India’s power generation and transmission sectors are poised for substantial growth, as highlighted in a recent report by Jefferies. The report anticipates a 2.2 times rise in the power generation and transmission sectors, reaching USD 280 billion between FY24 and FY30 compared to FY17-23. This growth is crucial as the country enters a phase of capex-driven GDP growth, where the power intensity is expected to play a vital role in sustaining the economy’s rapid expansion. With power consumption projected to grow more than 7 per cent annually, India’s total power generation capacity will need to increase from 442 GW in FY24 to 673 GW by FY30 to meet the rising demand and avoid power shortages.
The report also emphasizes the importance of thermal power in maintaining grid stability, as the country’s thermal power plants currently operate at around 65-70 per cent plant load factor (PLF). By FY28, the average annual PLF for thermal power plants is anticipated to surpass the peak levels observed in FY08, with thermal utilization rates already hitting 74 per cent in FY25. However, peak power deficits are becoming more frequent due to years of underinvestment in the sector. To address this issue and prevent regular power shortages, there will be a focus on accelerating capacity additions and boosting investment in power transmission and distribution (T&D) equipment.
In line with the growth in traditional energy sources, the capacity of renewable energy is also expected to increase significantly. The report estimates that the annual capacity addition for renewables will grow 3.5 times between FY24 and FY27 compared to FY10-20. India has set a target to achieve 450 GW of renewable energy by 2030, driving further investment and growth in the sector. The power transmission sector is also set for significant expansion, with the bid pipeline increasing seven-fold over the past three years. Projects valued at less than Rs 150 billion in February 2021 have now reached Rs 1 trillion up for bidding, driven by the government’s focus on expanding renewable energy capacity and the growing needs for storage, green hydrogen, data centres, and electric vehicle infrastructure.
The report highlights the need for continued investment and expansion in both traditional and renewable energy sources to meet the growing power demand in India. With the country’s GDP expanding rapidly, the power intensity will be crucial in supporting economic growth. By increasing the total power generation capacity and improving grid stability through thermal power investments, India can avoid regular power shortages and ensure a sustainable energy future. The growth in renewable energy capacity, along with the significant expansion in the power transmission sector, will further drive investment and propel the country towards achieving its renewable energy targets and meeting the evolving needs of various sectors such as storage, green hydrogen, data centers, and electric vehicles infrastructure.
Overall, the future of India’s power generation and transmission sectors looks promising, with substantial growth expected in both traditional and renewable energy sources. The focus on accelerating capacity additions and increasing investment in power transmission and distribution equipment will be crucial in meeting the rising power demand and sustaining economic growth. By addressing the challenges of underinvestment and peak power deficits, India can build a robust and resilient energy infrastructure that will support its development goals and drive towards a cleaner, greener future.
