India’s power sector to grow 2.2 times to reach US$280 billion by FY30: Report

India’s power generation and transmission sectors are poised for substantial growth, and power intensity should increase as the country enters a phase of capital expenditure-driven GDP growth, Jefferies said in its latest September report.

The power generation and transmission sector is projected to grow 2.2 times between FY24 and FY30 compared to FY17-23 to reach USD 280 billion, the report said.

The US company said that as the gross domestic product (GDP) is growing at a rapid pace, power intensity will be essential to sustain the growth of the economy.

It further added that electricity consumption is expected to grow by more than 7 per cent annually.

The report estimates that India’s total power generation capacity needs to be increased to 673 GW by FY30 from 442 GW in FY24 to avoid power shortages. This expansion will also spur further investment in thermal power, which is expected to play a key role in maintaining grid stability, the report said.

The country’s thermal power plants, which currently operate at around 65-70 per cent plant load factor (PLF), will play a key role in meeting this demand.

The average annual PLF for thermal power plants is projected to surpass the highest levels seen in FY08 by FY2028, and the thermal power utilisation rate is projected to reach 74 per cent by FY25.

However, it also highlighted that peak power shortages have been growing steadily due to years of underinvestment in the power sector.

To prevent regular power shortages, the focus will be on accelerating capacity addition and increasing investments in power transmission and distribution (T&D) equipment, Jefferies said.

It said capacity addition is expected to increase significantly, particularly in the thermal power sector, where the annual addition rate will rise from the current 2-5 GW to 17 GW.

In line with conventional energy sources, the capacity of renewable energy will also increase rapidly.

It estimates that annual capacity addition for renewable energy is expected to grow 3.5 times between FY24 and FY27, compared to FY10-20.

India aims to achieve 450 GW of renewable energy by 2030.

The power transmission sector is also expected to grow significantly, with the bid pipeline increasing seven-fold in the last three years.

In February 2021, the pipeline was valued at less than Rs 150 billion, but as of now, projects worth Rs 1 trillion are up for bidding.

According to the report, this rapid expansion will be driven by the government’s focus on expanding renewable energy capacity, as well as growing needs for storage, green hydrogen, data centres, and electric vehicle infrastructure.