India's power sector enters "value chain" reset led by transmission, storage and demand growth: Report
New Delhi, July 5
India's electricity system is heading into a synchronised reset across generation, transmission and distribution, with transmission capex and energy storage emerging as the critical enablers for the next decade, Macquarie Equity Research said in a research report.
The brokerage expects India's installed capacity to expand from 538GW today to 900GW by FY32E. The growth will follow a dual-track path according to the brokerage. Coal will continue to anchor baseload stability with plant load factors above 65 per cent, while renewables drive the bulk of incremental capacity. However, this transition is contingent on deploying 74GW of energy storage by the end of 2032 to manage intermittency and meet evening peak demand.
Peak power demand hit a record 271GW in May 2026 during an intense heatwave, leaving minimal operating headroom. The Central Electricity Authority projects power demand to grow at a 6 per cent CAGR by 2030. With industrial activity at 50 per cent of consumption, structurally rising cooling demand accounting for higher than 20 per cent of incremental growth, and new high-load segments such as data centres and electrified transport. The IEA expects India's electricity consumption to grow at 6.4 per cent annually through 2030 -- the fastest among major economies.
The report highlights a clear pivot to a transmission-led capex super-cycle. To evacuate 500GW of non-fossil capacity by 2030 and 900GW by 2035-36, India will need US$51 billion in transmission investment. A key challenge is timing: generation assets take 12-18 months to build, while transmission corridors take 36-48 months. Without proactive inter-regional development, curtailment risk rises. The grid lost 2,300GWh between May-Dec 2025 when mid-day solar surges exceeded absorption capacity.
In distribution, Macquarie sees a structural turnaround. Under the Revamped Distribution Sector Scheme (RDSS), Rs2.83 trillion has been sanctioned for infrastructure upgrades and 203 million smart meters are planned. Resulting in a drop in AT&C losses to 15 per cent vs 22 per cent in FY 2021, and DISCOMS posted a Rs 25 billion profit in FY 2025 after decades of losses. Overdue payables to generators have also dropped to under Rs500 billion from Rs1.4 trillion earlier, aided by Late Payment Surcharge rules.
The Revamped Distribution Sector Scheme (RDSS) is a Government of India initiative launched in 2021 to improve the operational efficiencies and financial sustainability of State-owned power distribution companies (DISCOMs).
Regulatory reforms are reinforcing the shift. The Draft National Electricity Policy 2026 signals a move to market-based systems, with coal repositioned as flexible balancing capacity rather than rigid baseload. The Electricity (Amendment) Bill 2026 aims for cost-reflective tariffs and regulated competition in distribution, while the India Energy Stack is being built to enable peer-to-peer trading and monetisation of distributed assets.
Overall, Macquarie said the sector is moving from sporadic state-led initiatives to an interlocking central framework spanning the entire value chain. With 50GW/year of capacity addition underway and Rs9.15 trillion earmarked for transmission by 2032E, the next phase of growth will be defined by how quickly transmission and storage can keep pace with demand.
— ANI
Reader Comments
900GW by 2032 sounds ambitious, but I hope we're not over-relying on coal. The report says coal PLF above 65% for baseload stability - that's still a lot of emissions. We need to push harder on renewables and storage. 74GW of storage by 2032 seems doable if we fast-track battery manufacturing and pumped hydro projects. Also, the transmission capex of US$51 billion is huge - let's hope it doesn't get stuck in land acquisition delays like many infrastructure projects.
Interesting analysis from Macquarie. The timing mismatch between generation (12-18 months) and transmission (36-48 months) is a classic infrastructure bottleneck. India lost 2,300GWh between May-Dec 2025 due to curtailment - that's enough to power millions of homes. The government needs to create a single-window clearance for transmission corridors. Also, the Draft National Electricity Policy 2026 moving coal to 'flexible balancing capacity' is a smart move - we're seeing similar trends in Australia and the US.
The 271GW peak demand in May 2026 during heatwave is scary. We barely escaped blackouts. With data centres and EVs adding more load, we need to plan ahead. The 6% CAGR growth projection is conservative if you ask me - with India's economic growth and electrification of transport, it could be higher. And please, someone fix the DISCOM billing systems! My bill was wrong for three months straight. Smart meters can't come soon enough. 😡
The India Energy Stack for peer-to-peer trading sounds revolutionary! Imagine selling excess solar from your rooftop to your neighbour. That's real decentralisation. But regulatory clarity is needed - the Electricity Amendment Bill 2026 better have strong consumer protection clauses. Also, what about rural areas? The report focuses on transmission and storage, but last-mile connectivity in villages is still a challenge. Hope the RD
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