As we celebrate Deepavali, the festival of lights, it is imperative to shed light on a burning issue in our national energy landscape: the phenomenon of peak demand pushing power purchase costs to unsustainable levels. Indeed, the phenomenon of escalating peak demand and the associated surge in power purchase costs has become a critical national issue, demanding the active involvement of policymakers and stakeholders alike.
As highlighted in the latest Observer Research Foundation Weekly Energy News Monitor, this challenge is already straining state resources. For instance, in Tamil Nadu, the additional cost of procuring power to meet peak demand could range from INR 50 million to INR 70 million a day, forcing the government to constantly recalibrate its procurement to avoid buying electricity at exorbitant open-market prices while still trying to prevent crippling interruptions for industries and households.
Taking an objective view of this analysis alongside recent developments reveals an urgent imperative to rationally consider electricity demand and supply from the perspective of the overall welfare of society, flora, fauna, and the general environment. Several major factors demand our immediate consideration. Electricity demand is projected to increase manifold over the next few decades. Globally, the International Renewable Energy Agency has raised its renewables goal to 18.4 terawatts by 2035 as power demand climbs. In India, electricity demand is set to outpace overall energy demand by 2035, heavily fueled by the growing popularity of artificial intelligence data centers and electric vehicles. This is already triggering localized crises, with reports of rising power cuts in Maharashtra’s data hub regions and farmer leaders pointing out the stark reality of water shortages for agriculture while data centers enjoy uninterrupted supply. Furthermore, with Karnataka’s urban population projected to touch 70 percent by 2047, the strain on urban energy infrastructure will only intensify.
Despite these evolving dynamics, there remains a continued preference among authorities to add large-scale coal, gas, dam-based hydro, and nuclear power plants. While solar and wind power capacities are increasing, they are not expanding at the pace required to meet this surging demand without severe grid stress. The constraints of this conventional approach are becoming glaringly obvious. Recently, half of India’s coal plants ran critically low on fuel as power demand surged, and coal-fired power output jumped significantly as hydro generation slumped due to climate change-induced drought conditions. Coal India itself has missed profit forecasts as operational costs rise amid this strong demand.
Yet, the push for massive conventional expansion continues. India is contemplating a 97-gigawatt coal expansion plan, which some senior officials argue may still be too small to meet future peaks. Simultaneously, the Central Electricity Authority has indicated that India needs 15 lakh crore rupees to add 91 gigawatts of nuclear capacity by 2047. This large-scale infrastructure push faces fierce societal and environmental pushback. Villagers in Uttar Pradesh have actively resisted proposed nuclear plants, stating they cannot afford to lose their agricultural land, echoing similar global backlash against land and resource diversion for energy projects. The continued and unsustainable demand for the diversion of forest and agricultural lands, coupled with a fascination for building more high-voltage power lines and substations, shows a reduced focus on the ecological impacts of such breakneck development.
At the same time, we face massive concerns regarding pumped storage plants due to their societal and environmental footprint, even as the Central Electricity Authority emphasizes the need to scale up to 175 gigawatts of energy storage by 2035 for grid stability. Independent analysts estimate India needs to build over 350 gigawatt-hours of energy storage capacity by the 2032 fiscal year to meet its renewable targets. Recognizing this, the cabinet recently approved a 14,500 crore rupee scheme to develop 92 gigawatt-hours of grid-scale energy storage, and Maharashtra has become the first utility in India to achieve 1,000 megawatt-hours of battery storage capacity. However, renewable energy curtailment continues due to a lack of adequate, widespread storage facilities, highlighting a critical gap in our current strategy.
At a high level, it should be clear that our societal objective must be to maximize reliable electricity services while minimizing the total economic, ecological, social, technological, and inter-generational cost to the larger society. There is a strong case for India to diligently reconsider the prevailing policies centered on large-scale power plants and a complex, integrated grid-based electricity supply. Before making further irreversible commitments, we must focus on the need to undertake a transparent and independent National Electricity Options and Full Life-Cycle Cost-Benefit Assessment. Such an assessment should compare every electricity source on an equal footing, evaluating the combined potential of solar and wind power, robust energy storage, distributed generation, energy efficiency, demand response, grid modernization, and existing-asset optimization.
The enormous potential of distributed and rooftop solar photovoltaic systems, alongside virtual power plants, can significantly reduce the overall burden on the integrated grid. Regions that have embraced decentralized energy systems are already demonstrating how homes and communities can keep the lights on during crises without relying solely on fragile, large-scale infrastructure. China’s wind and solar power capacity has already surpassed 2 terawatts, proving that massive additional capacities in renewable energy are achievable, especially when distributed systems are prioritized to minimize social and environmental impacts.
It should be obvious that civil society groups must play a critical role in persuading and assisting our authorities to undertake an early and rational policy review. This is the only way to make the electricity and energy sector highly responsible, accountable, and efficient. We stand at a crossroads where the choices we make today will dictate the ecological and economic reality of future generations. The question is whether we all are truly interested in playing such an important role in shaping a sustainable and equitable energy future for our nation.
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*Power and Climate Policy Analyst, Sagara, Karnataka
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