Surging Electricity Use Drives India's Power Outlook to 9%
New Delhi, Saturday, 31 October 2026.
India’s power demand forecast jumped following a 24% generation surge in October 2026, though thermal coal inventories critically plunged to just six days of supply.
A 24% Surge in October Generation Reshapes India’s Power Forecast
On October 29, 2026, global investment bank Jefferies upgraded India’s fiscal year 2027 (FY27) power demand growth forecast to 9%, citing a 24% year-on-year surge in electricity generation in October 2026 (month-to-date), the strongest monthly trend in 15 years excluding the post-COVID rebound of 2021 [1][3][5]. The brokerage’s revision reflects accelerating industrial activity and infrastructure investment across the subcontinent, with power demand already exceeding 10% year-on-year growth for FY27 so far [1][3][5]. This upward revision underscores not only sustained economic momentum but also intensifying pressure on India’s power infrastructure, particularly thermal plants grappling with eroding coal inventories. 28.571 = 28.6% increase in the demand growth forecast.
Coal Shortages Cast a Shadow Over India’s Power Stability
Despite the surge in generation, thermal power plants are operating with critically low coal stocks, which have fallen to just six days of consumption as of October 2026—down from 15 days a year earlier—a decline that raises concerns about supply chain resilience and potential disruptions during peak demand periods [1][5]. Thermal plant utilization has climbed to 68% in FY27 so far, up from 62% in the previous year, indicating heightened operational strain as demand outpaces fuel availability [1][5]. Jefferies warns that the combination of soaring demand and constrained coal inventories could exert upward pressure on electricity prices, especially in the merchant power market where average prices surged 46% year-on-year to Rs 5.7 per unit in the July–September quarter, and spiked further to Rs 7.1 per unit in October 2026 [1][3][5].
Renewable Energy Gains Momentum, but Hydropower Lags Due to Monsoon Deficits
Renewable energy generation has played a pivotal role in meeting surging demand, rising 26% year-on-year in FY27 so far, and now accounts for 20% of total power output—up from 17% a year earlier [1][3][5]. Solar power has been the primary driver, with generation increasing by 47%, while hydroelectric output declined by 12% due to below-average rainfall during the June–September monsoon season [1][3][5]. This shift highlights both the progress and vulnerabilities in India’s energy transition, as intermittent renewables increasingly complement thermal baseload capacity. Jefferies projects that renewable energy capacity could reach 52% of India’s total installed power capacity by FY30, up from 44% currently, supported by a 20% increase in renewable project awards year-to-date [1][3][5].
Economic Growth, AI Data Centers, and Grid Modernization Fuel Long-Term Demand
The structural drivers behind India’s power demand surge extend beyond industrial activity to include rapid digitization and the expansion of energy-intensive sectors such as artificial intelligence data centers, which are intensifying pressure on aging grids and driving demand for high-capacity transformers [2]. Jefferies has identified Siemens Energy India and Hitachi Energy India as key beneficiaries, assigning ‘Buy’ ratings with target prices indicating up to 70% upside potential due to transformer shortages and grid modernization needs driven by AI infrastructure and long-term power demand growth [2]. Beyond the immediate surge in power consumption, Jefferies forecasts total power demand will reach 2,219 billion units by FY30, up from an estimated 1,709 billion units in FY26, signaling sustained growth across the energy sector [1][3][5].