India's Electricity Demand Growth Forecast Dims Amid Prolonged Monsoon

Icra has revised its electricity demand growth forecast for India to 1.5-2% for FY26, down from 4-4.5%. This revision is attributed to the prolonged monsoon and high base effects, which have kept demand growth muted. Despite the slowdown, renewable energy capacity has seen significant growth.

Rating agency Icra has adjusted its electricity demand growth projection for India for the fiscal year 2026, citing the influence of prolonged monsoonal conditions. The revised forecast now stands at a modest 1.5-2%, a steep decline from the previous 4-4.5% prediction.

Official data noted a 3% year-on-year drop in electricity demand for the first ten days of November 2025. Ankit Jain, Vice President at Icra, attributed the sluggish growth to the prolonged rainy season and a high baseline effect, resulting in largely flat demand for the initial seven months of the fiscal year.

While demand growth lags, India's renewable energy capacity has surged, with 25.7 GW added between April and September 2025. This increase, more than doubling the previous year's figures, stems from developers' urgency to complete projects before a transmission charge waiver expires. The full-year capacity addition could reach 45-50 GW by the end of FY26.

(With inputs from agencies.)