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Renewables surging; nuclear in focus

Peak power demand, which had been strong in the past decade (FY15–25), at a 5% CAGR, showed signs of moderation in FY25, rising a mere 3% YoY to 249.8GW—below the Central Electricity Authority’s (CEA) May 2025 projection of 270.0GW, with actual peak demand falling 8% YoY to 231.0GW. This subdued demand combined with high generation and early rains led to a sharp drop in spot power prices, which even touched INR 0/unit on May 25. Power companies continue to aggressively pursue renewables expansion—NTPC (14.6GW under construction), JSW Energy (9.7GW), NLC India (10.0GW by FY30), and Tata Power (70% renewables by FY30).

Summer peak demand misses CEA projections: Peak power demand has exhibited a robust upward trajectory in the past decade, posting a CAGR of 5% during FY15-25. This surge was driven by robust economic activity, rising temperatures, and greater airconditioner penetration. However, signs of moderation are emerging from FY25. Growth in peak demand slowed to a mere 3% YoY, reaching 249.8GW for FY25. Although peak demand reached a record high of 249.8GW in May 2024, it fell short of CEA’s Summer projection of 270GW in May 2025, with peak demand declining by 8% YoY to 231.0GW.

Exchange prices dip amid sluggish power demand: Spot electricity prices crashed to INR 0/unit on 25 May 2025, led by soft demand, high power generation and early rains. Average prices declined by 22% YoY to ~INR 4.1/unit in May 2025. Volume on the exchanges also was subdued in May 2025. Volume declined 20% YoY to 3,510MU on DayAhead Market (DAM); however, volume increased 42% YoY to 4,770MU on real time market (RTM).

Robust renewable capacity target; nuclear sector again in focus: Power companies under our coverage are pursuing aggressive capacity expansion, especially in the renewables sector. NTPC has 14.6GW of renewables under construction, while JSW Energy is building 9.7GW. NLC India aims to scale its renewable capacity from 1.4GW to 10.0GW by FY30. Tata Power has set a goal of achieving 70% of overall capacity from renewables by FY30. NTPC is also emerging as a major player in the nuclear segment, with plans to develop 30GW out of the government’s ambitious 100GW nuclear energy target by FY47.

Regulated firms, renewables and hydro attractive: We prefer regulated PSU companies, such as NTPC and PGCIL, due to assured returns from regulated assets and robust capacity addition pipeline. We also favor IEX, given the rising share of short-term power markets in India and increasing dominance of power exchanges. CESC offers potential upside, driven by its significant renewable capacity expansion targets while NLC India appears attractive with plans to double its regulated equity by FY30. In the long term, the hydro sector looks promising, due to upcoming capacity addition and renewed focus on the industry

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