India’s power generation and transmission sectors are on the brink of substantial growth, with the country expected to see a surge in power intensity driven by capital expenditure (capex)-led GDP growth, according to a recent report by Jefferies. The report anticipates that the sectors will expand 2.2 times to USD 280 billion between FY24 and FY30, compared to the period from FY17 to FY23, underscoring the critical role of power in sustaining India’s rapid economic expansion.
The American financial services company projects that India’s power consumption will increase by over 7% annually, with total power generation capacity needing to grow from 442 GW in FY24 to 673 GW by FY30 to avoid significant power shortages. The report highlights the vital role that thermal power will continue to play in maintaining grid stability during this phase of accelerated growth.
Jefferies noted that India’s thermal power plants, currently operating at a plant load factor (PLF) of 65-70%, will need to ramp up their output. By FY28, the average PLF is expected to exceed peak levels observed in FY08, with utilisation rates already hitting 74% in FY25.
However, the report also flagged concerns over India’s recurring peak power deficits, attributed to years of underinvestment in the sector. To prevent future shortages, Jefferies emphasized the importance of accelerating power capacity additions and enhancing investment in transmission and distribution (T&D) equipment. The annual capacity addition for thermal power is set to increase significantly, from the current 2-5 GW to 17 GW in the coming years.
In tandem with traditional energy sources, renewable energy capacity is also expected to grow exponentially. The report estimated that annual capacity additions for renewables will rise 3.5 times between FY24 and FY27 compared to FY10-20, aligning with India’s ambitious target of achieving 450 GW of renewable energy by 2030.
India’s power transmission sector is also gearing up for rapid expansion, with the bidding pipeline swelling seven-fold in the last three years. In February 2021, the pipeline was valued at under Rs 150 billion, but it now boasts Rs 1 trillion worth of projects up for bidding. This growth will be driven by the country’s push for renewable energy, alongside growing demands from emerging sectors such as green hydrogen, electric vehicles, data centres, and energy storage.
With power demand rising and the energy landscape transforming, the Indian government’s focus on expanding both renewable and thermal power capacity is expected to drive significant investment, ensuring that the country’s energy infrastructure remains resilient and capable of supporting its growing economy.
