India's power demand to grow up to 5% YoY in FY27 on sustained economic momentum: Fitch Ratings

New Delhi [India], May 12 : India's power demand is expected to increase by 4-5 per cent year-on-year (YoY) in the financial year ending March 2027 (FY27), recovering from a marginal 0.9 per cent growth recorded in FY26. A report from Fitch Ratings stated that this trajectory is supported by sustained economic growth, a low base from the preceding year, and a sharp rise in cooling requirements across the country.

The ratings agency mentioned that the sector remains on a stable footing despite the necessity for significant investment in new capacity.

"India's rated power utilities' credit profiles should remain resilient as demand rises in the financial year ending March 2027 (FY27), despite sustained high growth capex....Fitch expects India's power demand to increase by 4%-5% yoy in FY27, after growth of just 0.9% in FY26, supported by economic growth, a low base and higher cooling demand," Fitch Ratings said.

"Cash flow visibility from availability-based regulated assets and long-term fixed-tariff contracts should keep cash flow from operations before capex resilient, while post-capex metrics are likely to remain within rating sensitivities in Fitch's base case," the report added.

The report highlighted that peak demand reached a record 256.1 GW in April. Forecasts for monsoon rainfall at 92 per cent of the long-term average suggested that higher temperatures will likely persist in several regions.

This environment is expected to elevate cooling demand while simultaneously reducing the generation capacity of hydropower plants, placing more pressure on other energy sources.

To meet this rising need, the report explained that India will rely heavily on a combination of renewables and coal. Renewables generation, specifically from solar and wind sources, is projected to grow by approximately 15 per cent in FY27.

This follows a significant expansion in FY26, where renewable capacity increased by 50 GW, or 32 per cent. Consequently, renewables and hydro accounted for 26 per cent of overall generation in FY26, up from 22 per cent in the prior year.

Thermal power continued to provide more than 70 per cent of India's electricity generation. Fitch expects coal plant load factors to stay broadly flat, hovering above 65 per cent in the first half of FY27, compared to 64 per cent in the same period last year.

"Coal-based power generation should remain important in meeting peak and baseload demand, especially as gas-fired plants are unlikely to contribute materially. Thermal power still accounts for more than 70% of India's electricity generation, and we expect coal plant load factors to remain broadly flat at above 65% in 1HFY27, from 64% in 1HFY26, supported by domestic coal supply and inventory of around 18 days," the report said.

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