Heat, growth and power: The forces driving India’s energy surge

Global energy demand surged at an accelerated pace in 2024 with India playing a significant role in this trend.

According to Giulia Petroni of The Wall Street Journal, record-breaking temperatures drove up electricity consumption worldwide, with extreme heatwaves in India and China substantially increasing coal use. The International Energy Agency (IEA) reported a 2.2 per cent increase in global energy demand surpassing the previous decade’s average growth rate of 1.3 per cent per year. India’s growing energy needs reflect broader trends in emerging economies, which contributed to over 80 per cent of the world’s demand growth. The power sector was responsible for three-fifths of this rise with electricity consumption increasing by nearly 1,100 terawatt hours—more than double the decade-long average annual increase.

India’s role as the largest oil demand growth driver

The IEA’s latest Global Energy Review highlights India as the world’s largest single source of oil demand growth registering a 3.4 per cent spike in 2024. As per the report, India’s dynamic economy has driven a remarkable 11.6 per cent increase in oil consumption compared to 2019 fuelled by rapid urbanisation and the rising number of car owners. Gasoline usage alone surged by 41.7 per cent, or 310 thousand barrels per day, between 2019 and 2024. These trends indicate that, despite the global push for renewable energy, fossil fuel consumption remains significant in India’s economic growth trajectory.

India’s electricity demand surges ahead of global trends

India’s electricity demand is growing at an annual rate of 6.3 per cent, outpacing the global average, according to Fortune India’s PB Jayakumar, citing the IEA’s Global Electricity Outlook 2025. This sharp rise, exceeding the previous decade’s 5 per cent average, is fuelled by industrial expansion, rising household consumption and the electrification of transportation. In contrast, global electricity demand grew by 4.3 per cent in 2024 and is projected to maintain nearly 4 per cent annual growth until 2027.

Extreme weather conditions are exacerbating electricity consumption in India. In 2024, prolonged heatwaves pushed power demand up by 8.5 per cent in the first half of the year. Despite fewer than 20 per cent of households owning air conditioners, cooling systems accounted for 60 GW of peak electricity demand. Air conditioner sales surged by 27 per cent in 2024 and by 2030, cooling devices could contribute up to one-third of peak electricity load, potentially reaching 140 GW. The IEA said that for every 1°C rise in temperature, peak demand in 2024 increased by over 7 GW—double the increase recorded in 2019. This trend could exceed 11 GW per degree by 2027.

Shifting agricultural energy use

Agricultural electricity consumption remains significant, accounting for 40 per cent of power use in states like Rajasthan. The PM-KUSUM Scheme, launched in 2019 and expanded in 2024, is driving a shift from diesel-powered water pumps to solar-based irrigation, altering India’s electricity demand patterns. To manage the growing evening peak load, the Ministry of Power introduced the Time-of-Day Electricity Tariff System in August 2023, mandating a 20 per cent tariff reduction during solar hours and a 20 per cent hike during peak hours. Initially applied to medium-to-large commercial and industrial users, the policy will extend to smaller consumers by April 2025.

Renewables grow, but fossil fuels still dominate

Despite rising electricity demand, India continues to expand its renewable energy capacity. In 2024, global renewable energy saw record growth with 700 GW of new capacity, and India contributed significantly with increased solar and wind power adoption. However, fossil fuels remain a dominant part of the country’s energy mix, indicating the ongoing challenge of transitioning to a cleaner energy future.

Addressing energy storage and future challenges

While India is expanding its renewable energy portfolio, the absence of large-scale energy storage solutions remains a critical issue. The India Energy & Climate Centre (IECC) estimates that by 2027, evening power shortages could range between 20-40 GW, even if all planned power projects are completed on time. The National Electricity Plan 2023-2032, published by the Ministry of Power, forecasts India’s peak demand to reach 458 GW by 2032—an 83 per cent increase from 2024. Without sufficient energy storage deployment, solar power expansion alone will be insufficient to address growing peak-hour deficits. As India continues to assert itself as a global economic powerhouse, its energy strategy will play a crucial role in shaping both domestic growth and international energy markets.