New Delhi: India's electricity demand is projected to grow significantly faster than overall energy demand by 2035, with power consumption by data centres and green hydrogen production expected to rise nearly ninefold to around 240 terawatt-hours, according to S&P Global.
The report noted that the shift towards electricity is already underway, with electric vehicles reducing dependence on fossil fuels. The transition is expected to accelerate as industries increasingly adopt electricity and green hydrogen-based production processes.
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Additionally, industrialisation, rising incomes, growing appliance ownership and higher cooling requirements are expected to drive electricity consumption across the country.
"India's energy growth story is becoming more electric, with electricity demand expected to grow much faster than energy demand between 2025 and 2035, at 5.56% and 2.47%, respectively. Electricity's share in the total energy basket could rise to nearly 25% by 2035, from about 19% in 2025," the ratings agency said.
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At the same time, it highlighted that data centres and green hydrogen production will emerge as major sources of electricity demand, with their combined consumption expected to rise nearly ninefold to around 240 terawatt-hours by 2035.
Furthermore, while the electricity grid will remain the primary source of power, distributed generation, which produces electricity closer to consumers, is expected to meet a growing share of demand. " This share could increase to about 16% by 2035, from about 13% in 2025," it said.
The report noted that rising electricity consumption and increasingly unpredictable demand patterns will put additional pressure on India's power infrastructure. "Meeting this demand reliably will require a diversified supply mix, stronger transmission and distribution networks, storage, and flexible generation and market design that can support a more dynamic electricity system," it noted.
S&P Global further noted that India has achieved its 2030 Nationally Determined Contribution (NDC) target of 50 per cent cumulative installed power capacity from non-fossil fuel sources ahead of schedule, while the target for 2035 has been set at 60 per cent.
However, the report cautioned that "early progress on capacity targets also changes the nature of the challenge."