India’s power sector is experiencing an unusual and revealing moment. The first ten days of November 2025 recorded a 3 per cent year-on-year fall in electricity demand, according to POSOCO. At first glance, such a decline may appear counterintuitive for an economy that has been expanding steadily across manufacturing, services and digital infrastructure. But the numbers reflect a deeper story—one shaped by weather anomalies, a high statistical base and a rapid transformation in India’s energy mix.
FY2026 has been a year of muted growth from the outset. The early and prolonged monsoon cut cooling loads sharply during the summer months, while last year’s elevated consumption created a high base effect. The outcome is a seven-month stretch of flat demand, a rare scenario for a country accustomed to relying on power consumption as an informal indicator of economic momentum. This stagnation has compelled forecasters to revise the electricity demand projection dramatically downwards, from an expected 4 to 4.5 per cent to a much lower 1.5 to 2 per cent for the full fiscal year. A mild seasonal rebound is still expected in winter, but the overall direction is unmistakably softer.
Yet the slowdown in demand is only one half of the picture. The supply side is witnessing its own transformation. Between April and September 2025, India added 25.7 gigawatts of gross generation capacity, more than double the 10.7 gigawatts added during the same period last year. This surge was driven almost entirely by renewable energy developers who rushed to commission projects before the June 30 deadline for the complete waiver of transmission charges.
The expiry of the waiver may change the cost structure of future projects, but the pipeline already created is strong enough to push full-year additions to the range of 45 to 50 gigawatts. This would place FY2026 well above FY2025 in terms of year-round capacity expansion and further tilt the country’s power mix towards cleaner sources.
One of the quieter indicators of the system’s stability can be seen in coal inventories. As of November 10, stocks stood at 16.6 days, higher than the 15.6 days recorded at the end of October. Although inventories remain slightly below normative levels because monsoon rains typically disrupt mining operations, they are healthier than the levels recorded in September 2024 and September 2023. This suggests that the country is navigating the seasonal fluctuations of coal supply with greater resilience, aided by the increasing contribution of renewable generation during non-peak hours.
Market behaviour reflects a similar shift. Average spot power prices on the Indian Energy Exchange rose modestly from ₹2.7 per unit in October to ₹3.1 per unit by November 10. Despite this month-on-month increase, prices remain below the ₹3.3 per unit recorded in November 2024. The decline in tariffs since May 2025 underscores a notable structural trend: supply conditions have improved more quickly than demand has grown. The expansion of renewable energy, coupled with adequate coal availability, has created a more balanced market where volatility is tempered and spikes are less frequent.
All of these developments invite a larger question about how India should interpret “growth” in the power sector. For decades, rising electricity demand has been treated as both a sign and a driver of economic expansion. A flattening of demand would once have triggered anxiety among policymakers. But the present pattern tells a more nuanced story—one where consumption is shaped as much by climate variability and efficiency improvements as by macroeconomic conditions. In an energy ecosystem undergoing transition, stable demand is not necessarily a negative indicator. It can also signify a system that is becoming more efficient, less wasteful and better supplied.
In many ways, FY2026 marks the beginning of a structural shift. Renewable energy is being added faster than demand is rising, and the coal fleet is gradually transitioning from a baseload workhorse to a balancing resource. The grid is becoming more resilient, with diverse generation sources smoothing seasonal pressures. Market signals are becoming less erratic, reflecting a better alignment of supply and demand. And the planning philosophy itself is evolving from meeting shortages to managing surpluses and variability.
The year ahead will test how prepared India is to operate within this new paradigm. Flexibility will matter more than raw capacity. Storage technologies, hybrid renewable systems, grid-forming inverters and demand-side management will move from the margins to the mainstream. The policy conversation will increasingly shift from increasing supply to improving quality, reliability and system adaptability.
FY2026 may therefore be remembered not as a year of slowdown but as a year of quiet recalibration—the moment when India’s power system began functioning more like a mature, climate-aligned network and less like an economy trapped in cycles of deficit and emergency response. What appears on the surface as flat demand is, in reality, a sign of a sector entering a new phase of balance, stability and long-term transformation.