million tonnes (mt) from 60 mt in May 2025, with coal dispatches to power plants rising 1.22% to about 74 mt. This resulted in coal inventory falling to 16 days from 21 days in May 2025.
In the first two months of FY27, demand was up 7.6% year-on-year, benefiting from the low base of -1.2% in the corresponding period of FY26. For FY27, it is expected to increase 6-7% year-on-year to 1,810-1,830 BU, driven by higher temperatures and lower rainfall due to the expected El Niño effect from July 2026. Despite the current decline from May peaks, India's electricity demand remains higher than the same period last year, with the country's electricity demand typically peaking during May and June due to summer heat as households and businesses increase cooling appliances use.
