India’s electricity system is projected to undergo a massive transformation over the next decade as demand rises and renewable energy (RE) expands rapidly, according to the Central Electricity Authority (CEA)’s midterm review of the 20th Electric Power Survey (EPS) released on March 19, 2026.
The report, National generation adequacy plan (2026-27 to 2035-36), estimates that peak electricity demand will grow at a compound annual growth rate (CAGR) of 5.58 per cent between (financial year) 2024-25 and 2035-36, while the overall electricity energy requirement will expand at a 6.41 per cent CAGR during the same period. By 2035-36, India’s peak electricity demand is projected to reach 459 gigawatt (GW), while the total electricity requirement is expected to rise to 3,365 billion unit (BU).
To meet this demand, India’s installed power generation capacity is projected to expand sharply from around 520 GW as of January 31, 2026, to 1,121 GW by 2035-36. According to the generation planning study, the projected capacity mix by 2035-36 will include 315 GW of coal, 20 GW of gas, 22 GW of nuclear, 77 GW of large hydro, 509 GW of solar, 155 GW of wind, 16 GW of biomass and 6 GW of small hydro, with solar emerging as the dominant contributor to the electricity system.
Solar photovoltaic (PV) capacity is expected to become the backbone of India’s energy transition, accounting for 509 GW or around 45 per cent of total installed capacity, while coal remains the second-largest source with 315 GW (28 per cent). Wind power is projected to contribute 155 GW (14 per cent) and hydropower 77 GW (7 per cent), while nuclear, gas, and biomass together account for smaller shares. Overall, non-fossil fuel-based capacity is projected to reach around 786 GW, or nearly 70 per cent of the country’s total installed capacity by 2035-36, indicating a decisive shift towards clean energy sources.
However, despite the rapid rise of renewable capacity, coal will continue to dominate electricity generation because of its role in providing reliable baseload power. The study projects that gross electricity generation will reach 3,596 BU by 2035-36, with coal contributing 1,819 BU (51 per cent), solar PV 984 BU (27 per cent), wind 320 BU (9 per cent), hydropower 256 BU (7 per cent), nuclear 147 BU (4 per cent), gas 56 BU (2 per cent), and biomass and other renewables around 14 BU (less than 1 per cent). While renewable generation increases significantly over time, coal is expected to continue supplying more than half of the country’s electricity output during the transition period.
India’s electricity demand itself is projected to grow rapidly, nearly doubling within a decade. Net electricity generation is expected to increase from about 1,725 BU in 2024-25 to around 3,450 BU by 2035-36, reflecting strong demand growth driven by economic expansion, urbanisation, electrification, and the emergence of new loads such as data centres and green hydrogen production. Over this period, coal and lignite will remain the backbone of the generation system even though their share gradually declines, falling from around 64 per cent of generation in 2026-27 to about 49 per cent by 2035-36, while the share of non-fossil sources increases from around 34 per cent to nearly 49 per cent.
Union power secretary Pankaj Agarwal, on March 19, at the Bharat Electricity Summit, said that “The country will require investment of about $2.2 trillion in the power sector over the next two decades.”
The study has been undertaken, in line with the non-fossil fuel-based installed generation capacity target of 500 GW in the country by 2030, to identify the least-cost pathway for expanding generation capacity between 2026-27 and 2035-36, aiming to minimise the overall system cost of electricity generation, including both future investment costs and the operational costs of the existing and planned generation fleet, while ensuring that all technical parameters of different generation technologies are met and the projected electricity demand is reliably served.
The expansion strategy outlined in the survey highlights sustained annual additions of RE capacity, particularly solar PV. The study expects solar installations to grow at around 30-40 GW per year (excluding rooftop solar) over the coming decade, underscoring the central role of solar energy in meeting future electricity demand and supporting India’s decarbonisation goals. Wind and hydropower will also expand steadily, while nuclear capacity is expected to grow gradually in the long term.
A key feature of the future power system will be the large-scale deployment of energy storage technologies to support renewable integration. The study says India is estimated to require around 174 GW / 888 gigawatt-hour (GWh) of energy storage capacity by 2035-36, comprising 80 GW / 321 GWh of Battery Energy Storage Systems (BESS) and 94 GW / 567 GWh of Pumped Storage Plants (PSP) to enable energy shifting, manage variability in renewable generation, and support grid stability as the share of solar and wind increases.
Pumped storage projects are expected to play a particularly important role in providing long-duration energy storage. As an established and reliable technology, PSPs typically provide six hours or more of storage, enabling surplus renewable energy generated during periods of high solar or wind output to be stored and released during peak demand periods. In addition to storing electricity, PSPs also support system stability by providing frequency regulation, voltage control, and physical inertia through rotating machines—services that become increasingly important as conventional thermal generation declines.
To accelerate energy storage deployment, the government has introduced policy measures such as guidelines for procuring and using BESS as generation, transmission and distribution assets, a national framework for promoting energy storage, and dedicated guidelines for PSPs. It has also granted a 100 per cent waiver of inter-state transmission system (ISTS) charges for PSPs with construction contracts awarded by June 30, 2028, and for co-located BESS projects commissioned before the same date under specified conditions.
In addition, the government approved a Rs 3,760 crore Viability Gap Funding (VGF) scheme in March 2024 to support 13,220 MWh of BESS capacity at Rs 27 lakh per MWh. This was followed by another VGF scheme in June 2025, allocating Rs 5,400 crore from the Power System Development Fund to develop 30 GWh of battery storage at Rs 18 lakh per MWh. Authorities have also advised co-locating energy storage systems with solar projects to improve grid stability and optimise transmission infrastructure.
The report highlights significant challenges related to India’s dependence on imports for battery technologies. At present, it imports around 75-80 per cent of lithium-ion cells, which account for approximately 80 per cent of the total cost of BESS. Global battery manufacturing remains highly concentrated in a few Asian countries, creating potential risks related to geopolitics, trade restrictions, and price volatility. Similarly, critical minerals such as lithium, cobalt, nickel and graphite, essential for clean energy technologies, are almost entirely imported due to limited domestic reserves and refining capacity.
The EPS review also presents an alternative scenario that takes into account recent trends of slower demand growth. Under this scenario, the projected electricity demand trajectory is shifted by one year, reflecting the lower demand base observed recently. As a result, the projected peak demand in 2035-36 declines from 459 GW to 446 GW, while the electricity requirement falls from 3,365 BU to 3,215 BU. Correspondingly, the total installed capacity requirement reduces to around 1,054 GW instead of 1,121 GW, and the energy storage requirement falls to about 128 GW compared with 174 GW in the base case scenario.
Over the past five years, India’s power sector has seen significant capacity expansion, particularly in renewable energy. The project pipeline remains strong. Energy storage is also expanding.
The EPS midterm review concludes that India’s power sector is transitioning toward a cleaner, more flexible and resilient electricity system. Renewable energy, particularly solar PV, is expected to dominate future capacity additions, supported by large-scale energy storage and expanding nuclear capacity. At the same time, coal-based generation will remain important for ensuring reliability and meeting baseload demand during the transition.