India’s power sector witnessed a moderate increase in electricity demand in September 2025, with signs of gradual recovery after a weak start to the fiscal year. According to data released by ICRA, electricity demand grew by 4.8 percent year-on-year in August 2025, reflecting a rebound after subdued growth in the first quarter of FY2026, which had been affected by the early arrival of the Southwest Monsoon. The demand revival indicates improving consumption trends across industrial, commercial, and residential segments as the monsoon impact begins to ease.
ICRA has projected India’s electricity demand to rise by about 4.0 to 4.5 percent in FY2026. The rating agency expects a stronger performance in the second half of the year, which could offset the slower growth recorded in the first half. The growth forecast, however, has been revised downwards from the earlier estimate of 5.0 to 5.5 percent due to the prolonged monsoon season. The overall demand growth projection for FY2026 now trails ICRA’s GDP forecast of around 6.0 percent, reflecting a more balanced but cautious outlook for the power sector.
The data from the Power System Operation Corporation (POSOCO) showed that the country’s electricity consumption in August rebounded significantly after witnessing a contraction during the first quarter and only modest growth in July 2025. The recovery in August is attributed to the easing of monsoon-related disruptions and higher demand from states where agricultural and industrial activities picked up pace. However, the demand growth is expected to remain moderate in the coming months, given that rainfall levels have been above average in many regions.
On the pricing front, spot power tariffs on the Indian Energy Exchange (IEX) averaged ₹4.1 per unit as of August 25, 2025, slightly lower than the average of ₹4.2 per unit in July 2025. The prices were also below those recorded in August 2024, mainly due to improved power supply and a moderate increase in demand. The stable tariff trend points to an overall balance between generation and consumption, supported by adequate availability of coal and renewable energy sources.
Coal inventory levels at domestic power plants remained healthy during this period, despite minor disruptions caused by the monsoon. As of August 24, 2025, coal stock at power plants was sufficient for 17.1 days of operation, compared to 18.1 days recorded at the end of July 2025. The marginal decline was primarily due to slowed supply from mines affected by heavy rainfall. Nevertheless, coal availability remained significantly better than the low stock levels seen in September 2024. As of October 10, 2025, the average coal stock stood at 14.7 days, which continues to reflect improvements in coal logistics and supply management.
In contrast to the moderate overall demand, the renewable energy segment has demonstrated remarkable momentum. Renewable energy generation rose by 24.8 percent year-on-year during the first five months of FY2026, from April to August 2025. This growth was supported by a strong pipeline of projects and consistent policy backing from the Government of India. The sector’s steady progress underscores the country’s commitment to expanding clean energy capacity while maintaining a reliable supply mix.
While the first half of FY2026 was marked by weather-related fluctuations, the overall outlook for India’s power sector remains stable. The expected recovery in electricity demand in the coming months, coupled with strong renewable energy performance and adequate coal stocks, points toward a more balanced and resilient energy landscape going forward.
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