Whalesbook
Demand Drivers and Sector Stability
Fitch Ratings forecasts India's power demand to increase by 4-5% year-on-year in FY27, recovering from a marginal 0.9% growth recorded in FY26. 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 noted that the sector remains on a stable footing, despite the necessity for significant investment in new capacity.
Peak Demand and Weather Impact
Peak demand reached a record 256.1 GW in April. Forecasts for monsoon rainfall at 92 per cent of the long-term average suggest 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.
Energy Mix Evolution
To meet this rising need, 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% in FY27. This follows a significant expansion in FY26, where renewable capacity increased by 32% (50 GW). Consequently, renewables and hydro accounted for 26% of overall generation in FY26, up from 22% in the prior year.
Coal's Continued Role
Thermal power continued to provide more than 70% of India's electricity generation. Fitch expects coal plant load factors to stay broadly flat, hovering above 65% in the first half of FY27, compared to 64% 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. This stable outlook is supported by domestic coal supply and inventory of around 18 days.