Thermal PLF to Stay Weak at 65–66% Despite Demand Recovery Outlook

India’s thermal power plant utilisation is expected to remain subdued, with plant load factor (PLF) projected at 65–66% in FY2027, despite an anticipated rebound in electricity demand, according to Icra. This follows a sharp slowdown in FY2026, where demand growth averaged just 0.9% in the first 11 months, weighed down by prolonged monsoon conditions and a high base. As a result, average thermal PLF fell to 64.4% in 10MFY26, down from 68.8% a year ago. Though demand is expected to recover to ~5% in FY2027, rising renewable capacity and accelerated overall power addition — 53.5 GW projected in FY26, including significant solar and thermal capacity — will keep thermal plants underutilised. The shift toward renewables is reshaping the sector, limiting operating hours for thermal stations even as total generation capacity surges. Meanwhile, transmission infrastructure growth has slowed, with only 5,077 circuit km added (April-Jan) — a 19.8% YoY drop — due to right-of-way and weather challenges, threatening grid integration of green energy. Icra stresses that faster transmission execution is critical to support India’s clean energy transition and ensure efficient power flow across regions. While demand recovery may improve fundamentals, thermal plants face structural pressure in a rapidly evolving energy mix.