India’s power sector debt structures now as critical as technology or policy.
Renewable investments must surge from $68bn in 2032 to $145bn by 2035.
Companies like Adani Green outperform legacy thermal peers, reflecting structural economic shift.
India's power sector is entering a phase where the structure of debt finance will be as critical as technology or policy in determining the success of the energy transition, according to a report published by the Institute for Energy Economy and Financial Analysis (IEEFA).
The report further stated that annual investments in renewable energy, storage and transmission must rise significantly to meet the government's target of 500 gigawatts (GW) of renewable capacity by 2030. Estimates indicated that requirements will surge from $68bn by 2032 to as much as $145bn by 2035.
1 April 2026
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“Adani Green Energy Limited consistently outperforms Adani Power on EBITDA margins within the same corporate group. Similarly, NTPC Green outperforms NTPC's legacy thermal operations. These are not cyclical differences. They reflect a structural shift in the economics of power generation that will compound over time as renewable portfolios mature and generate stable, contracted cash flows,” co-author Soni Tiwari, Energy Finance Analyst, India, IEEFA stated in the news release.
Clean Energy Outperforms Thermal
Credit markets are already showing a structural differentiation between clean energy and thermal assets, stated the IEEFA report. Renewable platforms generally deliver stronger margins and lower variable costs because they lack fuel expenses. For example, Adani Green Energy Limited consistently outperforms Adani Power on EBITDA margins and NTPC Green shows better profitability than its parent company's legacy thermal operations.
However, the rapid expansion is placing pressure on the credit profiles of major power generators. Seven of the eight key companies analysed—including NTPC, Tata Power and Adani Green—exhibited negative free cash flow in the 2025 financial year due to capital-intensive buildouts. Aggregate leverage is expected to rise as companies execute massive capital expenditure plans. NTPC alone has a planned expenditure of ₹7trn ($80bn) through the 2032 financial year.
A significant bottleneck remains the underdeveloped state of India’s corporate bond market. Currently, the eight utilities studied raise approximately 80% of their debt through bank loans rather than bonds. This over-reliance on bank lending and international capital leaves the sector vulnerable to sudden foreign capital repatriation. Offshore bond markets offer a selective channel but only renewable players are currently active in raising capital through USD-denominated bonds. Thermal-linked credits are largely absent from this funding channel following Tata Power's exit in 2021.
A positive development is the improvement in cash collection from distribution companies (DISCOMs). Following the 2022 Late Payment Surcharge Rules, DISCOM payable days decreased from 168 in the 2022 financial year to 132 in the 2024 financial year. This has reduced receivable days for power producers, although counterparty risk remains a factor for companies exposed to weaker state DISCOMs. The transition offers opportunities to strengthen India's financial markets through long-term investment in renewable infrastructure.
