12 - 05 - 2026

Press Release: Rising Demand Supports Indian Power Utilities Despite High Capex

Fitch Ratings-Hong Kong/Singapore-12 May 2026: India’s rated power utilities’ credit profiles should remain resilient as demand rises in in the financial year ending March 2027 (FY27), despite sustained high growth capex, Fitch Ratings says. Cash flow visibility from availability-based regulated assets and long-term fixed-tariff contracts should keep cash flow from operations before capex resilient, while post-capex metrics are likely to remain within rating sensitivities in Fitch’s base case.

Fitch expects India’s power demand to increase by 4%-5% yoy in FY27, after growth of just 0.9% in FY26, supported by economic growth, a low base and higher cooling demand. Peak demand reached a record 256.1GW in April, and forecasts for monsoon rainfall at 92% of the long-term average could keep temperatures high in some regions, which will raise cooling demand while reducing hydropower generation.

Renewables and coal should meet most of the increase in demand. Fitch expects renewable generation, especially from solar and wind, to rise by around 15% in FY27 after renewable capacity increased by 50GW, or 32%, in FY26. Renewables, including hydro, accounted for 26% of overall generation in FY26, up from 22% in FY25. This should limit supply disruptions, but shifts the credit focus to power storage and grid integration.

Coal-based power generation should remain important in meeting peak and baseload demand, especially as gas-fired plants are unlikely to contribute materially. Thermal power still accounts for more than 70% of India’s electricity generation, and we expect coal plant load factors to remain broadly flat at above 65% in 1HFY27, from 64% in 1HFY26, supported by domestic coal supply and inventory of around 18 days. NTPC Limited’s (BBB-/Stable) coal fleet should continue to outperform, with plant load factors remaining above 72%, significantly above the national average. While higher utilisation may modestly increase NTPC’s incentive income, cash flow should be largely insulated from volume swings because availability-based tariffs drive most earnings.

Gas-based generation is likely to remain marginal. Plant load factors at gas plants fell to around 15% in April 2026 from 22% a year earlier, as higher liquefied natural gas prices and supply risks reduced economic viability. That leaves the system more reliant on coal for peak demand and on renewables for incremental capacity additions.

High capex for generation capacity growth will remain a central credit consideration, although demand for higher power transmission capacity to avoid curtailment will also lead to increases in capex for power transmission utilities.
Fitch expects rated generators, including NTPC, ReNew Energy Global (BB-/Stable), Greenko Energy Holdings (BB-/Stable) and Continuum Green Energy Holdings (B+/Stable), as well as transmission utilities, such as Power Grid Corporation of India (BBB-/Stable) and Adani Energy Solutions (BBB-/Stable), to continue investing heavily in renewable generation, storage and transmission.

The main downside to our base case of resilient issuer credit profiles would be a material increase in curtailment or capex above our expectations, which could weaken post-capex cash flow and leave some issuers with less cushion within their current ratings.