India power demand seen rising 5% on higher cooling needs, coal reliance

Coal inventories stayed near 18 days supporting thermal generation into FY27.

India’s power demand is set to rise 4% to 5% year on year in financial year 2027 (FY27), according to Fitch Ratings, as higher cooling demand and economic growth support consumption.

The firm expects demand growth to recover from 0.9% in FY26, as peak demand reached 256.1 gigawatts (GW) in April.

Monsoon rainfall is forecast at 92% of the long-term average, which the firm said could keep temperatures high in some regions and increase cooling demand, whilst reducing hydropower generation.

Coal remains central to the power system, supplying more than 70% of electricity generation.

The firm expects coal plant load factors to remain above 65% in the first half (1H) of FY27, compared with 64% in 1HFY26, supported by domestic coal supply and inventory of around 18 days.

NTPC Limited maintains coal plant load factors above 72%, higher than the national average, with availability-based tariffs supporting cash flow stability.

Renewable generation is set to increase by about 15% in FY27 after renewable capacity rose by 50GW, or 32%, in FY26, according to the firm.

Renewables account for 26% of total generation in FY26, compared with 22% in FY25. The firm said this increases requirements for storage and grid integration.

Gas-fired generation continues to decline in utilisation. Plant load factors fell to around 15% in April 2026 from 22% a year earlier, as higher liquefied natural gas prices and supply risks reduced economic viability.

Capital expenditure remains high across generation and transmission, with the firm expecting continued investment in renewable generation, storage, and transmission capacity to reduce curtailment and support grid stability.

The firm projects continued investment from NTPC Limited, ReNew Energy Global, Greenko Energy Holdings, Continuum Green Energy Holdings, Power Grid Corporation of India, and Adani Energy Solutions.

The firm identifies curtailment and higher-than-expected capital spending as key downside risks to post-capex cash flow across the sector.