12 - 05 - 2026

India’s power demand to surge 5% in FY27 on rising mercury, economy

India’s power demand is forecast to jump by 4-5% year-on-year (YoY) in FY27, a sharp acceleration from the marginal 0.9% growth seen in FY26, according to Fitch Ratings.

The ratings agency attributed the anticipated surge to robust economic growth, a low base from the previous year, and an increase in cooling demand. Peak demand in India already hit a record 256.1GW in April 2026.

With monsoon rainfall forecast at 92% of the long-term average, temperatures are likely to remain high in several regions. This environment will simultaneously raise the need for air conditioning while reducing the availability of hydropower generation.

Despite the pressure of sustained high capital expenditure, Fitch noted that the credit profiles of India’s rated power utilities should remain resilient. This stability is underpinned by cash flow visibility from availability-based regulated assets and long-term fixed-tariff contracts.

Solar, wind generation to rise

Renewables and coal are expected to be the primary sources meeting the incremental demand. Solar and wind generation is projected to rise by about 15% in FY27, following a massive 50GW capacity increase in FY26. However, coal remains the backbone of the system, accounting for more than 70% of generation.

Fitch expects coal plant load factors to remain steady at above 65% in the first half of FY27, supported by domestic supply. NTPC Limited’s coal fleet is tipped to outperform the national average with utilisation rates exceeding 72%.

In contrast, gas-based generation has become increasingly marginal, with load factors dropping to 15% in April 2026 due to high liquefied natural gas prices.

While the base case for major utilities like Power Grid Corporation of India, Adani Energy Solutions, and Greenko remains stable, Fitch warned that any material increase in curtailment or capex beyond current expectations could weaken post-capex cash flows and reduce rating cushions.