AI and Data Centres Could Raise India’s Peak Power Demand by 30 GW

25 Mar 2026 CW Team

Government projections suggest peak demand could reach 459 GW by FY36, with total energy requirements rising to 3,365 bn units and installed capacity expected to more than double to around 1,121 GW. Of the projected capacity, about 786 GW could be from non-fossil fuel based sources. Integrating such large shares of renewable energy (RE) will require strengthened grid flexibility, storage solutions and market reforms. The narrative frames transition challenges as both technical and regulatory.

Union Minister for New and Renewable Energy Pralhad Joshi said energy transition is central to India’s manufacturing ambitions and that affordable, low-emission power underpins competitiveness. He noted electronic production has expanded sixfold from Rs 1.1 tn to Rs 1.8 tn and warned that the Carbon Border Adjustment Mechanism (CBAM) could affect carbon intensive sectors. He argued that renewable energy and battery energy storage systems (BESS) can lower long-term power costs, while thermal generation will continue to meet baseload needs during integration.

Pankaj Aggarwal, secretary at the Ministry of Power, said installed capacity has more than doubled to 520 GW and that renewable energy has driven much of the growth since 2016. He said the next phase requires stronger regulatory frameworks, market design and pricing mechanisms to manage a renewable-heavy grid and estimated the transition will require an investment of $2.2 tn over 20 years. He added that measures such as time-of-day tariffs, demand response, flexible generation and storage must be advanced as battery technologies mature.

Artificial intelligence (AI), data centres and electric vehicles (EVs) are expected to raise India’s peak power demand by 30 GW over the next five to six years, Union Power Minister Manohar Lal Khattar said at the India Electricity Summit. He noted peak demand was 250 GW in 2024-25 and that the FY26 estimate of 270 GW was not reached owing to weather, while the ministry remained ready to meet 270 GW if required. The minister framed the projection as driven by digitalisation and electrification. Government projections suggest peak demand could reach 459 GW by FY36, with total energy requirements rising to 3,365 bn units and installed capacity expected to more than double to around 1,121 GW. Of the projected capacity, about 786 GW could be from non-fossil fuel based sources. Integrating such large shares of renewable energy (RE) will require strengthened grid flexibility, storage solutions and market reforms. The narrative frames transition challenges as both technical and regulatory. Union Minister for New and Renewable Energy Pralhad Joshi said energy transition is central to India’s manufacturing ambitions and that affordable, low-emission power underpins competitiveness. He noted electronic production has expanded sixfold from Rs 1.1 tn to Rs 1.8 tn and warned that the Carbon Border Adjustment Mechanism (CBAM) could affect carbon intensive sectors. He argued that renewable energy and battery energy storage systems (BESS) can lower long-term power costs, while thermal generation will continue to meet baseload needs during integration. Pankaj Aggarwal, secretary at the Ministry of Power, said installed capacity has more than doubled to 520 GW and that renewable energy has driven much of the growth since 2016. He said the next phase requires stronger regulatory frameworks, market design and pricing mechanisms to manage a renewable-heavy grid and estimated the transition will require an investment of $2.2 tn over 20 years. He added that measures such as time-of-day tariffs, demand response, flexible generation and storage must be advanced as battery technologies mature.

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