India's Power Demand Surge Predicted to Strengthen in Second Half of the Year

India's power demand is projected to grow stronger in the latter half of the year due to favorable weather and structural drivers. Bernstein's report highlights key tailwinds, including data centers' growth and global uncertainty. Climate shifts may drive demand up, impacting the entire energy sector.

As India gears up for the second half of the year, the power sector is expected to experience significant growth in demand. A report by Bernstein attributes this anticipated rise to improved weather conditions and structural demand drivers. The long-term outlook showcases a renewed confidence in growth prospects for the industry.

Bernstein highlights three main factors bolstering utilities: immediate demand growth from a low base combined with favorable weather, long-term visibility from burgeoning data centers, and a defensive stance amidst global instability. Looking ahead to 2026, the report indicated a broader power demand growth to around 5 percent, adjusting for climate developments that suggest a hotter upcoming half-year.

The transition from La Nina to El Nino, expected sooner than previously thought, may lead to higher temperatures and decreased rainfall starting May. India recorded a slight uptick of 1 percent in power demand in February 2026, with expectations of steady demand in March. As a result, Bernstein has adjusted its FY27 power demand growth estimate to 0.9 times the real GDP growth.

Reflecting an optimistic outlook, the International Energy Agency revised its growth rate estimate for India's power demand to 6.4 percent for the period of 2025-2030. A year-on-year demand growth of 6 percent for 2026 is now anticipated. The entire power sector could benefit from this surge, although merchant power prices might stabilize due to new thermal supply.

Renewable energy could witness stronger demand, encouraging more power purchase agreements and reducing curtailment. However, challenges remain for hydro and wind power if conditions don't favorably change. Construction companies and nuclear capacity needs may see positive growth trajectories, driven by additional thermal capacity requirements.

(With inputs from agencies.)