As per Jefferies’ September report, the power generation and transmission sectors of India are projected to rise more than twice during the period between FY24 and FY30, reaching around USD 280 billion.
Sep 10, 2024
The power generation and transmission sectors of India are projected to rise 2.2 times during the period between FY24 and FY30, compared to FY17-23, reaching around USD 280 billion, said a global investment banking and capital markets firm.
According to Jefferies’ September report, as the country entered a phase of capex-driven GDP growth, the power consumption was expected to grow more than 7 percent annually.
The report said in order to avoid power shortages, India’s total power generation capacity needed to reach 673 GW by FY30 from 442 GW in FY24. The expansion drive would further investment in thermal power, which was expected to play a vital role in maintaining grid stability, it added.
The country’s thermal power plants, which were currently operating at around 65-70 percent plant load factor (PLF), would play a critical role in meeting this demand, said the report.
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It estimated the average annual PLF for thermal power plants to surpass the peak levels observed in FY08 by FY28, with thermal utilization rates already hitting 74 percent in FY25 to date.
The report, however, highlighted that the peak power deficits were becoming more frequent, driven by years of underinvestment in the sector.
As per Jefferies, in order to prevent regular power shortages, the focus would be on accelerating capacity additions and boosting investment in power transmission and distribution (T&D) equipment.
It estimated the capacity additions to rise significantly, especially in thermal power where the annual addition rate was set to increase to 17 GW from the current 2-5 GW. In line with traditional energy sources, the capacity of renewable energy was likely to grow rapidly.
The report expected the annual capacity addition for renewables to rise 3.5 times between FY24 and FY27 compared to FY10-20.
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India has set the target to achieve 450 GW of renewable energy by 2030. The power transmission sector of the country was estimated to grow with the bid pipeline increasing seven-fold over the past three years. In February 2021, the pipeline was valued at less than INR 150 billion. The figure has currently risen to INR 1 trillion as several projects got ready for the bidding process.
Jefferies said the rapid expansion was due to the Government of India’s focus on expanding renewable energy capacity, alongside the growing needs for storage, green hydrogen, data centers and electric vehicle infrastructure.
