Thermal power is set to remain a crucial component of India’s energy mix, with plant load factors (PLFs) expected to range between 65%-70% in the medium term, India Rating and Research (Ind-Ra) projected, considering the trends in capacity addition and energy demand forecast for FY30 under the National Electricity Plan (NEP).
India’s power demand has witnessed a 7% year-on-year increase during the first nine months of FY24, spurred by enhanced economic activity, delayed monsoons, and humid conditions, pushing thermal PLFs over 68% for the period, compared to 64% in FY23. “The country’s power demand grew around 7% yoy during 9MFY24,” according to Ind-Ra, highlighting the pivotal role of thermal power amidst changing weather patterns and economic dynamics.
The report further stated that peak demand saw an 11% year-on-year rise in the first half of FY24, driven by economic recovery and climatic factors. However, improvements in coal supply have led to a significant reduction in the peak demand deficit, now at 0.08% during 9MFY24, down from 4% in FY23. India, with an installed capacity of 428GW as of December 2023, faced an all-India peak demand of 240GW during the same period, showcasing a substantial decrease in peak deficits from about 10.6% a decade ago to just 0.42%.
Despite the shift towards renewable energy, thermal power remains indispensable, representing around 75% of India’s total power generation. Ind-Ra anticipated thermal PLF to remain at approximately 68% over FY24-FY25, with a 5%-6% annual increase in power demand. The agency noted, “The extreme weather conditions and increased economic activity witnessed during FY24 have led to power consumption reaching nearly 1,308 billion units during 9M.”
Coal stock levels, while improved from the lows seen in September-October 2023, are still 25% below normative levels as of January 2024. This highlights the ongoing challenge in securing coal supply, essential for sustaining thermal power generation.
Looking forward, renewables are expected to contribute significantly to India’s new capacity additions, with nearly 25GW expected by FY25. However, with the total installed power capacity projected to more than double by FY32, the role of thermal power in ensuring energy security and meeting demand spikes is underscored, despite increasing contributions from renewable sources.
