Thermal power capacity addition slows 32% in FY25 due to project execution problems

New Delhi: The capacity addition of thermal power generation capacity in the country slowed down about 32% during the first 11 months of FY25 amid delay in commissioning of projects.

As of February FY25, about 3.9 GW of thermal capacity was installed, compared to 5.7 GW in the same period of the previous fiscal, according to provisional data from the Central Electricity Authority. 

Thermal plants generate power from coal, gas and diesel, mostly coal. The lag in the capacity addition can be attributed to delays in commissioning, land acquisition, and supply of material among other issues.

“The thermal power capacity addition was below expectations last fiscal due to execution-related challenges related to contractors, availability of equipment, land and right of way (RoW) issues. In several projects, it is witnessed that the majority of the work is done, but last-mile completion is delayed, leading to deferment of project commissioning,” said Vikram V, vice president and co-group head – corporate ratings, ICRA Ltd. 

In February about 1.32 GW capacity was added, less than half the 2.78 GW added in the same month of FY24. The target for capacity addition in February 2025 was 1.46 GW.

This slowdown comes despite a roadmap to add about 80 GW of coal-based power generation capacity in the country by 2032 in a bid to meet the surging power demand.

Growing energy requirement

India’s energy requirement has grown over the years. In the past three years, peak power demand has hit record highs. This summer it is expected to hit 270 GW, surpassing the previous high of 250 GW logged in May last year.

This increase in demand has led to higher power generation, across sources, ranging from coal-based power capacity to renewable energy. During the April-February period a total of 1.67 trillion units of energy was generated in the country, nearly 5% higher than 1.59 trillion units in the year-ago period.

Although India is committed to having 50% of its cumulative installed power capacity from non-fossil fuel-based energy resources by 2030, the Centre is also looking at adding coal-based power capacity which form the base load.

Thermal power still accounts for 52.6% of India’s total installed electricity capacity. According to CEA, the contribution of thermal power is projected to be 42.6% by FY27 and 31.6% by FY32.

Out of the total 247.59 GW total thermal capacity, coal and lignite comprise 221.81 GW, while gas-based capacity accounts for 25.18 GW, and diesel-backed power capacity 589 MW.

The government announced it would install about 80 GW of new thermal capacities in November 2023, as India would require a base load of 283 GW coal and lignite capacities in order to meet the estimated electricity demand by the year 2031-32 projected by CEA.

The estimated capital cost for setting up of new coal based thermal capacity, according to, the National Electricity Plan is ₹8.34 crore per MW (at 2021-22 prices). Hence, the thermal capacity addition is expected to entail an expenditure of at least ₹6.67 trillion by 2031-32.