India is set to nearly double its investments in the thermal power sector, targeting an impressive $26.71 billion by fiscal year 2027–28. This surge reflects an urgent need to meet rising electricity demands while ensuring stable base load generation. According to Crisil Ratings, the thermal power sector is witnessing a strategic revival, with investment volumes in the next three years expected to far outpace those seen in the past.
A key highlight of this investment push is the increasing role of private players. While private entities contributed only 7–8% of recent thermal investments, their share is projected to rise to about one-third by 2028. This marks a significant shift from state-dominated funding to a more diversified investment base.
India’s long-term roadmap includes plans to add at least 80 gigawatts (GW) of thermal capacity by 2031–32. Out of this, around 60 GW has already been announced or is under various stages of execution. Private developers are set to handle 19 GW of this expansion, primarily through brownfield projects. Brownfield developments typically face fewer regulatory and environmental hurdles than greenfield projects, making them a preferred route for quick capacity additions.
However, the sector is not without challenges. One of the major concerns is the supply chain backlog, particularly for critical components like boilers and turbines. Limited domestic manufacturing capacity and heavy workloads at existing suppliers could slow project execution. Still, Crisil points out that risks related to fuel supply, power purchase agreements, and tariff stability remain relatively low, supporting investor confidence.
Most private sector projects are expected to become operational after 2028–29, accounting for the long construction lead times typical of thermal infrastructure. Despite the delayed timelines, the renewed momentum in thermal power investments indicates a careful balancing act—expanding renewable energy while reinforcing conventional power capacity to ensure grid reliability.
With both central and state public enterprises contributing substantial funding, alongside rising private involvement, India’s energy sector is poised for a robust transformation aimed at securing future energy needs.
