CRISIL forecasts India`s thermal power share in electricity generation to fall below 70% in FY27
Crisil Ratings in its latest report has said that for the first time, India's thermal power share in electricity generation is set to fall below 70 per cent in next fiscal (FY27), weighed down by slower growth in power demand and a sharp rise in renewable energy (RE) output. It noted that thermal's share is expected to ease to about 72 per cent in FY26 from nearly 75 per cent in FY25, before slipping below the 70 per cent mark next year.
As a result, the report said plant load factors (PLFs) for thermal power plants are likely to moderate to 64-66 per cent in FY26 and FY27 compared with 69 per cent in FY25. Despite the decline, a pickup in long-term power purchase agreements (PPAs) and a healthy outlook for base-load demand are reviving capital expenditure in the thermal segment. It stated that while this will push up leverage for thermal power producers over the next three to four years, steady cash flows and controlled debt levels are expected to keep credit profiles stable. It said growth in power demand is likely to slow to 1-2 per cent this fiscal because of an early monsoon and a relatively cool summer but rebound to 4-6% next fiscal on a low base.
According to the report, even so, demand growth over this fiscal and next is expected to average below 4 per cent, weaker than the 5.6 per cent recorded over the past five fiscal years. In contrast, RE generation is forecast to grow at the compound annual growth rate (CAGR) of 18-20 per cent over the same period, supported by 75-85 GW of new RE capacity additions. A strong pipeline of utility-scale projects and a ramp-up in commercial, industrial, and rooftop installations will allow renewables to meet most of the incremental power demand in the country.
