India's power sector is likely to face another year of weather-related demand pressure, with electricity consumption predicted to rise 6-7 per cent year-on-year to 1,810-1,830 billion units (BU) in FY27, according to a Crisil Intelligence report. This forecast follows an intense heatwave that drove peak power demand to a record 271 GW in May 2026.
Record Peak Demand in May
The prediction comes after India's peak electricity consumption hit a record 271 GW in May, almost 10 per cent higher than the previous fiscal year's peak of 245 GW. This surge was attributed to extended hot conditions that increased cooling needs across most of the nation.
According to the report, “Power demand is expected to increase 6-7% on-year in fiscal 2027 to 1,810-1,830 BU, driven by higher temperatures and lower rainfall due to the expected El Niño effect from July 2026, resulting in a rise in cooling demand.”
May saw a peak power demand of 271 GW, 10 percent higher than the 245 GW peak in fiscal 2026. This surge is attributed to increased cooling demand due to severe and prolonged heat waves, the report added.
Electricity Demand and Generation Trends
Electricity demand increased 11.2 percent year-on-year to 165 BU in May due to above-average temperatures in northern, northwestern, western, and central India. Temperatures continued to be 1-4 degrees Celsius above average; on May 12, Banda in Uttar Pradesh recorded one of the highest readings of the month at 48.3°C.
The report highlighted that the Manufacturing PMI increased to 55.0 in May from 54.7 in April, indicating that manufacturing activity supported electricity consumption as well. Nearly half of India's overall electricity consumption comes from commercial and industrial users.
The first two months of FY27 saw a 7.6 percent year-on-year increase in energy demand, which contrasts with a 1.2 percent decrease during the same period in the previous fiscal year. This suggests a significant reversal in consumption patterns.
Furthermore, all of the main fuel sources produced more electricity as a result of the increase in demand. In May, total generation rose by almost 12 percent year-on-year to 178 BU, with gains recorded by nuclear power, coal, hydro, and renewable energy.
Renewable Energy Capacity Addition
In April and May, India built 7.4 GW of renewable energy capacity, including small hydro, which allowed renewable generation to grow more quickly than overall demand.
