India’s electricity demand set to grow by 8.5% in FY2027: ICRA

India’s electricity demand is set to grow by 8.5% in FY2027, up from the projected 6.5% earlier due to weather condition predictions, says rating agency ICRA.

Data from Grid Controller of India Limited (GCIL) indicates that India’s electricity demand registered a YoY growth of 23.4% during the first 10 days of October 2026, reflecting the continuation of strong demand trends seen during FY2027. Supported by higher-than-normal temperatures, sustained cooling requirements and healthy industrial activity, electricity demand remained resilient despite the end of the peak summer season.

Consequently, electricity demand growth remained robust at 10.2% YoY in 6M FY2027. ''In line with the current trend, ICRA now expects demand growth of 8.5% in FY2027, up from 6.5% earlier, though weather-related uncertainties remain a key risk'', said Ankit Jain, vice president & Co Group Head - Corporate Ratings, ICRA Ltd.

Coal stock stood at around 6 days as of October 10, 2026, lower than the levels observed in the last 3 years. Coal stocks also remain below the normative requirement of around 19-20 days, with lower inventory levels providing a thinner buffer against demand and supply disruptions. Domestic coal production declined by 3.2% YoY in 5M FY2027, largely due to lower output from Coal India Limited.

However, coal supply to the power sector increased by 4% YoY during the period. A further decline in stock levels, particularly if accompanied by weaker coal production or supply constraints, may limit the sector’s ability to meet any sharp surge in peak demand. Sustained recovery in coal production and supply remains important to maintain adequate buffer stock levels.

Spot power tariffs on the Indian Energy Exchange (IEX) averaged ₹7.7 per unit as on October 10, 2026, compared to ₹7.3 per unit in September 2026 and ₹2.6 per unit in October 2025. While tariffs moderated sequentially due to adequate supply, particularly during solar hours, they remained above the year-ago level, supported by healthy electricity demand. The tariff trend in FY2027 will continue to depend on the evolving demand-supply balance and the pace of capacity additions.