How States are managing the surging summer power demand

India’s electricity demand has surged earlier than expected this year, with peak demand touching an all-time high of 256.1 gigawatts (GW) on April 25. (The country followed up with higher records on May 19 and May 20). Nearly one-third of this peak demand was met through renewable energy (RE) sources. While the national grid held up without any shortage during solar hours, the non-solar hours saw a deficit of 2% (4,243 megawatts) on the same day. What is peak demand? Peak demand refers to the highest point of electrical power consumed on a grid over a specific period, typically a 15-minute interval. While peak demand is a single instant, it occurs during 2 to 4 hours of higher-than-average demand or ‘peak demand period’. Summer months may cause longer peaks from late afternoon to evening hours and then during the night due to cooling loads (from air conditioners and coolers). Similarly, winter peaks can last longer in the morning (between 6 a.m. and 10 a.m.) and evening (between 6 p.m. and 9 p.m.) due to increased heating and lighting loads during these hours, particularly in the northern States. Paying heed to the duration of these peaks is important because even though they occur only for a short period, the grid needs to meet the peak load instantly. In fact, the entire power sector infrastructure (generation, transmission, and distribution capacity) needs to be planned to deal with this peak. But this is easier said than done. Building a system to serve the periods of highest load that last only for a few hours is neither resource-efficient nor economical. If enough capacity is built to meet the peak demand, it will remain underutilised during off-peak hours. On the other hand, if enough capacity is not available to meet the peak demand, then the system will face issues like load shedding and grid instability. How do States manage demand? States meet demand through two mechanisms: contractual supply and power exchange purchases. Contractual supply comprises the long-term power purchase agreements (PPAs) that State distribution companies (DISCOMs) sign with power generators to ensure power supply over several years. This helps the DISCOMs in meeting the average demand for their consumers. Almost 85%-90% of the demand in India is being met through contractual supply or bilateral contracts between the DISCOMs and generators. In the event of real-time mismatches or when the contractual supply falls short due to sudden spikes in demand or power plant or transmission failures, DISCOMs turn to the second mechanism — buying power from power exchanges. At present, around 10%-15% of the electricity is traded on the power exchanges. For managing peaks, States often undertake demand-side measures. Most States have relied on advisories urging consumers to reduce usage during peak hours, typically between 6 p.m. and 11 p.m. Delhi has increasingly utilised measures such as time-of-day tariffs (electricity charges that vary based on the time of day) and smart metering to flatten evening peaks that are driven by cooling demand. What are some challenges faced by States due to rising demand? A steady growth in household electrification, use of air conditioners, electric vehicle penetration, and agricultural power consumption has been driving the increase in India’s electricity demand. In the last 5 years, the country’s peak demand has risen by 37% — from 183 GW in December 2020 to over 250 GW in April 2026. This surge has made it tougher for States to fulfil the electricity requirements. With DISCOMs committed to long-term agreements that are signed at a fixed capacity and price, any shortfall has to be met through power exchanges, which are short-term markets. This exposes the States to price volatility because prices in these markets increase during peak periods. Indian Energy Exchange data shows that electricity prices in the day-ahead market have seen sharp spikes during peak periods, with rates touching the regulatory ceiling of ₹ 10 per kilowatt-hour on several occasions during April and May this year. Another challenge relates to the inadequacy of the distribution network. Infrastructure expansion and upgrades in India’s power distribution segment often lag demand growth, leading to issues with last-mile delivery of power to the end-consumer. Over the last decade, India’s generation capacity has increased by 76% (from 303 GW to 532 GW), its transmission lines have expanded by 47% (from 3,41,551 circuit kilometres [ckm] to 5,01,766 ckm), and the transformation capacity has increased by 115% (from 6,58,949 megavolt-amperes [MVA] to 1,41,63,76 MVA). However, a corresponding expansion in the distribution infrastructure has not happened, and distribution networks continue to face major stress. Recent assessments by the Central Electricity Authority indicate that nearly 13 lakh distribution transformers (DTs) fail annually in India. Some States have low DT failure rates of less than 2%, such as Kerala, while some (partic