Will India's long-term energy demand grow by 6%?

New Delhi, Sep 2 (NationPress) India’s long-term energy requirements are anticipated to grow by approximately 6 percent annually until 2030, driven by ongoing economic growth and new demand sources, including electric vehicles, data centres, and green hydrogen, according to a report released on Tuesday.

“The power sector is experiencing robust demand growth, with an increase ranging from 7.7 percent to 9.4 percent during FY22–FY24, aided by a significant recovery in GDP following the COVID pandemic,” stated CareEdge Ratings in its report.

The Indian government aims to achieve 100 GW of new thermal capacity by FY32, with 33.2 GW presently under construction.

As per the report, the pace of new capacity additions is expected to quicken with the commissioning of ongoing projects and new orders being placed.

“India’s power sector is at a pivotal juncture—renewable energy and storage will spearhead future capacity growth, while the thermal segment remains essential for stability in meeting rising demand,” remarked Sabyasachi Majumdar, Senior Director at CareEdge Ratings.

With reforms enhancing discom finances, a reliable coal supply ensuring fuel security, and a rapid decline in storage costs, the sector is set for sustainable, reliable, and green growth in the next decade, Majumdar added.

The power sector is undergoing a major transformation, with renewable energy expected to lead future capacity expansions.

According to the rating agency, while thermal capacity expansions will be crucial to support base load requirements until renewable energy coupled with storage solutions becomes more prevalent, the generation mix is anticipated to change swiftly.

“The contribution of non-fossil sources in total energy generation is projected to exceed 35 percent by FY30, compared to 25 percent in FY25, with new capacity primarily driven by solar energy, followed by wind,” the report emphasized.

Moreover, it is noteworthy that domestic coal supply has increased at a 9 percent CAGR over the past five years, reducing dependency on imports and alleviating fuel cost and forex risks.

Nevertheless, thermal power continues to be vital in fulfilling India’s base-load needs.

Plant Load Factors (PLFs) have improved from 56 percent in FY20 to 70 percent in FY25, supported by strong power demand and a healthy domestic coal supply, according to the report.

Currently, nearly 33 GW of thermal capacity is under construction, with private entities expected to contribute approximately one-third of future additions.

The report also highlighted that Aggregate Technical and Commercial (AT&C) losses have reduced to 15–16 percent in FY22–24, down from 22 percent during FY19–21.