While the all-India electricity demand growth moderated to 5.4 per cent in the first six months of the current financial year (FY25), Icra expects it to recover in the third and fourth quarters of the year and end with a year-on-year (YoY) growth of 6 per cent to 6.5 per cent in FY25. The report added that the demand increased at a compounded annual growth rate (CAGR) of 8.4 per cent from FY22 to FY24, driven by changes in climatic conditions and healthy economic activity.
The Centre is encouraging investments in new thermal power projects, including by the private sector, with the goal of adding 80 gigawatts (GW) of new thermal power capacity by 2032. As per the report, to achieve this target, an incremental capacity pipeline of 45 GW, beyond the existing under-construction pipeline of 35 GW is required.
The report highlighted that the sector witnessed new coal-based power project notifications of 27 GW, with expected completion by 2032. NTPC accounts for a major share with 15.2 GW capacity, mainly through brownfield expansion. Adani Power secures the tag of the second largest contributor with 9.6 BW under development.
“The capital cost of coal-based power projects has seen a sharp increase from the level of Rs five to seven crore per MW seen till 2017 to Rs 8 to 10 crore per MW for under-construction projects and further to over Rs 12 crore per MW as seen from the capital cost estimates of new projects notified by NTPC,” stated the report.
The report added that the cost of generation (CoG) from new coal-based power projects is estimated to be over Rs six per unit considering the capital cost of Rs 12 crore per MW. Icra has highlighted that prospects for these projects would remain sensitive to the emergence of renewables plus energy storage, apart from demand growth.
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