Rapid growth in electricity use is exposing shortages in firm generation, coal supplies and local networks, leaving India’s ageing power system struggling after sunset.
India’s power system is entering a strain point: demand is rising faster than the infrastructure needed to keep pace, and the result is becoming visible at the sharpest hour of the day. The country has added a great deal of solar and wind capacity in recent years, but according to Business Standard the gains from renewables are masking deeper weaknesses in the coal-fired, gas, hydro and nuclear fleet, as well as in the distribution network that carries electricity to homes and factories. The article argues that the old system is being asked to do too much with too little investment, just as higher electricity use, artificial intelligence-led data demand and more frequent energy shocks are changing the shape of consumption.
The imbalance is most obvious in generation. Business Standard says overall capacity used to outpace demand growth, but since 2016-17 demand has risen by about half while capacity has increased by roughly a third, with non-intermittent capacity growing more slowly still. That matters because solar cannot meet evening and night-time demand, and the report says the amount of firm capacity available for every 100 megawatts of evening peak demand has fallen back to around its 2010-11 level. The system had some breathing room for a time because older plants could be run harder, but by this September there was little slack left, with coal units nearly fully committed in the evening and supply failing to keep up after sunset.
The weakness extends to distribution, where state electricity companies, or discoms, have struggled to keep up investment in wires, substations and transformers. Business Standard’s analysis suggests that from 2020-21 to 2022-23, real spending on the network was broadly flat even as power sales climbed by about 50 per cent, leaving the system underbuilt for the amount of electricity now flowing through it. That shortfall matters even more as renewable energy grows, because grids designed around steady thermal generation need more reinforcement, flexibility and digital control to handle intermittent supply. A separate analysis cited by Business Standard found that the grid cost of integrating solar and wind can rise sharply as their share of electricity increases.
Much of the problem comes back to the finances of discoms. A July Business Standard report said many state-run utilities remain dependent on subsidies and still lack the resources for modernisation, even where reported profits have improved. Moody’s has also warned that weak discom balance sheets continue to hold back renewable energy developers by delaying payments and increasing working capital strain, while ICRA said in May that limited tariff increases and higher power purchase costs are likely to keep the sector’s cash gap elevated this financial year. CRISIL Ratings has since said operating losses at 30 state-owned discoms could narrow in FY26, but it still expects the sector to remain under pressure. Odisha offers a reminder that better governance can help: Business Standard reported that after a private operator took over the state’s discoms in 2020 and 2021, loss levels fell sharply, profits returned and investment rose.
The knock-on effect reaches beyond distribution. When cash-strapped discoms avoid signing long-term power purchase agreements, new firm capacity becomes harder to finance, especially as investors worry that better batteries may eventually undercut new thermal plants. The article says India will also need far more spending on smart meters and time-of-day pricing, because peak demand must be managed as well as supplied. The policy framework is partly in place: rules issued in 2023 require discoms to secure enough capacity to meet demand, but the next step is execution, including evening power contracts, stronger local networks and more reliable coal supplies. Business Standard notes that by mid-September coal stocks at plants had fallen to about a week, roughly half the level of a year earlier. The broader lesson, the article argues, is that India has proved it can build solar quickly; what it now needs is the political will to rebuild the older parts of the system with equal urgency.
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