India power demand seen rising 6%-7% in FY27 on hotter weather, El Nino impact: Crisil

India's electricity demand is expected to grow 6%-7% in fiscal year 2027 due to higher temperatures and lower rainfall linked to an expected El Nino weather pattern, according to a Crisil Intelligence report released on Thursday.

Power demand is projected to reach 1,810-1,830 billion units (BU) in FY27, as rising cooling requirements boost consumption across households, commercial establishments and industries.

The ratings and research firm said weather conditions would remain a key determinant of electricity consumption during the year, with the expected El Nino effect from July 2026 likely to result in above-normal temperatures and reduced rainfall.

India's power demand has become increasingly sensitive to heatwaves in recent years as ownership of air-conditioners and other cooling appliances continues to rise.

The forecast follows a sharp rise in electricity consumption in May, when power demand increased 11.2% year-on-year to 165 billion units amid a prolonged heatwave across large parts of the country.

Peak power demand touched 271 gigawatts (GW) on May 21, exceeding the previous fiscal year's peak of 245 GW.

To meet rising demand, power generation is expected to continue relying heavily on coal-fired plants, which remain the backbone of India's electricity system despite rapid growth in renewable energy capacity.

Coal-based generation accounted for more than 68% of total power generation in May, while renewable energy output rose about 20% from a year earlier.

The report noted that coal inventories at thermal power plants declined during May as demand surged.

India added 7.4 GW of renewable energy capacity, including small hydro projects, in the first two months of the current fiscal year, helping expand non-fossil fuel generation capacity.