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India's Power Demand Set to Surge in H2 2026, Bernstein Upgrades Outlook

India's power demand is projected to follow a stronger trajectory in the second half of 2026, supported by an earlier transition to hotter El Nino conditions and structural drivers like data center growth. Bernstein has revised its FY27 power demand growth outlook upward, now expecting it to be around 0.9 times real GDP growth. The International Energy Agency has also increased its long-term growth estimate for India's power demand. While the entire power sector value chain could benefit, thermal capacity additions may limit merchant price rises, and hydro/wind power face potential downside risks.

Key Points: India Power Demand Growth Revised Up for FY27, H2 Surge Expected

  • Stronger H2 demand on hotter weather
  • Growth revised to 0.9x GDP for FY27
  • Data centers a long-term driver
  • Thermal capacity addition may cap prices
  • Risks for hydro and wind power
3 min read

India's power demand may see strong 2nd half, Bernstein raises FY27 growth outlook

Bernstein report forecasts stronger power demand in H2 2026, driven by weather and data centers, raising FY27 growth outlook to 0.9x GDP.

"long-term confidence in growth prospects appears to be returning - Bernstein Report"

New Delhi, March 5

India's power demand could see a stronger trajectory in the second half of the year, with improved weather conditions and structural demand drivers supporting the sector, according to a report by Bernstein.

The report notes that long-term confidence in growth prospects appears to be returning.

Bernstein said there are three key tailwinds supporting utilities at present: near-term demand growth on a low base along with supportive weather, long-term growth visibility from data centers, and defensive positioning amid global uncertainty.

In its outlook for calendar year 2026, the report said it had earlier expected a power demand growth reversal to around 5 per cent after a flat CY25. However, recent climate developments indicate the possibility of a hotter second half of the year.

The transition from La Nina conditions, characterized by cooler ocean temperatures, to El Nino conditions, which typically bring higher-than-normal temperatures and lower rainfall, is expected to begin earlier than anticipated. As a result, higher temperatures and reduced rainfall compared with historical trends are expected from May onwards.

After an improvement in December-January, India recorded about 1 per cent growth in power demand in February 2026. March demand is expected to remain similar.

Based on updated weather projections, the report revised its expectations for power demand growth in FY27 upward to around 0.9 times real GDP growth, from 0.8 times earlier.

Over the longer term, Bernstein continues to expect power demand growth to broadly track real GDP growth, driven by electrification trends and potential demand from data centers.

The International Energy Agency has also revised its projections upward, increasing India's power demand compound annual growth rate estimate to 6.4 per cent for CY2025-2030, compared with 5.5 per cent earlier for CY2024-2035.

The report also revised CY26 demand growth to around 6 per cent year-on-year, compared with an earlier estimate of about 5 per cent. Demand growth is expected to improve further from June onwards.

Higher demand could support the entire power sector and associated capital expenditure value chain. However, Bernstein noted that merchant power prices may not rise significantly because of the upcoming addition of thermal supply.

Construction companies could benefit from the push for additional thermal capacity, while long-term nuclear capacity requirements may also increase.

For renewable energy, stronger demand could lead to the signing of more power purchase agreements and lower curtailment levels.

The report added that hydro power players and possibly wind asset owners could face downside risks if wind speeds remain weaker than expected.

- ANI

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Reader Comments

P
Priya S
A hotter second half predicted due to El Nino? 😓 My first thought is about the common people. Higher demand means higher bills. I hope discoms and regulators ensure affordable tariffs, especially for middle and lower-income households who will be running ACs more.
R
Rohit P
Good to see the upward revision. The link to data center demand is crucial. With all the digital push and AI, we need massive, reliable power. Hope the thermal capacity addition doesn't slow down our green energy targets. We need a balanced mix.
S
Sarah B
Reading this from an investor perspective. The report seems optimistic for construction and equipment companies. But the note about merchant power prices not rising much due to new thermal supply is a key point for anyone looking at power generators.
V
Vikram M
While growth is good, we must be cautious. Every year we hear about power demand peaks, and then in many states, especially villages, we still have load shedding. Growth should mean reliable 24x7 power for all, not just metros and industries. Let's see if the infrastructure keeps up.
K
Kavya N
The mention of hydro and wind facing risks is worrying. We depend on monsoon for hydro. If El Nino affects rainfall, it's a double whammy - more demand for cooling and less supply from hydro. Hope there are strong contingency plans in place.

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