Evening peaks strain India's power grid; coal dominates 73% of supply despite solar surge: IEEFA

Time of India

15-07-2025

New Delhi: India's electricity demand hit a record 250 gigawatts (GW) in May 2024, up nearly 50 per cent from 167 GW in May 2021, driven by increased cooling load, growing industrial consumption, and rising residential use during heatwaves. Despite the expansion of solar energy, coal accounted for 73 per cent of daily power supply on peak days, according to the latest briefing note by the Institute for Energy Economics and Financial Analysis (IEEFA).The analysis found that while solar generation has increased significantly, it does not meet demand during the late evening hours, leading to dual daily peak loads that stress the power system.
Evening peak now rivals solar-hour highs
On 15 May 2025, electricity demand reached 231 GW at 3 PM and remained elevated at 227 GW between 9 PM and 11 PM, the report said. IEEFA noted that these sustained evening peaks now nearly match the traditional afternoon peak, but solar power is not available after sunset, resulting in a continued reliance on thermal power.
'Electricity consumption by electric vehicles has grown nearly tenfold – from 59 million units (MUs) in FY2021 to 569 MUs in FY2024,' said Charith Konda, contributing author and Energy Specialist at IEEFA, South Asia.
Storage, demand response key to managing post-sunset load
IEEFA recommended accelerating battery storage deployment, hybrid solar-wind-storage projects, and demand-side measures to manage evening peaks. 'The persistent evening peaks reinforce the urgency of deploying storage solutions, demand measures and hybrid renewable projects,' said Saloni Sachdeva Michael, Energy Specialist and co-author of the report.
The report also highlighted that on 15 May 2025, market clearing prices on the power exchange shot up to ₹10/kWh post 6 PM, driven by high demand and the withdrawal of solar supply.
Time-of-day pricing could help shift usage
IEEFA has called for more effective Time of Day (ToD) tariffs that widen the price differential between peak and off-peak periods to incentivise industrial and commercial consumers to shift usage to daytime hours.
'Incentivising load shifting from evening to day can help align demand with solar availability,' said Vibhuti Garg, Director, IEEFA South Asia.
Focus on hybrid RE, battery storage, and import duty reform
The study highlighted the importance of deploying battery energy storage systems (BESS) and pumped hydro to ensure round-the-clock power availability. It also called for cutting import duties on battery technologies and expediting PLI scheme disbursement to boost domestic battery manufacturing.
'Battery storage enables energy arbitrage by charging during near-zero-cost solar hours and discharging during high-demand hours,' said Kaira Rakheja, co-author and Energy Analyst at IEEFA.
Demand from ACs, EVs, industry behind power surge
India's rising power consumption is driven by increased use of air conditioners, electrification of transport, and commercial and industrial expansion, the report noted. In FY2024, industry accounted for 32 per cent, residences 31 per cent, agriculture 22 per cent, and commercial establishments 10 per cent of electricity consumption.
The report also flagged upcoming demand from sectors like green hydrogen and digitised industries, underscoring the need for a flexible, low-carbon grid.
Grid digitisation and cyber readiness crucial for future
IEEFA underlined that along with physical infrastructure, digitisation of the grid, cybersecurity, and smart metering will be critical for managing two-way power flows and integrating rooftop solar and electric vehicles.
'As India's power demand continues to rise, grid flexibility, demand response, and clean storage will be central to ensuring supply stability,' the report concluded.