Revival of Thermal Power in India 💡

The credit ratings of thermal power companies have significantly improved over the past few years. According to Care Ratings, 79% of the covered thermal power companies had a credit rating of A- or higher in 2024-25, compared to just 67% in 2021-22. This positive trend is driven by favorable market conditions. Surging Demand for Firm Power: The increasing integration of intermittent renewable energy sources, such as solar, has created grid imbalances. This has led to a surge in demand for firm power, which can be reliably supplied at all times. As a result, distribution companies are increasingly entering into short-term power purchase agreements (PPAs) and buying power from exchanges at lucrative prices. The average short-term market price for thermal power rose from ₹3.2 per unit in 2019-20 to ₹5.8 in 2023-24. Favorable Government and Policy Shift: The Indian government's stance on thermal power has shifted. It now aims to add 80 GW of thermal capacity by 2031-32 to meet the base load power demand. This policy shift is making long-term PPAs for thermal power more common, encouraging private sector investments. Increased Investments: The favorable outlook has led to a surge in investments from private companies.

, for instance, has announced a $3 billion investment to build a 2.4 GW thermal power plant in Bihar, which is the largest private-sector project of its kind in a decade. is also open to acquiring or expanding existing coal-fired plants. Crisil Ratings estimates that investments in the sector could reach ₹2.3 trillion between 2025-26 and 2027-28, double the amount of the preceding three years.