Government Charts Power Expansion Plan to Meet Rising Peak Demand by 2031-32

The Government has outlined a comprehensive plan to expand power generation and transmission capacity as peak electricity demand continues to rise.

According to a statement laid before the Lok Sabha by Minister of State for Power Shripad Yesso Naik, the gap between demand and supply has narrowed significantly over the past five years despite the steady rise in peak load, reflecting the impact of sustained capacity additions across the power sector.

As outlined in the National Electricity Plan (NEP), the country’s installed generation capacity is projected to reach 874 GW by 2031-32, covering thermal, renewable, hydro and nuclear sources.

In line with this projection, all states have drawn up 10-year rolling Resource Adequacy Plans in consultation with the Central Electricity Authority, identifying both new generation development and long-term power procurement needs. The Centre has advised states to initiate contracting and development of new power projects in accordance with these plans to ensure that generation capacity stays ahead of rising peak demand.

A major component of the expansion strategy is a renewed push in the thermal segment. The projected thermal capacity requirement for 2034-35 is estimated at about 3,07,000 MW, compared to the installed 2,11,855 MW as of March 2023. To bridge this gap, the government plans to develop at least 97,000 MW of additional coal and lignite-based capacity. Since April 2023, about 16,560 MW of thermal projects have been commissioned, while 40,345 MW is currently under construction, including nearly 4,845 MW of stressed assets. A further 22,920 MW has been awarded and is awaiting construction, with another 24,020 MW at various planning stages.

Hydropower development also continues to gather pace, with 13,223.5 MW currently under construction and another 4,274 MW in planning, scheduled for completion within the current decade. In the nuclear sector, 6,600 MW of new capacity is under construction and is expected to be commissioned by 2029-30, while 7,000 MW of projects are progressing through approval and planning processes. Renewable energy remains a central pillar of the expansion strategy, with 1,56,900 MW of solar, wind and hybrid capacity presently under construction. An additional 51,420 MW of renewable energy projects, dominated by solar and hybrid installations, are under planning and targeted for completion by 2029-30.

Recognising the importance of energy storage in integrating large volumes of renewable generation, the government is simultaneously scaling up pumped storage and battery-based systems. Pumped storage projects amounting to 11,870 MW of capacity are under construction, while 6,580 MW have been approved and are expected to begin construction soon. Meanwhile, over 25,400 MW of Battery Energy Storage Systems are progressing through various bidding and construction phases.

To ensure a reliable power system capable of handling the expanding generation base, the government has undertaken comprehensive transmission planning. According to the NEP, about 1,91,474 km of extra high-voltage transmission lines and 1,274 GVA of transformation capacity are planned to be added between 2022-23 and 2031-32. This expansion is being implemented in parallel with generation development to maintain grid stability and minimise congestion.

Alongside infrastructure development, a series of policy measures has been rolled out to accelerate renewable energy adoption. These include waivers of inter-state transmission charges for solar and wind projects up to June 2025, offshore wind projects until December 2032, and green hydrogen projects until 2030.

The government has also issued standard bidding guidelines for renewable procurement, permitted 100 percent FDI under the automatic route, funded intra-state transmission upgrades under the Green Energy Corridor programme, and implemented schemes such as PM-KUSUM, PM Surya Ghar Muft Bijli Yojana, the National Programme on High Efficiency Solar Modules, PM JANMAN’s tribal solar initiatives, and the National Green Hydrogen Mission. Additional policy tools such as Renewable Purchase Obligations, Renewable Consumption Obligations, the Green Term Ahead Market and the Production Linked Incentive scheme for solar manufacturing have been introduced to support long-term renewable growth.

Power demand trends over the past five years reflect the urgency of the government’s planning efforts. Peak demand rose from 1,90,198 MW in 2020-21 to 2,49,856 MW in 2024-25, while the unmet demand dropped sharply from 802 MW to just 2 MW over the same period. These figures indicate a substantial improvement in system reliability and generation adequacy.