Fitch-rated Indian power generation companies’ (Gencos) credit profiles should be resilient to moderately weaker demand,
| Photo Credit:
Angel Garcia
India’s power demand is expected to grow at 4-5 per cent per annum over the medium term aided by rising economic activity and higher demand for cooling with summers marked by higher number of heat waves.
Fitch Ratings expects India’s power demand to grow by 4-5 per cent over the medium term, similar to the 4 per cent growth in FY25, but slower than the roughly 8 per cent growth over FY22-FY24.
Fitch-rated Indian power generation companies’ (Gencos) credit profiles should be resilient to moderately weaker demand, as they generally benefit from high availability of their regulated assets and/or long-term fixed-tariff contracts, it added.
Fitch’s medium-term power demand growth projections factor in increased cooling and heating demand linked to weather disturbances.
The ratings agency pointed out that slowdown in power demand growth in FY25 was sharper than it had expected, partly reflecting slower GDP growth, which it estimates averaged 6.2 per cent, compared with 9.2 per cent in FY24.
Fitch has projected India’s economic growth at 6.4 per cent in FY26 and 6.3 per cent in FY27, which will support steady increases in power demand.
“However, risks to the economic outlook are significant, given uncertainties around India-Pakistan relations, global trade and US tariffs. Weaker-than-expected economic growth would weigh on power demand. Sustained lower electricity demand growth would increase the risk of oversupply, given rapid ongoing capacity additions,” it added.
As in FY24, additional demand for cooling during heatwave days in the hot weather season in April-June could lead to higher peak demand levels, potentially topping the peak of 250 gigawatt (GW) in May 2024.
“However, in the near term, we believe the system’s capacity to meet demand peaks should be robust due to adequate coal inventory levels and recent increases in renewable generation capacity,” Fitch Ratings said.
Fitch expects capex among Indian power utilities to remain high in the medium term, particularly for renewable generators, as the government is aiming to expand power storage and transmission capability, and raise renewable capacity to 500 GW by 2030, from around 220 GW currently.
“We project renewable capacity addition will remain high in FY26 after an increase to 30 GW in FY25, from 18 GW in FY24,” it added.
Strong renewable capacity addition will weigh on coal demand growth, which slowed to 3.4 per cent Y-o-Y in 11 months of FY25, from 9.4 per cent in FY24.
“Slower demand growth and improving domestic supply are likely to lead to lower coal imports in the next few years. We also expect plant load factors at thermal power plants to fall from around 69 per cent in FY24-FY25 to around 65 per cent in the medium term, assuming the rapid growth in renewable power capacity is sustained,” the ratings agency projected.
Published on May 14, 2025
Fitch-rated Indian power generation companies’ (Gencos) credit profiles should be resilient to moderately weaker demand,
| Photo Credit:
Angel Garcia
India’s power demand is expected to grow at 4-5 per cent per annum over the medium term aided by rising economic activity and higher demand for cooling with summers marked by higher number of heat waves.
Fitch Ratings expects India’s power demand to grow by 4-5 per cent over the medium term, similar to the 4 per cent growth in FY25, but slower than the roughly 8 per cent growth over FY22-FY24.
Fitch-rated Indian power generation companies’ (Gencos) credit profiles should be resilient to moderately weaker demand, as they generally benefit from high availability of their regulated assets and/or long-term fixed-tariff contracts, it added.
Fitch’s medium-term power demand growth projections factor in increased cooling and heating demand linked to weather disturbances.
The ratings agency pointed out that slowdown in power demand growth in FY25 was sharper than it had expected, partly reflecting slower GDP growth, which it estimates averaged 6.2 per cent, compared with 9.2 per cent in FY24.
Fitch has projected India’s economic growth at 6.4 per cent in FY26 and 6.3 per cent in FY27, which will support steady increases in power demand.
“However, risks to the economic outlook are significant, given uncertainties around India-Pakistan relations, global trade and US tariffs. Weaker-than-expected economic growth would weigh on power demand. Sustained lower electricity demand growth would increase the risk of oversupply, given rapid ongoing capacity additions,” it added.
As in FY24, additional demand for cooling during heatwave days in the hot weather season in April-June could lead to higher peak demand levels, potentially topping the peak of 250 gigawatt (GW) in May 2024.
“However, in the near term, we believe the system’s capacity to meet demand peaks should be robust due to adequate coal inventory levels and recent increases in renewable generation capacity,” Fitch Ratings said.
Fitch expects capex among Indian power utilities to remain high in the medium term, particularly for renewable generators, as the government is aiming to expand power storage and transmission capability, and raise renewable capacity to 500 GW by 2030, from around 220 GW currently.
“We project renewable capacity addition will remain high in FY26 after an increase to 30 GW in FY25, from 18 GW in FY24,” it added.
Strong renewable capacity addition will weigh on coal demand growth, which slowed to 3.4 per cent Y-o-Y in 11 months of FY25, from 9.4 per cent in FY24.
“Slower demand growth and improving domestic supply are likely to lead to lower coal imports in the next few years. We also expect plant load factors at thermal power plants to fall from around 69 per cent in FY24-FY25 to around 65 per cent in the medium term, assuming the rapid growth in renewable power capacity is sustained,” the ratings agency projected.
Published on May 14, 2025
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The point of using Lorem Ipsum is that it has a more-or-less normal distribution of letters, as opposed to using ‘Content here, content here’, making
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It is a long established fact that a reader will be distracted by the readable content of a page when looking at its layout. The point of using Lorem Ipsum is that it has a more-or-less normal distribution
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