The thermal power segment is expected to attract ₹2.3 lakh crore worth of investments over the next three fiscals, on account of renewed focus to help meet India's growing energy demand, Crisil Ratings said on Wednesday.
The capital expenditure in thermal power stood at ₹1.1 lakh crore over the three fiscals through 2025, Crisil Ratings said in a report.
"Investments to set up thermal electricity generation capacities will double to Rs 2.3 lakh crore over the three fiscals through 2028, compared with the preceding three fiscals, because of renewed focus on the segment to help meet India’s growing demand for energy and base load power requirement," it said.
In the preceding three fiscals, private companies accounted for only 7-8 per cent of the investments. On expanded investment levels over the next three fiscals, private companies will contribute nearly a third, with central and state public sector undertakings accounting for the balance.
The government has set a target of at least 80 GW of thermal capacity addition by fiscal 2032.
At present, nearly 60 GW of capacity addition has either been announced or is in various phases of implementation, with private developers taking up nearly 19 GW.
The majority of the private capacities will be operationalised only after fiscal 2028, given that these involve long construction periods.
While the majority of these are brownfield expansions involving low implementation risks, timely delivery of equipment -- mainly of boilers and turbines -- remains monitorable, given limited supply capacity and substantial build-up of orders at major manufacturers. Other risks related to offtake, fuel and tariff adequacy remain low.
"Energy demand is expected to log a compound annual growth rate of 5.5 per cent to 2,000 billion units by fiscal 2028. Nearly 70% of the incremental demand will be met by renewable sources," Manish Gupta, Deputy Chief Ratings Officer at Crisil Ratings, said.
However, with renewable energy being intermittent - solar is available only during daytime, while wind is concentrated from May to September, thermal power remains critical to meet the base load demand consistently, he said.
