India’s thermal power plant utilisation is set to remain under pressure, with plant load factors (PLF) expected to stay at 65–66% in FY2027, even as electricity demand is projected to recover, according to an Icra report.
Stagnant Demand
The rating agency flagged a sharp slowdown in demand, with electricity consumption rising just 1.1% year-on-year so far in FY2026, while growth remained flat at 0.9% in the first 11 months.
“In 11 months of FY2026, the YoY electricity demand growth remained flat at 0.9 per cent, due to prolonged monsoon conditions and a high base despite some recovery in the winter months,” said Ankit Jain, Vice President and Co-Group Head — Corporate Ratings, Icra.
The weak demand has already impacted thermal utilisation, with average PLF declining to 64.4% in 10M FY2026 from 68.8% in the same period last year.
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Icra estimates PLF may average 66.6% in FY2026 and remain range-bound in FY2027 despite a demand rebound.
“Considering the muted growth expected in electricity demand in FY2026… despite expectations of a rebound in demand growth in FY2027, Icra estimates the PLF to remain at 65-66%,” the report said.
The demand slowdown was also visible in March, where growth moderated to 0.8% YoY during March 1–22, 2026, compared with 4.9% in February, reflecting volatility driven by weather conditions.
The rating agency, however, expects demand growth to recover to around 5% in FY2027, supported by normalised weather, a lower base and continued industrial and commercial activity.
Accelerated Capacity Addition
The subdued thermal performance comes even as capacity addition accelerates sharply. Gross power generation capacity addition reached 49.4 GW in the first 10 months of FY2026, surpassing the 34.1 GW added in the full year FY2025.
For FY2026, total capacity addition is projected at 53.5 GW, largely driven by renewable energy expansion along with higher additions in the thermal segment.
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The report underlines a structural shift in the power sector, where rising renewable capacity is limiting thermal plant utilisation even as overall capacity grows.
At the same time, transmission infrastructure remains a bottleneck. Capacity addition in transmission declined 19.8% year-on-year to 5,077 circuit km during April–January FY2026, impacted by right-of-way issues and prolonged monsoon conditions.
“A pick-up in execution in the power transmission segment remains important to integrate the growing share of renewables into the grid,” Icra said.
TOPICSRenewable EnergyThis article was first uploaded on April two, twenty twenty-six, at fifty-three minutes past six in the evening.