India's thermal power share to fall below 70 pc as renewables surge: Report

New Delhi, Jan 19 (IANS) Thermal power’s share in India’s generation mix is set to drop below 70 per cent next fiscal amid a surge in renewable energy, a report said on Monday.

The report from Crisil Ratings said the thermal share is expected to slip to 72 per cent in FY26 from about 75 per cent in fiscal 2025.

Renewable generation is poised to log a compound annual growth rate of 18–20 per cent over this fiscal and next, driven by 75–85 gigawatt of capacity additions, amid a robust pipeline of utility projects and a ramp-up in commercial and industrial and rooftop additions.

The surge in renewable power generation will result in RE meeting most of the incremental power demand in the country, the report said.

Plant load factors of thermal plants is set to fall to 64–66 per cent this fiscal and next from 69 per cent last fiscal, the report said.

More power purchase agreements are being signed improving cash?flow visibility and driving a revival in thermal capex, which will raise leverage for thermal producers over the next three to four years but keep credit profiles stable due to healthy cash flows and controlled debt, the report said.

Power demand growth is seen easing to 1–2 per cent this fiscal because of an early monsoon and cool summer, before rebounding to 4–6 per cent next fiscal on a low base, the agency forecasted.

The compound annual growth rate (CAGR) will be under 4 per cent over this fiscal and next, compared to 5.6 per cent over the last five fiscals.

“Despite its declining share, thermal power remains crucial as grid absorption of RE is constrained by the intermittent nature of RE and the nascent adoption of energy storage solutions,” said Manish Gupta, Deputy Chief Ratings Officer, Crisil Ratings.

Buoyed by healthy cash flows, Independent Power Producers (IPPs) in the agency's portfolio saw leverage decline but revival in capex will peak leverage around 3 times by fiscal 2029, according to Dushyant Chauhan, Associate Director, Crisil Ratings.