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Key Points

India's thermal power sector is set for massive growth, with investments doubling to Rs 2.3 lakh crore in the next three years. Private players are stepping up, contributing nearly a third of the funding after years of minimal participation. While renewables will meet most new demand, thermal remains crucial for stable base load supply. The government aims for 80 GW capacity by 2032, with long-term PPAs reducing risks for private developers.

Key Points: India's Thermal Power Investments to Double Rs 2.3 Lakh Crore by 2028

  • Private sector to contribute 33% of thermal investments after lagging earlier
  • 80 GW thermal capacity target set by 2032 amid rising energy needs
  • 70% of new demand to be met by renewables but thermal remains key for base load
  • Long-term PPAs signal utilities' commitment to thermal power stability
2 min read

Thermal investments in India to jump 2-fold to Rs 2.3 lakh crore in next 3 fiscals

India's thermal power investments set to surge 2x to Rs 2.3 lakh crore in 3 years, driven by private sector expansion and rising energy demand.

"Energy demand is expected to log a compound annual growth rate of 5.5% to 2,000 billion units by fiscal 2028. – Manish Gupta, Crisil Ratings"

New Delhi, July 16

Investments to set up thermal electricity generation capacities will double to Rs 2.3 lakh crore in India over the three fiscals through 2028, compared with the preceding three fiscals, a report said on Wednesday.

Renewed focus on the segment to help meet India’s growing demand for energy and base load power requirement, said Crisil Ratings.

In the preceding three fiscals, private companies accounted for only 7-8 per cent of the investments.

Over the next three fiscals, private companies will expand their investment, contributing nearly a third, with central and state public sector undertakings accounting for the balance, the report stated.

The government has set a target of at least 80 GW of thermal capacity addition by fiscal 2032.

At present, nearly 60 GW has either been announced or is in various phases of implementation, with private developers taking up nearly 19 GW2, according to the report.

The majority of the private capacities will be operationalised only after fiscal 2028, given that these involve long construction periods.

"While the majority of these are brownfield expansions involving low implementation risks, timely delivery of equipment — mainly of boilers and turbines — remains monitorable, given limited supply capacity and substantial build-up of orders at major manufacturers," the report said.

Meanwhile, other risks related to offtake, fuel and tariff adequacy remain low.

“Energy demand is expected to log a compound annual growth rate of 5.5 per cent to 2,000 billion units by fiscal 2028. Nearly 70 per cent of the incremental demand will be met by renewable sources," said Manish Gupta, Deputy Chief Ratings Officer, Crisil Ratings.

However, with renewable energy being intermittent — solar is available only during daytime, while wind is concentrated from May to September — thermal power remains critical to meet the base load demand consistently, he added.

Distribution utilities in four states have resumed offering 25-year thermal power purchase agreements (PPAs) to private sector generators after a 9-10 year break.

PPAs have committed to 6.1 GW of the 19 GW of private projects currently in operation, with the majority of the remaining projects in various stages of completion.

According to the report, this makes it abundantly evident that distribution utilities intend to commit to thermal power on a long-term basis to reduce offtake risk.

- IANS

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Reader Comments

P
Priya S
While I understand the need for thermal power, I hope the government ensures strict environmental regulations. We've seen what unchecked pollution does to our cities. Can we balance development and clean air please? 🌱
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Arjun K
Good to see private sector participation increasing. Competition will bring efficiency and better technology. But govt must ensure no monopoly situation develops like we saw in telecom sector earlier.
M
Meera T
The 25-year PPAs are a smart move! This gives stability to investors and ensures long-term power availability. My father worked in NTPC and always said thermal plants need such long-term vision to be viable.
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Sarah B
As someone working in renewable energy sector, I'm concerned about the focus shifting back to thermal. Yes we need base load, but shouldn't we invest more in storage solutions to make renewables more reliable?
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Vikram M
Hope the new plants adopt supercritical technology to minimize emissions. We can't afford to go backwards in pollution control while expanding capacity. Also, what about coal availability? Import dependence is risky.

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