India’s electricity system is entering a phase where rising demand and expanding clean energy capacity are advancing together, though not always in step. In the fourth quarter of FY 2025-26, total electricity generation rose 3 per cent year-on-year to 464 billion units, supported largely by non-fossil sources, even as peak demand reached fresh highs.
On 26 April 2026, peak electricity demand climbed to 256 GW, the highest recorded so far, surpassing earlier peaks of 250 GW in May 2024 and 245 GW in January 2026. The steady rise reflects growing consumption across industrial, residential and commercial segments. Yet the system is showing signs of strain in absorbing the clean energy it is now capable of producing.
Curtailment Signals Strain
Data from the Centre for Research on Energy and Clean Air (CREA) shows that solar generation drove growth in the quarter, rising 24 per cent year-on-year to 48.9 billion units. Wind generation increased by 11 per cent, nuclear by 10 per cent and large hydro by 7 per cent. Coal and lignite generation, in contrast, declined marginally by 1 per cent. The trend points to a gradual shift in the generation mix, with renewables accounting for a growing share of incremental supply. However, utilisation remains uneven. Solar capacity utilisation fell slightly to 22 per cent from 23 per cent a year earlier, reflecting variability in output and system constraints.
Despite higher renewable output, a significant volume of clean energy was not utilised. Around 27 GW of solar and 4 GW of wind capacity was curtailed during the quarter. A further 83 GW of solar and 11 GW of wind were curtailed under the Tertiary Reserve Ancillary Service mechanism, used to manage grid congestion.
Gujarat recorded the highest curtailment, pointing to regional imbalances where renewable capacity has grown faster than transmission and storage infrastructure. The figures underline a central challenge for the sector: generation capacity is expanding faster than the system’s ability to integrate and dispatch it efficiently.
“The 24 per cent jump in solar generation this quarter is genuinely encouraging, but the more telling number is the curtailment. Roughly 27 GW of solar capacity didn't make it onto the grid; energy that was produced and then turned away. That's the real story buried inside the headline,” said Piyush Goyal, Co-Founder and CEO, Volks Energie.
“We're at a point where India's clean energy build-out is moving faster than the system designed to carry it. Peak demand at 256 GW now coincides with solar hours on 88 out of 90 days, which is exactly the alignment the sector has been chasing. But without matching investment in transmission corridors, battery storage, and grid responsiveness, we'll keep generating power that has nowhere to go,” he added.
He further noted that grid strain has operational implications for industry. “For commercial and industrial users, every curtailment event and every voltage swing translate into real cost, lost output, damaged equipment, missed deliveries. Until storage and on-site generation move closer to where industry actually consumes power, curtailment will only get worse. We can't keep asking the grid alone to carry this transition.”
Grid Flexibility Challenge
India’s demand profile is also evolving. Of the 90 days in the quarter, 88 recorded peak demand during solar generation hours, suggesting a gradual alignment between consumption and daytime renewable supply. Even so, thermal power continues to provide the backbone of the system. During the January 2026 peak demand period of 245 GW, thermal sources accounted for 67 per cent of supply, while solar contributed 20 per cent. Maharashtra recorded the highest state-level peak demand at 32 GW, followed by Gujarat and Uttar Pradesh.
Coal remains central to the system, though its role is changing. Plant load factor for coal declined from 72 per cent to 69 per cent year-on-year, even as overall demand increased. Gas-based generation saw a modest rise in utilisation, while nuclear output edged up. The shift indicates growing pressure on coal plants to operate with greater flexibility rather than as steady baseload providers, as renewable energy occupies a larger share of daytime supply.
Capacity additions during the quarter reflect this transition. India added 16.2 GW of renewable capacity, compared with 2.3 GW of coal-based thermal power and 0.5 GW of large hydro. No thermal capacity was retired, while 39.4 GW of coal capacity remains under construction, largely at early stages.
Experts argue that the constraint has moved from generation to system flexibility. “India’s rising power demand is increasingly being met by renewables, particularly during daytime peak hours. However, rising renewable curtailment shows that grid infrastructure and flexibility are not keeping pace with clean energy growth,” said Manoj Kumar, India Analyst at CREA.
“As solar capacity grows, its intermittent and variable profile puts stress on the grid, which needs to be ready 24/7 to meet consumer demand. But India has two unique advantages in helping it cope with this pressure. One, power demand is still growing strongly, which partly reduces the intensity of this problem. Two, the country’s geographical spread diversifies generation and consumption patterns,” said Vinay Rustagi, Chief Business Officer, Premier Energies.
“Nonetheless, policy makers need to use all available tools, including demand side management, development of ancillary power markets, smart grids, storage capacity and flexibilisation of coal plants to ease grid imbalance and ensure continued growth of solar power,” he added. Stronger transmission networks, more responsive grid operations and faster deployment of battery storage are likely to determine how effectively India can integrate its growing renewable capacity in the months ahead.
(External quotes were added later) |
