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Credit rating agency ICRA in its latest report has said that the all-India thermal plant load factor (PLF) level or capacity utilisation is expected to remain healthy at 70 per cent in FY2025, from 69 per cent in FY2024, on power demand growth of 6 per cent. ICRA's outlook for the thermal power segment is ‘Stable’, following the improvement in the thermal PLF and healthy demand growth, thereby improving visibility on signing of new power purchase agreements (PPAs). 

Also, ICRA stated that the implementation of the Late Payment Surcharge (LPS) scheme enabled an improvement in payment discipline from state distribution utilities (discoms) to power generation companies from August 2022. However, it stated that ICRA's outlook for the power distribution segment remains ‘Negative’ amid limited tariff hikes and continued loss-making operations. 

The rating agency projects the full-year demand growth for FY2025 at 6 per cent, slightly lower than its expectation for the GDP growth for this fiscal (6.8 per cent). While this trails the growth of 7.6 per cent reported in FY2024, it remains higher than the historical average seen over the past 10 years. The healthy growth in electricity demand over the past three years has necessitated a rethink on thermal capacity addition, with the government looking to encourage new thermal power projects, including private sector participation.