The power sector in India is undergoing a structural transformation, driven by rising electricity demand, rapid renewable energy deployment and the need to strengthen grid infrastructure. The country’s current installed generation capacity is nearly 550 GW. While non-fossil fuel sources account for more than half of the capacity mix, the sector is increasingly moving towards a more diversified and low-carbon power system. Meanwhile, capacity additions are being accompanied by investments in transmission networks, energy storage and distribution infrastructure to improve system reliability and facilitate the integration of variable renewable energy. Distribution sector reforms are also yielding results, with declining aggregate technical and commercial (AT&C) losses, narrowing average cost of supply (ACS)-average revenue realised (ARR) gaps and improving financial performance of discoms.
Indian Infrastructure provides an overview of the power sector and its future outlook…
Generation
India’s installed power generation capacity stood at 548.86 GW as of June 30, 2026. Non-fossil-fuel-based sources accounted for 297.37 GW, or 54.18 per cent, of the total installed capacity, while fossil fuels accounted for 251.49 GW, or 45.82 per cent. Coal remained the largest source with 224.16 GW of installed capacity, followed by solar at 162.15 GW and wind at 57.44 GW. Large hydro, including pumped storage projects (PSPs), accounted for 52.07 GW, while gas and nuclear capacity stood at 20.12 GW and 8.78 GW respectively.
During 2025-26, India registered a record capacity addition of 64.69 GW as compared to 33.39 GW in 2024-25. In FY 2026, renewable power capacity increased by 50.1 GW, thermal by 9.47 GW, while large-hydro and nuclear additions stood at 3.62 GW and 700 MW respectively. The momentum continued in 2026-27, with around 16.1 GW added during April-June 2026.
During 2026-27 (till June 2026), total electricity generation stood at 523 BUs. Thermal power accounted for the largest share at 368 BUs, followed by renewable energy at 101 BUs, large hydro at 37 BUs and nuclear power at 17 BUs. Total electricity generated in FY 2026 was 1,840 BUs as compared to 1,824 BUs in FY 2025. During 2026-27, peak demand reached the highest-ever level of 270 GW in May 2026, compared to 235.3 GW during the corresponding period in the previous year.
India has significant generation capacity in the pipeline across conventional and renewable sources. As of June 2026, around 42.7 GW of coal-based capacity was under construction. The renewable energy pipeline stood at over 138.3 GW, comprising 90 GW of solar, 29.3 GW of wind and 19 GW of hybrid projects. In the hydro segment, 29 large hydro projects totalling 13.4 GW and 11 PSPs totalling 15.87 GW were under construction. In the nuclear segment, eight projects aggregating 6.6 GW were under implementation.
According to the Central Electricity Authority’s (CEA) National Generation Adequacy Plan (2026-27 to 2035-36), India’s installed generation capacity is projected to reach 1,121 GW by 2035-36, with solar and wind capacity expected to increase to 509 GW and 155 GW respectively. Non-fossil-fuel-based capacity is projected to reach 786 GW, accounting for around 70 per cent of the total installed capacity. The plan also estimates a storage requirement of 174 GW per 888 GWh by 2035-36, comprising 80 GW per 321 GWh of BESS and 94 GW per 567 GWh of pumped storage. The projected expansion underscores the growing role of energy storage in balancing the grid and enabling the integration of a rapidly expanding renewable energy base.
Renewable energy remains central to India’s capacity expansion, supported by its substantial solar and wind potential and a growing pipeline of hybrid and firm and despatchable renewable projects. Distributed solar is also gaining momentum under the PM Surya Ghar: Muft Bijli Yojana, with 4.12 million rooftop solar systems installed, benefiting around 4.96 million households as of July 31, 2026. The government is also strengthening renewable energy procurement through competitive bidding, renewable purchase obligation and renewable consumption obligation trajectories, while transmission expansion and energy storage are being scaled up to support renewable integration.
Transmission
Transmission infrastructure is being expanded to support the growing share of renewable energy and strengthen grid connectivity. The focus is on developing renewable energy zones and high-capacity transmission corridors across key renewable-rich states and connecting them with major demand centres.
As of June 2026, India’s transmission network (220 kV and above) stood at 509,603 ckt km. Intra-state networks accounted for 287,217 ckt km of the total transmission line length, while the interstate network comprised 222,386 ckt km. During 2026-27 (till June 2026), around 3,090 ckt km of transmission lines were added. During 2025-26, a total of 12,139 ckt km of lines were added as compared to 8,830 ckt km added in 2024-25.
By voltage level, 220 kV lines constituted the largest share of the network (215,664 ckt km), followed by 400 kV (211,516 ckt km), 765 kV (63,048 ckt km), ±800 kV HVDC (9,655 ckt km), ±500 kV HVDC (9,432 ckt km) and ±320 kV HVDC (288 ckt km).
The cumulative AC transformer capacity (220 kV to 765 kV) stood at 1,477 GVA as of June 2026. Of this, the intra-state network accounted for 832 GVA, while the interstate transmission system (ISTS) contributed 645 GVA. During 2026-27 (till June 2026), the country added 27,425 MVA of transformation capacity. Voltage-wise, the 400 kV level accounted for the largest transformer capacity at 541,463 MVA, followed by 230/220 kV at 521,288 MVA and 765 kV at 381,700 MVA. The country’s HVDC transformer capacity comprised 18,000 MVA at ±800 kV, 13,500 MVA at ±500 kV and 2,000 MVA at ±320 kV.
The tariff-based competitive bidding framework continues to drive private sector participation in transmission. Since its introduction in 2009, 168 interstate transmission projects have been awarded, of which 82 have been commissioned and 86 are under construction.
During 2025-26, a total of 16 ISTS schemes were awarded. POWERGRID emerged as the leading winner (seven projects), followed by Adani Energy Solutions Limited with three projects.
Looking ahead, the CEA’s Transmission Plan for Integration of over 900 GW of Non-Fossil Fuel Capacity by 2035-36 outlines the transmission infrastructure required to support India’s projected installed capacity of 1,121 GW, including 786 GW of non-fossil capacity. The plan envisages transmission infrastructure for integrating 913.7 GW of non-fossil generation through the addition of approximately 137,500 ckt km of transmission lines and 827,600 MVA of substation capacity across interstate and intra-state networks during 2026-27 to 2035-36, at an estimated investment of Rs 7.93 trillion.
To facilitate effective transmission capacity expansion and the integration of a higher share of renewable energy, the Draft National Electricity Policy 2026 envisages modernising the transmission network through the adoption of technologies such as flexible AC transmission systems, dynamic line rating and underground cabling where appropriate. It also proposes simplified, utilisation-based transmission connectivity, the use of dated thermal generating stations as synchronous condensers, and the accelerated deployment of energy storage systems to support a resilient and flexible grid.
Distribution
The distribution segment has witnessed steady improvements in operational and financial performance, driven by sustained policy and reform initiatives. AT&C losses declined to 15.04 per cent in 2024-25, from 15.97 per cent in 2023-24 and 16.22 per cent in 2022-23. During the same period, billing efficiency improved to 87.6 per cent, while collection efficiency reached 97 per cent. The ACS-ARR gap narrowed significantly from Re 0.51 per kWh in 2022-23 to Re 0.20 per kWh in 2023-24, and further to Re 0.06 per kWh in 2024-25, reflecting better cost recovery by discoms. Financial performance also improved considerably, with discoms reporting a collective profit after tax of Rs 27.01 billion (on an accrual basis) in 2024-25, compared to losses of Rs 270.22 billion in 2023-24 and Rs 604.31 billion in 2022-23. The sector has also witnessed greater financial discipline, with the timely issuance of tariff orders and payment of government subsidies. The average hours of supply in rural areas have increased from 12.5 hours in FY 2014 to 22.6 hours in FY 2026. In urban areas, the same have increased from 22.1 hours in FY 2014 to 23.4 hours in FY 2026.
As per the Revamped Distribution Sector Scheme portal (accessed on August 11, 2026), around 195.83 million smart consumer meters have been sanctioned, of which 123.5 million (63 per cent) have been awarded. Progress has been slower than expected, with only 55.8 million (29 per cent) installed and communicating so far.
Outlook
India’s power sector is poised for continued expansion, with the focus shifting towards building a more flexible, reliable and integrated electricity system. The growing share of renewables will require greater grid flexibility, storage and transmission capacity, while distribution reforms and digitalisation will remain important for improving efficiency and financial sustainability. Going forward, timely project execution, stronger grid coordination and effective integration of clean energy will be critical to balancing rising electricity demand with the country’s transition towards a cleaner and more resilient power system.
