For decades, hydropower occupied a straightforward position in India’s electricity system. Large dams provided low-cost electricity, supported regional development and supplied dependable generation capacity to a growing economy.
That role is changing. India’s next phase of hydropower development will not be defined by large increases in conventional generation capacity. Instead, the sector is increasingly being valued for its ability to balance solar and wind output, provide storage and maintain system reliability as renewable penetration rises. According to GlobalData’s India Power Outlook, Update 2026, hydropower and pumped storage are becoming more important as flexibility resources within an electricity system undergoing rapid structural change.
India’s electricity demand is expected to rise sharply over the coming decade. GlobalData forecasts that annual power consumption will increase from just over 1,418 TWh in 2025 to 1,945 TWh by 2030, before reaching more than 2,622 TWh by 2035, driven by industrial growth, urbanisation, electrification and rising cooling demand.
At the same time, renewable generation is expanding much faster than conventional generation technologies. Renewable capacity reached 223.7 GW in 2025 and is projected by GlobalData to approach 849 GW by 2035, led primarily by solar photovoltaic (PV) and onshore wind development. This combination of rising demand and growing renewable penetration creates a challenge that increasingly favours hydropower and storage technologies capable of responding rapidly to changes in system conditions.
India’s hydropower: from generation to flexibility
The changing role of hydro can be seen in India’s future capacity mix. Large conventional hydropower accounted for 7.2% of installed capacity in 2025, while pumped storage represented 1.2% and small hydropower contributed a further 0.8%, according to GlobalData. Coal remained dominant with a 45.3% share of installed capacity, while solar PV accounted for 24.6% and onshore wind 9.2%. By 2035, renewables are expected to dominate India’s installed capacity while thermal generation declines as a proportion of the total system.
In this environment, hydropower’s contribution becomes less about market share and more about operational value.
GlobalData forecasts that large hydropower capacity will increase from 44.2 GW in 2025 to 58.5 GW by 2035. The expansion is significant but measured, particularly when compared to solar and wind additions over the same period. The stronger growth story lies in pumped storage. Installed pumped storage capacity is expected to rise from 7.2 GW in 2025 to 15.7 GW by 2035, which GlobalData says will add “meaningful flexibility” to the electricity system as renewable penetration rises.
The investment case for storage
GlobalData identifies energy storage, including both batteries and pumped hydro, as one of India’s principal investment opportunities over the coming decade.
Storage assets can reduce renewable curtailment, provide ancillary services, support transmission constraints and improve overall grid stability. The report also highlights the role of pumped storage in shifting energy from periods of oversupply to periods of peak demand, a capability that is becoming increasingly important as midday solar production grows faster than consumption in some regions of the country.
Hydropower generation itself is also expected to increase despite weather-related variability. Combined generation from large hydropower and pumped storage reached 154.9 TWh in 2025 and is forecast to increase to 209.4 TWh by 2035. However, annual output will continue to fluctuate according to hydrological conditions and rainfall patterns. GlobalData notes that generation fell from 151.4 TWh in 2022 to 124.4 TWh in 2023, before recovering to 138.1 TWh in 2024 and 154.9 TWh in 2025, underlining the extent to which water availability continues to influence hydro performance.
The wider market context reinforces the sector’s changing role. GlobalData expects renewable generation to increase from 16% of total electricity production in 2025 to 38% by 2035, while thermal generation falls from 73.4% to 52.4% over the same period. Large hydropower and pumped storage are expected to contribute around 6.3% of generation in 2035, broadly maintaining their share despite significant growth in overall electricity production. This stability highlights the evolving economics of hydro investment, where projects are increasingly judged on fast ramping capability, frequency support, reserve services and long-duration storage rather than purely on annual electricity output.
The report repeatedly identifies grid flexibility as one of India’s major infrastructure challenges over the next decade. Alongside transmission expansion, digital grid technologies and demand-side management, hydropower is expected to form part of the solution. India’s transmission network is already undergoing significant expansion to accommodate growing renewable generation, while system operators are developing new ancillary service markets and introducing scheduling reforms designed to improve flexibility.
GlobalData notes that coal plants are also being modified to operate more effectively at lower output levels to support renewable integration, but hydropower offers a complementary source of flexibility without the emissions associated with thermal generation.
For India’s hydropower sector, the implication is clear. The industry is unlikely to return to the era when large dams dominated capacity additions and defined national electricity strategies. Instead, hydro is becoming infrastructure that enables the growth of other renewable technologies. In a system increasingly shaped by solar and wind generation, the ability to store energy, respond quickly to fluctuations and provide reliability during periods of stress may prove more valuable than simply generating additional electricity.
GlobalData’s outlook suggests that while hydropower’s share of India’s power mix may gradually decline, its importance to the operation of the electricity system is set to increase.
