India's Power Demand Forecast Spikes to 9% as Generation Surges
Jefferies raises India's FY27 power demand growth forecast to 9% as generation surges, while warning of tight coal stocks at thermal plants.
India is witnessing a massive surge in electricity consumption, prompting brokerage firm Jefferies to raise its India power demand growth forecast for FY27 from 7 per cent to 9 per cent. This revision comes as the country sees a significant uptick in power generation, with year-to-date demand already climbing by more than 10 per cent compared to the previous year.
Record-Breaking Generation Trends
The scale of the increase is evident in recent data. According to the Jefferies report, power generation in October 2026 saw a year-on-year jump of 24 per cent month-to-date. This represents the strongest monthly trend witnessed in 15 years, with the only exception being the post-COVID recovery period of 2021.
Looking further ahead, the brokerage expects demand to grow by 6 per cent in FY28. However, there is a possibility of even higher growth if El Niño conditions return in 2027, as above-normal temperatures typically drive higher electricity usage.
The Thermal Struggle and Coal Crunch
While demand is soaring, the infrastructure supporting it is under pressure. Thermal power plant utilisation has risen to 68 per cent in FY27, up from 62 per cent in the same period last year. However, this increased activity has come at a cost to reserves.
A critical warning highlighted in the report is the dwindling supply of fuel. Coal stocks at thermal plants have plummeted to just six days of consumption, a sharp drop from the 15-day reserve available a year ago. This tight supply could create significant pressure on the power grid as demand continues to climb.
The Rise of Renewables
As thermal plants struggle with fuel stocks, renewable energy is stepping up. Renewable generation has grown by 26 per cent year-on-year in FY27, now accounting for 20 per cent of total power generation, compared to 17 per cent previously.
- Solar Power: The primary driver of the green surge, with generation leaping by 47 per cent.
- Hydro Power: Faced a setback, declining by 12 per cent due to below-average rainfall during the June-September monsoon.
The shift toward green energy is accelerating. Projects totaling 8.3 gigawatts were awarded in FY27 up to October, surpassing the 7.7 GW awarded during the same period last year. Jefferies predicts that by FY30, renewable energy could make up 52 per cent of India's total installed power capacity, up from the current 44 per cent.
Market Prices and Future Outlook
The surge in demand is also reflecting in the merchant power market, where electricity is traded outside of long-term contracts. Prices in this sector have seen a dramatic spike:
- In the July-September quarter, average prices rose 46 per cent year-on-year to Rs 5.7 per unit.
- By October, prices jumped 2.6 times year-on-year, reaching Rs 7.1 per unit.
The long-term trajectory for India's energy needs is steep. Jefferies estimates that total power demand will reach 2,219 billion units by FY30, a significant increase from the 1,709 billion units estimated for FY26.