India’s power grids will come under immense pressure as peak electricity demand in cities quadruples by 2050 from 2022 levels, driven by a surging need for air conditioners amid rising temperatures, according to a report by the International Energy Agency (IEA).

While air conditioner ownership in India remains low, each 1°C rise in the average daily temperature above 24°C will result in a 2% increase in electricity demand, leading to higher strained grids and emissions.

India’s Central Electricity Authority has forecast a peak power demand of 256.53 GW in the financial year (FY) 2024-25, rising sharply from FY 2023-24’s 221.37 GW. Power demand is expected to soar above 256 GW in September 2024.

While extreme temperatures affect rural and urban areas, cities heat up more than the countryside. Dense buildings and paved surfaces, especially with few trees or green spaces, absorb and amplify heat, turning cities into heat islands.

Globally, around 10% of the increase in emissions since 2015 is due to urbanization, which led to a record high of nearly 29 billion tons of CO2 emissions from urban areas.

Meanwhile, over 90% of urban population growth between 2015 and 2020 occurred in emerging countries like India. By 2050, India’s urban population is projected to increase by over 400 million as rural citizens migrate to cities for economic opportunities, placing additional stress on the power grid.

The report cites the April 2022 crisis when an extreme heatwave caused India’s worst electricity shortage in years, with demand outstripping supply by 1.9 billion units, or 1.6%. Some regions were forced to undertake scheduled power cuts to manage the strain on the grid.

In the 19 months leading up to January 2024, 29 million new household connections were added to India’s existing residential customer base of 267 million from 2022.

Optimizing the Grid

The IEA recommended leveraging bulk procurement to create economies of scale and bring down costs of clean technologies like solar, using smart digital systems and technologies to enhance grid flexibility, efficiency, and renewable integration.

For example, in Lucknow, residents participated in a pilot peer-to-peer trading platform, allowing them to buy and sell rooftop solar electricity at rates 43% cheaper than central market prices, according to the report.

Earlier this year, Karnataka released a draft proposal to use blockchain technology to allow peer-to-peer solar energy trading in the state. While innovative, the policy was fraught with challenges, such as a lack of clarity around effortless implementation, operation, and dispute resolution.

The IEA report mentioned another pilot led by Panitek Power deploying “digital twin” technology to model low-voltage distribution networks in New Delhi. This pilot provides real-time data to optimize grid operations when the increasing penetration of rooftop solar and electric vehicle charging stations poses challenges.

An IEA analysis showed that implementing digitalization and flexible-load strategies for buildings and appliances could reduce peak load by about 13% by 2030 compared to a fixed usage pattern.

The report added that to be on track for net zero emissions, India and other nations must triple annual investment in modernizing and expanding distribution grids to $750 billion by 2030.