ICRA: Growing Energy Demand and Increased Thermal PLF to Require Additional Capacity by 2030, Despite Renewable Expansion

ICRA, a leading rating agency, projects an improvement in the all-India thermal plant load factor (PLF) to 69.0% in the fiscal year 2025, up from approximately 68.0% estimated for FY2024. This growth is anticipated to be driven by increasing electricity demand and limited thermal capacity addition. The agency maintains a Stable outlook for the thermal power segment, citing a healthy improvement in thermal PLF and reduced dues from state distribution utilities (discoms) following the implementation of the Late Payment Surcharge (LPS) scheme since August 2022.

According to Mr. Girishkumar Kadam, Senior Vice President & Group Head – Corporate Ratings at ICRA Limited, the under-construction thermal capacity of about 30 GW is mainly in the Central and state-owned generation segment and is expected to be commissioned over the next two to four years. However, he highlights the need for additional capacity beyond this pipeline to meet the growing annual electricity demand, which is projected to exceed 6.0% till 2030.

Coal remains the primary fuel source to meet the base load power demand, with its share in the overall energy generation mix estimated to decline to about 58-60% by FY2030. Despite this decline, coal is expected to maintain a significant share in the generation mix till 2030.

In the renewable energy segment, ICRA maintains a Stable outlook, supported by strong policy support, healthy demand prospects, and competitive tariffs. Mr. Kadam notes an expected improvement in renewable energy capacity addition, driven by factors such as declining solar PV cell and module prices and extensions in project timelines. However, challenges such as delays in land acquisition and transmission connectivity could hinder capacity addition prospects.