Electric vehicles (EVs), green hydrogen (GH), and data centres are expected to contribute 20–25% of the increase in electricity demand in India between FY2026 and FY2030, according to credit rating agency ICRA, reports Fortune India.
Electricity demand is projected to grow by 6–6.5% annually over the next five years. For FY2026, demand is expected to grow by 5.0–5.5%, which is lower than the forecasted GDP growth of 6.5%. This lower electricity demand is due to the early onset and expected strength of the monsoon, which tends to reduce demand for cooling and agricultural electricity use. Despite this, FY2026’s demand growth would still be higher than the 4.2% recorded in FY2025, though it trails the over 8% annual growth seen from FY2022 to FY2024.
ICRA estimates that the national thermal power plant load factor (PLF) will stay largely unchanged at around 70% in FY2026, with healthy growth expected from renewable energy (RE) sources and an addition of 9–10 GW in thermal capacity.
Vikram V, Vice President & Co-Group Head at ICRA, noted that the expansion in grid-connected electricity demand will be partially offset by the growing adoption of rooftop solar systems and off-grid solutions, supported by government schemes such as the Pradhan Mantri Surya Ghar Yojana.
EV adoption is set to increase across all categories, with three-wheelers leading, followed by two-wheelers, electric buses, and passenger cars. In the case of green hydrogen, a gradual scale-up is anticipated due to its current cost disadvantage compared to grey hydrogen.
To meet the expected rise in demand, the government is supporting the expansion of both renewable and thermal generation capacity. This support is reflected in fresh project announcements by public and private power producers, as well as new long-term power purchase agreements by state distribution companies—the first in over a decade.
India is projected to add a record 44 GW of power generation capacity in FY2026, surpassing the previous high of 34 GW in FY2025. The total installed power capacity is expected to approach 520 GW by March 2026. While the majority of new capacity will come from renewable sources, the thermal sector has also seen a resurgence, with more than 40 GW of new thermal projects currently under construction.
These developments come alongside broader national infrastructure efforts, including Minister Nitin Gadkari’s initiative to modernize India’s highways and the emergence of fast-growing mid-sized companies featured in Fortune India’s “100 Emerging Stars” list, highlighting the strength of India’s economic transformation.
