H1 2025: India’s Power Prices Fall 5–15%, Bucking Global Trend Says IEA Report

The International Energy Agency (IEA), in its mid-year update, anticipates a rise in electricity demand in China and India at a more moderate pace in 2025 than the rapid growth seen in 2024. For India, the IEA forecasts electricity demand to rise by 4% this year after 6% growth in 2024. The report stated, “Stronger growth is forecast for both China (+5.7%) and India (+6.6%) in 2026, as activity in the industry and services sectors picks up. Together, these two economies will account for 60% of global demand growth through 2026.”

For China, the report estimated that after a 7% surge in 2024, electricity consumption in China is projected to increase by 5% in 2025, reflecting slower demand growth in the industrial sector. It further anticipates that China alone will account for 50% of global electricity demand growth, as it did in 2024.

Prices: Trends in wholesale markets differ across regions

According to IEA estimates, in the first half of 2025, average wholesale electricity prices rose year-on-year in various regions, including Europe, the United States, and Japan, amid higher gas prices. By contrast, countries such as India and Australia saw lower wholesale prices compared to the previous year in the face of varying demand and generation trends, among other factors. 

In India, IEA in its study noted, "The electricity prices fell by about 15% y-o-y in the first half of 2025, averaging USD 51/MWh. Despite this decline, prices remain above pre-2022 levels." 

On the supply side, the study found that increased availability from thermal and renewable capacity additions in India strengthened market liquidity and exerted downward pressure on prices. Additionally, robust output from low-emissions sources in May, combined with unseasonal rains that increased hydropower output, contributed to near-zero prices during several time periods on 25 May.

Electricity Prices Variation

Globally, the IEA report noted a rise in average wholesale electricity prices in the first half of 2025. Wholesale prices in the European Union and the United States rose by about 30-40% amid higher gas prices. 

The study added, “While average prices remained below the 2023 annual levels, they were still higher than in 2019. By contrast, wholesale prices in countries such as India and Australia declined by around 5-15% in 2025 compared with the previous year. At the same time, many markets continued to observe an increase in the occurrence of negative electricity prices. The share of hours with negative prices on the wholesale market reached 8-9% in the first half of the year in countries such as Germany, the Netherlands, and Spain – up from 4-5% in 2024.”

Demand growth moderates in China, India, & the EU as the US powers ahead

According to the IEA forecast, following strong surges in electricity demand in 2024, driven by intense heatwaves and strong economic activity in the industrial and services sectors, China and India are expected to see more moderate growth rates in 2025. Moreover, it found that global economic uncertainties impacted industrial activity, and cooler summer temperatures compared to 2024 led to electricity demand increasing by 1.4% y-o-y in H1 2025 in India. 

Demand is forecast to rise at a higher rate for the remainder of the year, reaching an annual growth rate of 4%. The IEA expects demand to grow at a robust 6.6% in 2026, driven by stronger activity in industry and services, and increasing AC stock.