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India’s power sector is entering one of its most complex transition phases as rising heat stress, rapid renewable energy expansion, cooling demand, decentralised renewable systems (DRE) and emerging industries such as data centres reshape electricity planning.
At a policy discussion on May 13, 2026 in Delhi on India’s energy transition and grid preparedness, government officials, renewable energy developers, market experts and researchers said India was no longer dealing with a conventional supply challenge. Electricity demand patterns, generation sources and transmission needs are all changing at the same time, with heat emerging as a major stress factor.
Cooling devices such as fans, air conditioners and air coolers account for 40 per cent of household electricity use, according to a new survey by energy efficiency non-profit CLASP and the Bureau of Energy Efficiency. Provisional data from the Central Electricity Authority (CEA), showed the residential sector accounted for 25 per cent of India’s total electricity consumption in 2024-25, growing annually at 6 per cent.
Experts at the discussion warned that prolonged and unpredictable heatwaves are increasingly affecting transmission and distribution losses, thermal plant efficiency, coal logistics, voltage stability and evening peak demand.
“On May 30, 2024 and again on April 25, 2026, the demand suddenly started increasing in the afternoon and by around 2.30 pm to 3.30 pm we reached the highest peak,” said Vijay Menghani, chief engineer for emerging technologies and innovation at the CEA, at the Energy Dialogue of the India Heat Summit organised by research-based consulting firm Climate Trends.
India touched a peak demand of 256 GW during the heatwave period, with demand rising by nearly 20 GW within two hours. Menghani said the grid had remained resilient because of planning by central agencies, state governments and developers and added that the country is also increasing air-conditioning capacity by 20 per cent to 25 per cent annually while preparing for additional demand from data centres and manufacturing.
“We have planned up to 2047. Every additional increment in transmission will bring relief,” he said, adding that transmission approvals that earlier took nearly three years are now being cleared within three months after reforms introduced in August 2022.
India is expanding renewable energy capacity while preparing for deeper electrification of transport, cooking, manufacturing and digital infrastructure. But the rapid growth of decentralised renewable energy, especially rooftop solar, is creating fresh operational challenges even as it helps reduce transmission and distribution losses.
“When we increase DRE like rooftop solar, both the availability of location as well as generation is not quite available to the grid operator,” Menghani said, warning that sudden cloud cover could reduce large amounts of rooftop generation at the same time.
Another issue is voltage instability caused by sudden spikes in rooftop solar injection at the local distribution level. Menghani told Down To Earth that the government would introduce new inverter technology within a year, built into the solar rooftop package.
Around 10,000MW of rooftop capacity operating during daytime hours has already reduced transmission and distribution losses by nearly 2 per cent annually, he added.
Vishal Pandya, managing director and co-founder of energy platform REConnect Energy, said climate change and renewable energy variability were also altering electricity markets.
“Nifty 50 volatility ranges between 19 and 22 per cent. Bitcoin is around 80 per cent annualised volatility, while electricity in 2024 touched nearly 300 per cent,” he said.
According to him, climate-driven demand spikes and fluctuating renewable output are making electricity operations significantly more complex. He said humidity-driven “feels like” temperatures would increasingly affect cooling demand.
Renewable energy already accounts for nearly 50 per cent of installed capacity, while decentralised systems in states such as Rajasthan and Gujarat meet 20 per cent to 30 per cent of afternoon demand.
“In solar hours, the average market price would be Rs 1.5 per unit. Night hours touch Rs 10 per unit, which is the cap,” Pandya said, warning that evening supply shortages could trigger sharp price spikes.
Saloni Sachdeva Michael, energy specialist at the Institute for Energy Economics and Financial Analysis, or IEEFA, said India’s challenge was no longer only about meeting higher demand, but also managing when that demand occurs.
Citing findings from the State Electricity Transition report prepared jointly by IEEFA and Ember, she said India recorded peak demand of 256GW on April 25, 2026, around 9 per cent higher than the corresponding period last year.
“Delhi met its peak demand at 7GW in the month of March. Earlier, Delhi’s peak demand used to come in June and July,” Michael said.
One third of the April 2026 peak demand was met by renewables, with solar alone contributing around 57GW. But evening demand remains the biggest challenge as solar generation declines and night-time temperatures continue to rise.
“Night-time temperatures are also rising, which peaks the cooling demand,” she said.
Michael stressed the need for large-scale battery energy storage systems and pumped hydro projects. India currently has around 6GW of battery energy storage deployment against a target of 61GW by 2030.
India’s total solar potential stood at around 3,000 GW as of March 2025, but only 4.5 per cent had been utilised by March 2026, said Michael. Rajasthan has used around 8 per cent of its renewable energy potential, Maharashtra around 9 per cent and Gujarat about 15 per cent.
But rising renewable deployment has also intensified curtailment, where available renewable electricity cannot be evacuated because of inadequate transmission or insufficient demand.
Subrahmanyam Pulipaka, chief executive officer of the National Solar Energy Federation of India, said curtailment had two dimensions: low-demand curtailment and evacuation-related curtailment, where projects are ready before transmission infrastructure. “The financial implication is higher in the latter scenario,” he said.
India has around 500,000 km of transmission lines, enough to technically support more than 300 GW of renewable energy, but transmission systems are struggling to keep pace with generation projects. Delays are linked to right-of-way disputes, wildlife clearances and equipment shortages.
Pulipaka said India’s electricity system was moving towards co-located renewable energy and storage systems that use the same transmission infrastructure more efficiently. “Energy storage is going to be the key,” he said.
Debajit Palit, centre head of the Centre for Climate Change and Energy Transition at the Chintan Research Foundation, said India’s bigger challenge was insufficient electrification of overall energy demand, rather than a lack of renewable generation.
India consumes around 1,700 billion units of electricity annually, representing only about 22 per cent of total energy demand.
“It should have been maybe 3,000 BU by now and all the problems of solar would be solved,” he said.
Coal currently contributes roughly 1,200BU annually and accounts for nearly 70 per cent of grid generation. According to NITI Aayog projections cited by Palit, coal could still generate around 1,300 BU in 2047 even if its share falls to 34 per cent, because overall electricity demand will rise sharply.
“Renewables are not displacing coal. They are spacing coal,” he said.
Palit also raised concerns over the rapid expansion of data centres and their implications for electricity demand and urban heat. Estimates by central think tank NITI Aayog suggest data centres could consume around 45 GW of electricity by 2045, nearly equivalent to India’s current hydropower capacity.
Studies by Stanford and Cambridge universities also suggest data centres can increase temperatures by 2 per cent to 9 per cent within a 10 km radius.
“What would be the impact of that on the cooling load?” Palit asked, questioning whether high-heat states such as Rajasthan should aggressively promote data centre expansion without factoring in secondary heat impacts.
The State Electricity Transition report identified Karnataka, Haryana and Himachal Pradesh among the leading states on decarbonisation metrics because of renewable energy deployment and hydroelectric capacity. Delhi and Haryana were cited as strong performers in distributed solar deployment, while Bihar and Chhattisgarh showed improvements in DISCOM performance and smart meter implementation.
Delhi currently leads the country in electric vehicle penetration at around 11 per cent.
The report also highlighted growing use of solar-aligned time-of-day tariffs, green tariffs and energy efficiency interventions to manage demand growth.
Michael said decentralised renewable energy, smart metering and energy efficiency would become critical tools for managing future cooling demand and reducing stress on the electricity network.
Despite operational challenges, officials, developers and researchers agreed that India’s electricity transition remains on track and that many current problems reflect the speed of transformation rather than structural failure.
The key challenge ahead will be synchronising generation growth, transmission expansion, storage deployment and rising electrification demand.
“We should not fear because of some small problems,” Menghani said. “When we started this energy transition journey, we chose a path.”