New Delhi: According to Fitch Ratings research, India’s power industry is in danger of oversupply due to persistently low electrical demand. “Sustained lower growth in electricity demand would increase the risk of oversupply, given rapid ongoing capacity additions,” the assessment from Fitch Ratings said.

The research also notes that despite power firms’ fast capacity increases, India has had a modest rise in energy consumption of around 4% over the last two years.

Over the longer run, India’s electricity consumption would increase moderately by 4-5 percent, which is comparable to the 4% rise in the fiscal year that ended in March 2025 (FY25).

The electricity consumption in FY25 has drastically slowed, falling to about half of its growth rate of over 8% in FY22-FY24.

During FY 2024–2025, India successfully satisfied an all-time high power demand of 250 GW, according to official figures from the Power Ministry.

Energy shortages at the national level have significantly improved from 4.2% in FY 2013–14 to only 0.1% in FY 2024–25 due to large improvements in generation and transmission capabilities.

According to statistics from the Power Ministry, metropolitan regions now have up to 23.4 hours of power supply, while rural areas have seen an average rise in electricity availability from 12.5 hours in 2014 to 21.9 hours. These changes demonstrate significant advances in the dependability and accessibility of energy services.

As of November 30, 2024, the total installed power-generating capacity has increased from 249 GW on March 31, 2014, to 457 GW, representing an 83.8% increase.

In its study, the global rating agency also noted that electricity consumption in FY25 saw a significant decrease, which was partially due to weaker GDP growth.

“We project economic growth at 6.4 percent in FY26 and 6.3 percent in FY27, which will support steady increases in power demand,” the rating agency said.

Nonetheless, the rating agency said that given the uncertainty surrounding US tariffs, international trade, and India-Pakistan relations, there are substantial risks to the economic outlook.

It went on to say that electricity consumption will be impacted by slower-than-anticipated economic growth.

Given that the government wants to increase power storage and transmission capacity and increase renewable capacity from the present level of around GW to GW by 2030, Fitch anticipates that capital expenditures among Indian power utilities will continue to be high in the medium term, especially for renewable producers.
After rising to 30 GW in FY25 from GW in FY24, the rating agency predicted that the installation of renewable capacity will continue high in FY26.

The rating agency predicted that the rise in coal consumption, which slowed to 3.4% year over year in the 11 months of FY25 from 9.4% in FY24, would be impacted by the significant installation of renewable capacity.

According to the analysis, coal imports are expected to decline over the next years due to slower demand growth and better local supplies.