India’s energy demand to grow 5.5% in FY 2025

Renewable energy will lead capacity additions

India’s power demand is projected to grow around 5.5% in fiscal year (FY) 2025 with incremental capacity addition ranging 32 gigawatts (GW) to 35 GW, according to India Ratings and Research (Ind-Ra).

The expected demand is lower than the previous fiscal year’s 7.4% and FY 2023’s 9.7%.

Ind-Ra said extreme weather conditions witnessed in the first half of FY 2025 led to volatility in energy demand in the first and second quarter. All-India peak demand had reached an all-time high of nearly 250 GW in May 2024, up about 13% from a year ago.

“However, the demand moderated significantly during August-October 2024 with temperatures cooling down following a better monsoon during the year and also due to a moderation in the industrial activity,” the company said.

Ind-Ra said renewable energy will lead capacity additions, with its share reaching 23% in FY 2025. Currently, there are nearly 80 GW of under-construction solar, wind and solar-wind hybrid capacities, and another 95 GW under various stages of development.

The agency expects 28 GW to 30 GW of renewable energy capacity addition this fiscal (11 GW achieved in the first half of FY 2025), largely under solar.