India’s power generation in August rose at its fastest pace since March, data from the federal grid operator showed, as manufacturing activity accelerated due to strong demand.

The 4% increase in electricity output last month helped boost coal-fired power generation for the first time in five months on an annualised basis, daily analysis of Grid India data showed.

The sustained growth in renewable energy capacity has aided in lowering India’s dependence on coal for power generation this year. Coal typically accounts for about three quarters of annual electricity generation.

Power demand during the September and December quarters is expected to be higher after a weak June quarter, as the monsoon subsides this month and industrial activity picks up, said Vikram V, vice president of corporate ratings at Moody’s unit ICRA.

India’s manufacturing activity in August rose to the highest level since February 2008. Industries account for half of domestic power consumption.

Electricity usage has tapered this year due to a broader industrial slowdown and heavy rains weighing on cooling demand, but had started to recover in July.

“If not for the rains, the power demand growth would have been much higher in August,” Vikram said.

The share of coal in power generation rose to 64.8% in August, Grid India data showed, increasing from 64.3% in July, which marked a five-year low.

A 23% rise in generation from renewable sources such as solar and wind and a 9% annual growth in hydropower generation accounted for the majority of growth in power output to 161.24 billion kilowatt hours (kWh), the data showed.

India added a record 25.4 GW of new solar and wind capacity in the first seven months of 2025 and plans to increase non-fossil fuel power capacity to 500 GW by 2030.