The International Energy Agency (IEA) has expressed concern over rising household electricity prices in many countries.

While the agency’s Electricity 2026 report mentions India among countries that saw a fall in wholesale electricity prices in 2025, compared with the previous year, its concern centres around household tariffs. While the report’s observations on the affordability of household electricity tariffs is related to developed countries, it comes at a time when India is likely to see a hike in household tariffs, with the draft National Electricity Policy, 2026, calling for inflation-indexed (automatic) revision of tariffs, abolition of cross-subsidy charges and recovery of costs (regulatory assets) by electricity distribution companies — something that the Supreme Court, too, ordered in August 2025.

“Affordability remains a concern, as household electricity prices in many countries have risen faster than incomes and inflation since 2019,” the report, released in February, says. “While energy-related price components have fallen from crisis highs, they remain above 2019 levels, and non-energy charges — such as networks, taxes and fees — continue to take up a large share of bills,” it observes.

It further notes that electricity is often taxed more heavily than natural gas, raising its relative cost and weakening incentives for households to electrify heating, cooking and hot water.

“As a result, policymakers are increasingly focusing on market and regulatory reforms to improve affordability while still ensuring prices reflect costs and encourage demand-side flexibility,” it says.

In developing economies such as China, India, Indonesia, Kenya and Senegal, household expenditure on electricity grew more slowly than overall household expenditure due to the relatively stable residential electricity prices.

“In advanced economies such as many EU countries, the United Kingdom, or Korea, recent increases in electricity prices, when adjusted for inflation and purchasing power parity, have led to a rise in the share of electricity in total household expenditure.” This highlights the effect of inflation-adjusted tariffs.

Observations on India

The report notes that between 2021 and 2025, net electricity demand in India grew by close to 430 TWh, but in 2026-30 it expects India to “add over 570 TWh to its annual consumption”.

It also highlights the growing peak loads in India (a challenge); peak loads increased from 162 GW in 2017 to 250 GW in 2024. (On January 9, India’s peak load was 244.93 GW at 9.50 am.) “In recent years, the national peak load consistently hit its highest levels during the summer months amidst long heatwaves, reflecting increased cooling demand and high pre-monsoon agricultural electricity use,” IEA says.

It further notes that while the ‘time of day’ (ToD) tariffs could shift demand to solar hours — flattening the evening peak — the implementation of ToD depends upon the installation of smart meters, which has been slow.

ToD should have been in place for all but agricultural consumers by 2024.

“The deployment of smart meters has been uneven across India, with more than 29 per cent of approved meters installed in the Western Region against less than 5 per cent in the Southern Region. Overall, (only) 22 per cent of approved smart meters have been installed in India as of December 2025. Further progress in these projects will unlock more demand flexibility from peak evening hours to solar hours,” says IEA.

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Published on March 2, 2026