India's Power Sector Faces Night-Time Supply Strain as Solar Dips: Citi Report

The report highlighted that while India has significantly expanded its generation capacity over the past decade and reduced overall power shortages, the country is now facing growing stress during evening and night-time peak demand periods when solar power generation declines.

"The challenge is shifting from 'not enough energy' to 'not enough dispatchable energy at the right hour'," the Citi Research report stated.

According to the report, daytime solar generation and improved hydro capacity have reduced average energy shortages, but the system is increasingly being tested during non-solar hours when cooling demand and commercial electricity consumption remain high.

"The risk has migrated. Daytime solar and improved hydro have reduced average shortages, but evening and night peaks now test the system's flexibility," the report said.

Citi said India's power demand is becoming more weather-sensitive and time-sensitive due to rising air-conditioner usage, urbanisation, data centres and electrification trends.

The report noted that India's peak power demand has risen sharply from around 119 GW in 2010 to nearly 250 GW in 2025, with the next phase of demand growth expected to come from cooling loads, electric vehicle charging and data centre expansion.

"Demand is now broader-based, with incremental growth likely to be driven by cooling load, data centres, electrification and policy-supported manufacturing," the report said.

The report also warned that headline power deficit numbers may not fully capture the stress building up in the system during evening hours.

"Headline power deficits mask non-solar-hour strains," the report stated.

According to Citi, the country's transmission and storage infrastructure will become increasingly critical as renewable energy capacity expands further over the next few years. The report said battery energy storage systems (BESS), pumped hydro storage and flexible thermal generation would play a central role in ensuring grid reliability.

The report added that multiple instances of solar power curtailment between May and December 2025 exposed operational challenges linked to integrating large renewable energy volumes into a grid still dominated by thermal power.

"The proximate causes -- mismatch between daytime demand and solar output, limited coal ramping capability, and transmission bottlenecks -- are some of the issues that will likely define system risk in the next leg of the cycle," the report said.

Citi further warned that the Central Electricity Authority's long-term resource adequacy framework indicates risks of non-solar-hour power shortages if planned capacity additions or storage projects are delayed.

"CEA's long-term resource adequacy work suggests the risk of Planning Reserve Margin turning negative in non-solar hours over FY27-29, in case capacity additions slip," the report added.

The report also said coal-based power generation will continue to remain important despite India's renewable energy expansion, with around 97 GW of additional coal-based capacity either under construction or in planning till 2032.

- ANI