India’s power demand rose sharply in the first half of 2026, driven by heatwaves and strong industrial activity, with the International Energy Agency (IEA) forecasting a 7% annual growth in electricity demand for the full year, according to the agency’s mid-year electricity market review.
Demand Surge on Heatwaves
Electricity demand rose by around 6% in H1 2026, the IEA noted, led by stronger activity in industry and services and by heatwaves sweeping India between mid-April and early June. May saw an 11% year-on-year increase as cooling degree days were also 7% higher in India. Intense summer heat resulted in peak electricity demand hitting record-high values for four consecutive days from May 18-21, with peak load reaching 270.8 GW on May 21. Peak demand was fully met thanks to higher thermal and renewable capacity, with solar PV covering 22% of the daytime peak (60 GW).
| Period | Demand Growth | Key Details |
|---|---|---|
| H1 2026 | ~6% y-o-y | Driven by industry, services, heatwaves |
| May 2026 | 11% y-o-y | Cooling degree days 7% higher; record 270.8 GW peak |
| Full year 2026 (forecast) | 7% | Supported by economic expansion and electrification |
Supply Constraints and Electricity Shortages
Despite adequate peak capacity, electricity shortages more than doubled in January–May 2026 compared to the same period last year. The IEA explained that growing summer peak net load (excluding load covered by variable renewable energy) in evening hours requires rapid ramp-up of coal- and gas-fired generation, leading to shortages. States in the Northern Region of India’s national grid, such as Punjab, Haryana, and Uttarakhand, showed the highest levels of energy not supplied, reaching up to 2% of monthly demand in April.
"However, growing summer peak net load (i.e. excluding load covered by Variable RE) in evening hours requires rapid ramp up of coal-and gas-fired generation during the day, in some cases leading to electricity shortages, which more than doubled in Jan-May 2026 compared to the same period last year," the IEA said.
Outlook for H2 2026: El Niño and Monsoon Risks
Weather conditions are expected to continue to play a major role. The India Meteorological Department (IMD) declared the monsoon onset on June 4, three days later than average, and forecasts rainfall during the monsoon season to be the lowest in eleven years. This could increase electricity consumption in the agricultural sector for irrigation pumps and raise cooling demand across the country, the IEA added.
JM Financial noted in a recent commentary that power demand is more closely correlated with wet-bulb temperature than dry-bulb temperature. As El Niño conditions intensify from mid-July onwards, below-normal precipitation and elevated daytime and nighttime temperatures are expected.
"As per our analysis of the 2023 El Niño, higher humidity led to spikes in wet-bulb temperature and continued cooling demand beyond the usual May-June. Notably, FY24 power demand peaked in September (243 GW) versus the usual May/ June (224 GW). The El Niño not only raises peak, but also extends high-demand season," JM Financial added.
The brokerage expects more shortages from mid-July onwards as wind generation weakens seasonally (peak wind supply likely falling from 15–18 GW to around 10 GW by August-September) and hydro power remains constrained with reservoir energy content down 50% year-on-year. Thermal capacity is already stretched, with on-stream capacity operating at over 90% plant load factor. Gas can only modestly absorb the incremental peak.
"Thermal is already stretched with on-stream capacity operating at over 90 per cent PLF. Gas can support modestly to absorb the incremental peak. So, the deficit is likely to extend and increase during mid-July to end-August," JM Financial added.
For traders and commodity analysts, the sustained high demand and widening supply deficits imply continued strain on coal and gas procurement, as well as potential price impacts on short-term power markets. The IEA’s full-year growth forecast of 7% reinforces the need for close monitoring of monsoon progression, El Niño development, and thermal fuel availability in the coming months.
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