Electricity demand expected to grow by 6.0-6.5% over next five years

ICRA projects the full-year demand growth for FY2026 at 5.0-5.5%, lower than its expectation for the GDP growth for this fiscal (6.5%).

- EV Story, May 28

This is owing to the early onset of the monsoon and expectations of an above average monsoon, which dampens the demand for cooling as well as demand from the agriculture segment. While the demand growth in FY2026 is expected to be higher than the 4.2% reported in FY2025, it is expected to trail the over 8.0% growth seen during FY2022-2024. The rating agency forecasts the all-India thermal plant load factor (PLF) level to remain flat at 70.0% in FY2026 against 69.5% in FY2025, given the healthy growth in generation expected from the renewable sources and 9-10 GW capacity addition expected in the thermal segment in FY2026. Commenting on the demand growth outlook, Vikram V, Vice President & Co-Group Head - Corporate Ratings, ICRA, said: "Over the next five years, ICRA expects the electricity demand to achieve a healthy compounded annual growth rate (CAGR) of 6.0-6.5%, higher than the ~5.0% CAGR achieved over the past decade, driven by the demand from rising adoption of electric vehicles (EVs), green hydrogen (GH) and the increase in data centre capacity. These three segments are expected to contribute to 20-25% of the incremental demand over the next five-year period from FY2026 to FY2030. The growth in demand for grid capacity is expected to be offset to some extent, by the rising adoption of rooftop solar and off-grid projects, driven by schemes such as the Pradhan Mantri Surya Ghar Yojana." The EV segment is expected to witness an increase in penetration across the