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Critical Topics and Their Significance for the UPSC CSE Examination on March 14, 2025

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How can India meet its rising power demand?

For Preliminary Examination:  Current events of national and international importance

For Mains Examination:  GS III - Power sector, Renewable Energy (Solar, Wind, Hydro, Biomass, etc.), Energy Security, and Government Policies (such as UDAY, SAUBHAGYA, and National Electricity Policy)

Context:

As the fastest-growing major economy in a rapidly heating world, India’s electricity demand is growing fast. Since FY21, India’s electricity consumption has risen at approximately 9% per annum, compared to an average of 5% annually in the preceding decade. The Central Electricity Authority (CEA) had projected electricity demand to grow at a 6% CAGR between 2022 and 2030.

Read about:

What’s driving India’s electricity demand?

Why should India further raise its clean energy ambitions?

Key takeaways:

India’s Growing Electricity Demand and Renewable Energy Transition

As one of the fastest-expanding major economies in an increasingly warming world, India's electricity needs are rising at an unprecedented rate. Since FY21, power consumption has been increasing at nearly 9% annually, compared to an average of 5% in the previous decade. The Central Electricity Authority (CEA) had estimated a 6% compound annual growth rate (CAGR) in electricity demand between 2022 and 2030. However, recent trends indicate that actual demand may exceed these projections. The critical question remains: Can India's power sector meet this surging demand while simultaneously transitioning to renewable energy sources?

Key Drivers of India’s Electricity Demand

• In addition to economic growth and rapid urbanization, climate change-induced heatwaves are significantly influencing electricity consumption. Industries, households, and agriculture account for 33%, 28%, and 19% of India's total power usage, respectively.
• However, household energy consumption has expanded the fastest in the last decade. The summer of 2024 saw a 40-50% rise in air conditioner sales due to increasing temperatures and rising income levels.
• On May 30, 2024, the country's peak electricity demand surpassed 250 GW, exceeding forecasts by 6.3%. With February 2025 marking the warmest in 125 years, India faces prolonged heatwaves and an expected 9-10% growth in peak power demand.

India’s Response to Rising Power Demand

• Since the early 2000s, the nation’s power generation capacity has increased fourfold to 460 GW, making India the world's third-largest electricity producer. The energy sector is undergoing a transformation, shifting towards renewable sources like solar and wind.
• Initially, the government set a target of 20 GW of renewable energy (RE) by 2020. This was later revised to 175 GW by 2022, and in 2021, India set a more ambitious goal of achieving 500 GW of non-fossil fuel capacity by 2030.
• To handle rising demand, the government has implemented both short-term and long-term strategies. For instance, in 2022, coal allocation for power generation was increased, and railway transportation was prioritized to ensure adequate supply.
• Imported coal-based power plants were