India's electricity demand growth is expected to reach about 8.5 per cent in FY27, ICRA said in its monthly power sector update, revising its earlier estimate of 6.5 per cent. The change followed a sharp rise in consumption during the first half of the financial year and an acceleration in demand during the first 10 days of October 2026.

Demand rose 23.4 per cent year on year in the first 10 days of October, based on Grid Controller of India data cited by ICRA. Growth during the first six months of FY27 was 10.2 per cent year on year. Higher-than-normal temperatures, sustained cooling requirements and industrial activity supported consumption beyond the peak summer period, although weather-related uncertainty remains a risk to the forecast.

Coal inventories stood at around six days of consumption on October 10, below levels recorded over the previous three years and well below the normative requirement of around 19 to 20 days. Domestic coal production fell 3.2 per cent year on year in the first five months of FY27, largely because of lower output from Coal India, while coal supplies to the power sector increased 4 per cent.

A further fall in coal inventories, particularly if accompanied by weaker production or supply constraints, could limit the sector's ability to respond to a sharp increase in peak demand. ICRA said a sustained recovery in coal production and supply would be needed to rebuild buffer stocks and strengthen the system's response capacity.

Spot electricity tariffs on the Indian Energy Exchange averaged Rs. 7.7 per unit on October 10, compared with Rs. 7.3 per unit in September 2026 and Rs. 2.6 per unit in October 2025. Tariffs moderated sequentially amid adequate supply availability, especially during solar generation hours, but remained substantially above year-earlier levels as consumption stayed strong. The trajectory of tariffs in FY27 will depend on the balance between demand and supply and the pace of capacity additions.