Delhi's power sector has built a strong foundation for its clean energy transition through reliable electricity supply, efficient power distribution companies and supportive policies, but rising electricity demand will require faster deployment of rooftop solar, battery energy storage and demand-side flexibility, according to a new study by the Institute for Energy Economics and Financial Analysis (IEEFA) and Ember.
The study, Delhi's electricity transition challenges and opportunities: A SCOPE study, found that the capital's total energy requirement reached 38,482 million units in financial year 2026 (FY26), accounting for around 2.2 per cent of India's total energy requirement. Peak electricity demand increased from 7.7 gigawatts in FY23 to 8.7 gigawatts by June 2026, with the emergence of significant nighttime peaks underscoring the need for battery energy storage to utilise renewable energy resources better.
The report noted that Delhi has installed around 446 megawatts of rooftop solar capacity as of June 2026, well below the 750-megawatt target set by the Delhi Solar Energy Policy 2023. It says solar hour-aligned time-of-day tariffs, coupled with wider deployment of smart meters, could encourage consumers to shift electricity consumption to periods of high renewable energy generation and improve overall system efficiency.
Unlike most states, Delhi generates only a small share of the electricity it consumes and depends heavily on power allocated from central generating stations and purchases from neighbouring states. As of June 2026, the city had around 7,544 megawatts of allocated generation capacity, reflecting structural constraints such as limited land availability and negligible scope for expanding large-scale power generation within the National Capital Territory.
"Delhi requires a different transition pathway from that of most Indian states. Rather than relying on utility-scale renewable energy buildout within its geographical boundaries, Delhi's transition will depend on optimising clean power procurement, scaling rooftop solar and storage, improving energy efficiency, enabling demand side flexibility, and leveraging power markets," said Tanya Rana, Energy Analyst, South Asia at IEEFA and lead author of the report.
Domestic consumers accounted for more than half of Delhi's electricity consumption in FY26, highlighting the growing importance of residential demand in shaping the capital's electricity system, the study said.
"The study shows that Delhi has built strengths in distribution sector performance, power procurement planning, and distributed renewable energy. As electricity demand continues to grow, particularly during nighttime hours, these strengths provide a strong foundation for the next phase of the energy transition. That next phase will increasingly depend on scaling rooftop solar along with building energy storage, enhancing energy efficiency, and long-term futuristic planning to procure clean electricity that can meet electrification-led rising demand," said Ruchita Shah, Energy Analyst, Asia at Ember and co-author of the study.
The study identified distributed renewable energy as one of Delhi's biggest opportunities for decarbonisation. It attributes the growth in rooftop solar installations to policy support, consumer awareness initiatives and financial incentives, while recommending streamlined approval processes, expanded net metering provisions and continued incentives under the Delhi Solar Energy Policy and the Pradhan Mantri Surya Ghar: Muft Bijli Yojana.
It also highlighted recent policy initiatives, including Green Energy Open Access regulations, a pilot project for peer-to-peer rooftop solar electricity trading and a new electric vehicle policy proposing stronger electrification targets, expanded charging infrastructure and measures to strengthen the electric vehicle ecosystem.
"The study has identified several opportunities to strengthen Delhi's transition readiness further. These include accelerating deployment of battery energy storage systems, improving energy efficiency in buildings, expanding smart meter installation, solar hour-aligned time-of-day tariffs, increasing participation in green electricity market segments, and further developing peer-to-peer trading projects," said Saloni Sachdeva Michael, Lead Energy Specialist, South Asia at IEEFA.