India's power demand to grow at over 7 per cent CAGR, renewables and data centres to drive energy boom: Nomura report
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omura has projected robust growth for India's power sector, anticipating a compound annual growth rate (CAGR) of over 7 per cent in electricity demand from FY24 to FY27.
According to Nomura, the surge is attributed to accelerating economic activity, greater electrification, and emerging demand from sectors like data centres, electric vehicle (EV) charging, and green hydrogen production.
Changing weather patterns, which have recently led to supply deficits, could also add to the growing power demand. In FY25 alone, electricity consumption is expected to increase by 7.2 per cent year-on-year, reflecting consistent growth from the previous year's 7.1 per cent.
India's significant progress in renewable energy adoption, estimating that renewables will supply 35 per cent of the country's electricity in FY25, up from 33.5 per cent in FY24.
Solar and wind energy are projected to account for roughly 75 per cent of the incremental power demand by FY25, with solar power alone forecasted to grow by 23 per cent year-on-year.
This trend aligns with India's ambitious target of achieving 500 GW of renewable energy capacity by 2030, supporting its net-zero emissions goal for 2070.
By FY30, renewables are expected to constitute 55 per cent of total installed capacity, helping the nation become a renewable energy leader globally.
Three key themes likely to shape India's power demand in the coming years: data centres, EVs, and green hydrogen. Data centres are rapidly expanding due to the surge in digital activities like e-commerce, OTT streaming, and online education, coupled with advancements in AI, IoT, and the rollout of 5G.
Nomura estimates that India's data centre capacity will grow from 960 MW today to between 7.5 GW and 9 GW by FY30, driving power consumption in the sector from 8.4 TWh currently to as high as 80 TWh in a bull case by FY30.
Green hydrogen, identified as a major growth driver, is anticipated to contribute between 150 and 300 TWh of additional power demand as India ramps up production to support decarbonization across industries.
Increased EV adoption is expected to further contribute to demand, particularly in the transport and logistics sectors.
To meet the escalating power demand and support renewables, India's power transmission infrastructure is set to receive a substantial boost, with an estimated investment of USD 110 billion from FY22 to FY32.
The National Electricity Plan (2023-32) outlines major investments and expansion targets, including the addition of 162,646 circuit kilometres (ckm) of transmission lines and 1,094 GVA of transformation capacity.
Investments in the transmission sector are expected to create lucrative opportunities for product manufacturers with strong domestic manufacturing capabilities and advanced technology offerings.
The latest National Electricity Plan aims to enhance inter-regional transfer capacity from 119 GW to 168 GW by 2032, enabling greater power flow across states.
New high-voltage direct current (HVDC) lines, with a total capacity of 33.25 GW, are set to complement the existing 33.5 GW, ensuring efficient power transmission across long distances. India's energy transformation is expected to continue beyond FY30, with Nomura projecting that renewable energy will generate 49 per cent of the nation's electricity by 2040.
The shift will be facilitated by technological advancements in battery storage and decreasing costs of solar installations. With India's total installed power capacity projected to reach 777 GW by FY30, renewables, including solar, wind, and hydro, are anticipated to be the backbone of the country's power landscape.
✔️ India's power demand to grow at over 7 per cent CAGR, renewables and data centres to drive energy boom: Nomura report
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