India’s Slowing Power Generation in 2024: Trends, Challenges, and Outlook for 2025

India’s Electricity Generation Growth Slows in 2024: What It Means for 2025

India’s electricity generation in 2024 witnessed its slowest growth since the COVID-19 pandemic, reflecting a cooling economy. According to data from Grid-India, power output increased by just 5.8% to 1,824.13 billion kWh, a sharp decline from the 9.6% growth recorded in the year’s first half. By the second half, growth averaged a mere 2.3%, aligning with weaker economic activity.

The economic slowdown was evident, with GDP growth dropping to its lowest pace in nearly two years during the July–September quarter. Consumer demand softened, and private investment remained sluggish. Adding to the picture, December’s manufacturing activity was at its weakest for the year.

Despite this, analysts are optimistic about 2025, forecasting a 6%–7% growth in electricity demand driven by increased industrial activity and colder weather conditions. "Demand has already picked up in December, with falling temperatures boosting the use of heating systems," noted Sooraj Narayan, Head of Asia-Pacific Power Modelling at consultancy Wood Mackenzie.

Another notable trend in 2024 was a shift in India’s power mix. Coal’s share in electricity generation dropped slightly to 74.4% from 75% in 2023, marking a break in its three-year upward trend. Renewables accounted for 12.1% of the power mix, but their growth was subdued. Solar output grew at its slowest pace since 2015, while wind power generation declined for the first time in three years.

Looking ahead, analysts expect the share of both coal and renewables to increase in 2025, potentially offsetting the contribution from natural gas-fired power plants, which rose 17.3% in 2024. "We anticipate a declining share of gas in 2025 due to higher year-over-year gas prices," stated Kesher Sumeet, Senior LNG Analyst at Energy Aspects.

India remains reliant on coal to avoid power shortages during extreme weather, despite significant investments in renewable energy capacity. While hydropower recovered slightly with a 4% increase in 2024, its share in the total energy mix continued to decline.

As the economy braces for slower growth in FY 2024–25, with a projected GDP increase of 6.4% (down from 8.2% in FY 2023–24), the energy sector faces a balancing act. Meeting rising demand while transitioning to greener energy sources remains a critical challenge for India’s policymakers.

Colder weather and a rebound in industrial activity could reignite power demand growth in 2025, but achieving sustainable and efficient energy generation will require strategic shifts across sectors.

Key Takeaways:

• India’s power generation growth slowed significantly in 2024, mirroring economic trends.
• Renewables gained a higher share in the energy mix but grew at their slowest pace in years.
• Analysts predict stronger power demand in 2025, driven by colder weather and industrial recovery.

What are your thoughts on India’s energy trajectory for 2025? Let’s discuss in the comments below!

Credit: Economic Times