Rating agency ICRA on Thursday said power demand will rise by 5.0-5.5% in 2026-27 as against a tepid one per cent growth in 2025-26, supported by continued momentum in industrial and commercial activity.
The country's power demand growth in 2026-27 is likely to be supported by agricultural and household sectors given the expectation of sub-par rainfall amidst a potential El Nino, along with demand from industries as well as from emerging sources like electric vehicles and data centres, ICRA said in a statement.
The all-India thermal plant load factor (PLF or capacity utilisation) level fell to 65-66% in 2025-26 amid demand moderation and is likely to remain around 65% in 2026-27, given the healthy growth in generation expected from the renewable sources and 6-GW capacity addition likely in the thermal segment.
1 May 2026
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Ankit Jain, Vice President & Co-Group Head - Corporate Ratings, ICRA, said in the statement that the thermal power sector in India is witnessing a revived investment emphasis, even as the renewable capacity continues to expand at a rapid pace.
Thermal power acts as a reliable base-load supply, aiding grid stability, amid expectations of power demand growth, he said, adding that the coal stock level for the domestic power plants has been comfortable at around 19 days as on April 8, 2026.
The book losses of the distribution companies at the all-India level improved in 2024-25 over 2023-24. The gross debt for state-owned discoms reduced to ₹7.1 trillion as of March 2025 from ₹7.4 trillion as of March 2024, it stated.
However, such high debt levels are unsustainable for discoms, given their current revenues and profitability, it pointed out.
The tariff orders for 2026-27 have been issued in 17 out of 28 states as of April 2026, it noted.
Despite the loss-making operations of discoms, tariff hikes approved for 2026-27 remain muted across most states, it pointed out.
ICRA expects the cash gap per unit for the discoms at the all-India level could remain high at 30-33 paise per unit in 2026-27 in case of limited tariff hikes and increased power purchase costs amid addition of relatively higher tariff-based capacities, it stated.
ICRA's outlook for the power distribution segment remains Negative amid limited tariff hikes and continued loss-making operations, it stated.
