No Power for Domestic Consumers

India’s power sector is expanding at an unprecedented pace. Total annual electricity generation has crossed 2,000 TWh, renewable energy capacity is growing rapidly, and national per-capita electricity consumption has steadily climbed over the past decade. Yet the segment that should benefit the most—domestic consumers, who account for roughly one fourth of all electricity consumed—remains largely untouched by this progress and remain with energy poverty.

A closer look at the numbers based on Energy Statistics India 2025 released by MoSPI reveals a stark imbalance: while India’s generation is rising rapidly, domestic consumption is growing slowly, constrained by affordability and structurally inelastic demand. This mismatch now poses a real challenge for the country’s energy transition.

1. Rising Generation, Insignificant Household Gains

India’s per-capita electricity consumption has increased, but the domestic share at 25% shows only marginal gains.

Growth Comparison: Total TWh vs Domestic Per Capita Consumption

(Source: Energy Statistics India 2025 by MoSPI) https://www.mospi.gov.in/sites/default/files/publication_reports/Energy_Statistics_2025/Energy%20Statistics%20India%202025_27032025.pdf

Key Insight

Above table shows that the per capita electricity consumption is around 3 KWh per day only and the share of domestic consumers out of this is less than an unit a day. Such an insignificant consumption is far from transformative for millions of Indian homes, especially in a country striving for higher Human Development Index, better living standards and a more equitable energy transition.

2. Why Domestic Consumers Are Not Benefiting

Even with near-universal electrification, household electricity use remains extremely low. Four structural factors drive this stagnation:

a. Affordability Constraints

Tariff slabs increase sharply with consumption. For many households with low income, even modest increases in use lead to disproportionately high bills. Families self-limit usage—particularly cooling—to stay within affordable ranges.

b. Reliability and Supply Quality

Rural and semi-urban areas continue to face outages and voltage fluctuations. Unreliable supply discourages investment in appliances and restricts usage.

c. Limited Appliance Ownership

With low incomes, high tariffs, and irregular supply, households underinvest in energy-intensive appliances such as air-conditioners, heaters, and high-efficiency equipment.

d. Inelastic Demand

Domestic electricity demand is structurally inelastic households consume only what is essential. Even when supply or generation expands, consumption does not rise proportionately.

This inelasticity prevents the domestic sector from acting as a dynamic growth engine for electricity demand.

3. The Illusion of Progress: National Averages Mask Household Stagnation

National per-capita consumption nearly doubled over a decade. But this growth is driven overwhelmingly by:

• industry

• commercial establishments

• infrastructure

• data-centres and large loads

The typical household’s consumption barely grows, remaining insufficient for modern living—far short of the 3,000–3,500 kWh per capita seen in emerging economies.

Despite India’s development aspirations, many households still consume electricity equivalent to running a fan and a couple of bulbs for few hours a day.

4. How Low Domestic Consumption Undermines Renewable Energy Absorption

A critical consequence of stagnant household demand is inadequate absorption of new renewable energy (RE), especially solar.

a. Domestic Consumption Grows Too Slowly to Absorb New RE

Daytime solar generation is rising rapidly. But domestic daytime consumption remains minimal, with most household load concentrated in the evening. Without higher demand, DISCOMs cannot off-take expanding solar output.

b. DISCOMs Cannot Rely on Domestic Revenue

Domestic tariffs recover only 60–70% of the cost of supply. With subsidies often delayed and demand flat, DISCOMs face financial stress, making them reluctant to sign new long-term RE PPAs—even if RE is cheap.

c. Inelastic and Low Loads Offer No Assurance for New PPAs

Renewables require fixed offtake commitments. An inelastic domestic sector provides no incremental, paying demand to underwrite such commitments. This weakens the business case for expanding solar or wind procurement.

d. Affordability and Inelasticity Reinforce Each Other

• High tariffs → low consumption

• Low consumption → weak revenue base

• Weak revenue → DISCOM risk aversion

• Risk aversion → fewer RE PPAs

The slowest-growing segment of demand is now constraining India’s clean energy trajectory.

5. Why This Matters

A nation cannot reach developed-economy living standards while its average household receives less than 1 kWh/day. This constraint affects:

• comfort

• productivity

• digital access

• resilience to heat

• quality of life

Most importantly, it undermines equitable energy transition. Growth that does not uplift the domestic sector leaves a major share of citizens behind.

6. What Must Change

1. Make Electricity Affordable for Essential Modern Living

Tariffs must encourage—not penalize—reasonable household consumption.

2. Strengthen Reliability and Supply Quality

Households will increase consumption only when supply is predictable.

3. Create Demand Through Efficient Appliances

Incentives and financing for fans, coolers, ACs, and efficient appliances can create consistent daytime load.

4. Reorient Policy Toward Household Welfare

Meaningful improvement requires shifting the metric from “power availability” to “usable, affordable, reliable household electricity.”

Conclusion- India’s Power sector is a Growth Story with a Missing Beneficiary

India’s power sector is expanding rapidly, but Indian are energy poor where  domestic consumers remain peripheral to this growth. Until affordability improves and demand becomes more elastic, households will continue consuming at subsistence levels, reinforcing low living standards and slowing RE integration.

India’s energy transition—and its development ambitions—require not just more power, but more power reaching and benefiting domestic consumers.