Thermal Power Investments Set to double to ?2.3 Lakh Crore over Next Three Years

17 Jul 2025

Thermal power generation is set to witness a significant revival, with investments expected to double to ?2.3 lakh crore over the three-year period ending 2027–28—compared to the previous three fiscal years. This sharp increase is attributed to a renewed policy and industry focus on thermal capacity, driven by rising electricity demand and the critical need for dependable base-load power, according to a leading rating agency.

Over the past three fiscal years, private companies accounted for only 7–8% of investments in the thermal power sector. However, with investment levels set to rise over the next three fiscal years, private companies are expected to contribute nearly one-third of the total, while the rest will be contributed by central and state public sector undertakings.

The shift aligns with the government's goal of adding at least 80 GW of thermal power capacity by 2031–32, according to the report. Of this target, nearly 60 GW has already been announced or is in various stages of implementation, including around 19 GW from private developers, based on data reviewed by the rating agency. Although most private sector projects are unlikely to become operational before 2028–29 due to extended construction timelines, the majority are brownfield expansions—typically associated with lower implementation risks.

However, the timely delivery of critical components—especially boilers and turbines—remains a concern due to limited manufacturing capacity and significant order backlogs with major suppliers. Meanwhile, risks related to fuel supply, power offtake, and tariff adequacy are assessed as low, as per the rating agency.