India’s power sector recorded a moderation in electricity demand and generation growth in the fourth quarter of the 2025-26 financial year (FY26), even as renewable energy (RE) continued to expand rapidly and structural pressures on the grid became more visible, according to a quarterly snapshot by the Centre for Research on Energy and Clean Air (CREA), an independent research organisation.
Electricity generation in India grew by just 3 per cent year-on-year (YoY) in Q4 FY26, marking the slowest growth rate for the quarter in six years and extending a trend of gradual deceleration. Despite the rapid scale-up of clean energy, coal remained the backbone of the power mix, contributing 339 billion units (BU), or 73 per cent of total generation. Renewable sources posted strong gains, led by solar generation which increased 24 per cent, alongside wind (11 per cent), nuclear (10 per cent) and large hydro (7 per cent), underscoring the widening gap between installed clean capacity and actual generation share.
India’s installed power capacity rose to about 533 gigawatt (GW) by March 2026, with non-fossil fuel sources accounting for around 53 per cent of the total. Coal remained the largest contributor at over 220 GW, though its share continued to decline, while solar capacity surged to approximately 150 GW, driving most of the renewable expansion. During the quarter, 16.2 GW of renewable capacity was added compared with 2.3 GW of thermal and 0.5 GW of large hydro, reflecting a decisive shift in investment patterns toward clean energy.
Coal-based power plant utilisation moderated during the quarter, with the plant load factor (PLF) falling to 69 per cent, down from 72 per cent a year earlier, indicating reduced usage despite growing electricity demand. Gas-based plants saw a slight increase in utilisation to 12 per cent, reflecting their role in balancing supply, while nuclear PLF improved to 79 per cent. Policymakers are increasingly prioritising thermal flexibility, including proposals to reduce the minimum technical load from 55 per cent to 40 per cent, which would allow coal plants to operate more dynamically and better integrate variable renewable energy.
India’s electricity demand touched a new high during the quarter, with peak demand hitting 245 GW on January 9, even as overall demand growth slowed to around 3 per cent YoY. All-time peak demand went up to 250 GW on May 30, 2024. A significant shift in demand patterns is underway, with 88 out of 90 days recording peak demand during solar generation hours, indicating a move away from traditional evening peaks. On the peak day, total generation stood at 246 GW, with thermal power contributing 67 per cent (165 GW), followed by solar at 20 per cent (48 GW) and smaller shares from hydro, wind and nuclear. At the state level, Maharashtra (32 GW), Gujarat (25 GW) and Uttar Pradesh (23 GW) recorded the highest peak demand.
Despite strong growth in renewable output, the quarter highlighted significant constraints in the grid’s ability to absorb clean energy. Around 27 GW of solar and 4 GW of wind capacity were directly curtailed during Q4 FY26, while a much larger volume was curtailed under Tertiary Reserve Ancillary Services (TRAS), about 83 GW of solar and 11 GW of wind. Solar accounted for nearly 88 per cent of total curtailment, with losses peaking in March. Curtailment was concentrated in high-renewable states, particularly Gujarat, where large solar parks such as Khavda recorded the highest levels. The data indicates that operational challenges, including limited transmission capacity, inflexible thermal generation and inadequate storage, are increasingly constraining renewable integration.
Looking ahead, India’s power system will require significant expansion and modernisation to sustain the energy transition. Projections indicate peak demand could reach 459 GW by 2035–36, with total installed capacity rising to over 1,100 GW, including a 70 per cent share of non-fossil sources. Achieving this will depend heavily on enabling infrastructure such as large-scale energy storage (estimated at 174 GW / 888 GWh) and extensive transmission expansion to integrate renewable capacity across regions. The findings suggest that the next phase of India’s energy transition will be defined less by adding generation capacity and more by strengthening the grid to efficiently utilise growing renewable output.