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India Thermal Power Market (2023-2030)

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Author

Geetanshi Chugh

Published On

Nov 2025

Product Code

KRR56

Base Year

2024

India Thermal Power Market (2023-2030)

Macroeconomic Indicators

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Summary

Gain insights into the India thermal power market size at 237.26 MW in 2023, highlighting coal’s 86.5% share, growth drivers, major players, and forecast 2030.

Market Overview

India Thermal Power Market Overview

The installed capacity of thermal power in India reached 237.26 MW in 2023, growing at a Compound Annual Growth Rate (CAGR) of 1.26% during the historic period 2018–2023. Looking ahead, the installed capacity of thermal power is expected to reach 244.28 MW by 2029, reflecting a CAGR of 0.5% during the forecast period 2023–2029. Major players in the Indian thermal power sector include Adani Power Ltd., Damodar Valley Corporation (DVC), JSW Energy Ltd., NTPC Ltd., Reliance Power Ltd., SJVN Ltd., and The Tata Power Company Ltd. Among energy sources, coal dominates with a substantial share of 86.5% in India’s thermal power sector. The sector’s growth is primarily driven by factors such as increased industrial expansion, rising demand from the domestic sector, and the availability of abundant coal reserves across the country.

India Thermal Power Market Definition

Market Definition of India Thermal Power: The India Thermal Power Sector is based on the total installed capacity of thermal power in India in Megawatts. The market is segmented sector-wise (Private, State, and Central) and Category-wise (Coal, Gas, Lignite, Diesel). The report encompasses all the major government and private players such as Adani Power Ltd., Damodar Valley Corporation (DVC), JSW Energy Ltd., NTPC Ltd., Reliance Power Ltd., SJVN Ltd., The TATA Power Company Ltd., Additionally, the report will analyze market future projections, industry analysis, and key factors influencing India Thermal Power Sector.

Taxonomy

India Thermal Power Market Ecosystem

India Thermal Power Sector Market Size by Installed Capacity, in MW 2018-2023

India's thermal power sector experienced gradual growth from 222.91 MW in 2018 to 237.26 MW in 2023, resulting in a Compound Annual Growth Rate (CAGR) of 1.26%. This increase is driven by factors such as rising electricity demand due to urbanization, industrialization, and growing consumer needs. Government initiatives aimed at improving energy infrastructure and ensuring energy security have also spurred investments in the thermal power sector. Additionally, advancements in technology and efficiency improvements in thermal power plants have likely contributed to the capacity expansion. The 1.26% CAGR reflects a steady and sustainable growth rate, underscoring the sector's ability to adapt to evolving energy demands in India.

India Thermal Power Market Industry Analysis

Industrial Expansion

Recent advancements in industrial development have strengthened India’s power sector, resulting in a heightened demand for electricity that is expected to continue rising. The industrial sector has emerged as the largest consumer of power in India, accounting for approximately 55.43% of total power consumption in 2021. Power consumption within the industrial sector recorded a Compound Annual Growth Rate (CAGR) of about 3.80% between 2019 and 2021, with the manufacturing industry standing out as a significant consumer of electricity. Additionally, the Index of Industrial Production (IIP) for the electricity domain showed an upward trend, increasing from 156.90 in 2016 to 164.60 in 2022. In 2022, the IIP reached 164.60, marking a notable rise from 130.20 in 2020–21. Furthermore, reforms introduced in the power sector, including the implementation of tariff policies and the launch of the second phase of the Ujwal DISCOM Assurance Yojana (UDAY 2.0), are expected to further drive the sector’s growth in the coming years.

Rising demand from the domestic sector

Recent advancements in industrial development have fortified the power sector, leading to a heightened demand for electricity that is anticipated to continue increasing. In India, the industrial sector has emerged as the largest consumer of power, contributing approximately 55.43% of the total power consumption in 2021. The power consumption in the industrial sector demonstrated a Compound Annual Growth Rate (CAGR) of around 3.80% during the period from 2019 to 2021, with manufacturing standing out as a significant consumer of electricity. Additionally, the Index of Industrial Production (IIP) for the electricity domain witnessed a rise from 156.90 in 2016 to 164.60 in 2022, marking a notable increase compared to 130.20 in 2020–21. This upward trend highlights the strong correlation between industrial growth and electricity demand, reinforcing the vital role of the power sector in supporting India’s expanding industrial base.

Coal Reserves and Availability

The Indian Thermal Power sector is underpinned by substantial coal reserves, a vital growth driver supported by comprehensive data. The proven coal reserves in India have exceeded 150 billion metric tons, with key reserves concentrated in states such as Jharkhand, Odisha, Chhattisgarh, and West Bengal. This wealth of resources ensures a consistent fuel supply for thermal power plants. Delving into specific figures, the country's coal reserves have steadily grown, reaching around 157 billion metric tons in recent years. Furthermore, India has consistently ranked among the top coal-producing nations globally, with an annual production exceeding 700 million metric tons. This abundance of domestically available coal mitigates dependence on international markets, bolstering energy security. The Thermal Power sector's growth is intricately tied to these figures, with coal contributing to over 60% of India's total energy mix. Despite strides in diversifying energy sources, the proven and substantial coal reserves remain the cornerstone, providing a reliable foundation for India's expanding energy needs.

Increasing Usage of Renewable Energy

The Indian government has implemented various policies and strategies to enhance the energy storage landscape, incorporating a combination of standalone battery projects alongside renewable energy hybrid systems and specifications for ancillary services. Structural reforms have been initiated to establish a cleaner, more adaptable, and efficient power system. The Solar Energy Corporation of India (SECI) disclosed the results of its inaugural peak power tender in January 2020, giving developers the opportunity to acquire renewable energy, including wind and solar, with storage capabilities. In 2020, SECI also conducted India’s first tender for continuous clean power, requiring developers to integrate solar energy with wind, hydropower, or energy storage to achieve an 80% plant load factor throughout the year. These innovative bidding approaches aim to popularize renewable energy integration into the grid, enabling DISCOMs to procure higher volumes of renewable energy efficiently and sustainably.

Ineffective Transmission and Distribution System

Power sector transmission and distribution utilities in India face significant deficiencies in modern infrastructure. The inadequate infrastructure of the transmission and distribution (T&D) system hampers efficient power supply, resulting in substantial transmission and distribution losses. Despite the country achieving power surplus status, challenges persist within state-owned Discoms, leading to continued shortcomings in the T&D system. The financial struggles of these Discoms prevent them from upgrading technological infrastructure, further exacerbating inefficiencies. Operating at low tariffs to cater to rural domestic and agricultural sectors, Discoms incur financial losses, making it difficult to cover operational expenses through consumer charges. These entities face additional financial stress as the average cost of supplying electricity exceeds the average revenue realized. Moreover, issues such as electricity theft and the lack of a robust revenue collection system contribute to high aggregate technical and commercial (AT&C) losses. Consequently, the escalating burden of T&D and AT&C losses poses a major obstacle to the sustainable growth and efficiency of the Indian power sector.

Rising Demand from Domestic Sector

Thermal power continues to dominate the Indian energy landscape; however, the growing emphasis on renewable energy sources has significantly impacted thermal power plants. Competitive bidding, particularly in the solar and wind sectors, has driven down tariffs in the renewable energy market. This shift has compelled thermal power plants to adapt by adjusting their generation patterns to balance renewable and thermal power on the grid. The integration of renewable capacities has forced coal-based plants to operate more flexibly, affecting cost-efficiency at partial loads, increasing the expenses of balancing services, generation costs, and reducing the lifespan of units operating under flexible conditions. Additionally, government-imposed stringent emission norms have further increased production costs, with new standards introduced in December 2015 for water consumption, particulate matter, SOx, NOx, and mercury. Compliance with these regulations has required the installation of emission control equipment, combustion modifications, and plant retrofits. Moreover, acquiring Power Purchase Agreements (PPAs) has become a significant challenge for thermal power plants. The sluggish growth in thermal capacity additions has discouraged Discoms from entering into new PPAs, resulting in a rise in stressed thermal assets due to the unavailability of long-term PPAs and unrealistic tariff structures.

Shakti B

Shakti B serves as a platform enabling power plants with unused capacity to participate in coal auctions, utilize the acquired coal for electricity generation, and subsequently sell the generated power on the Day Ahead Market (DAM) or the Discovery of Efficient Electricity Price (DEEP) portal for short-term Power Purchase Agreements (PPA). In response to the growing electricity demand and the challenges faced by domestic coal producers in meeting this demand, the power ministry issued guidance on April 28 to all Generating Companies (Gencos), including Independent Power Producers (IPPs). The directive encourages a 10% blending of imported coal into power generation to supplement the domestic coal supply. The Central Electricity Authority of India (CEA) will determine the coal consumption under the SHAKTI B policy, necessitating a 10% blending of imported coal, equivalent to approximately 15% of domestic coal in energy terms.

Ultra Mega Power Projects (UMPP)

The expansion of the government’s Mega Power Projects (MPP) aims to add 100 GW of capacity by 2022, with an average tariff ranging from INR 2 to INR 3 per kWh. Each Ultra Mega Power Project (UMPP) is expected to have a minimum capacity of 4,000 MW and will be based on supercritical technology. A total of 15 UMPPs have been envisioned under this initiative, out of which two have been commissioned so far: the Sasan Ultra Mega Power Project (3960 MW) in Madhya Pradesh, owned by Reliance Power Limited, and the Mundra Ultra Mega Power Project (4000 MW) in Gujarat, owned by Tata Power Limited.

UDAY 2.0

The Indian government is poised to introduce Ujwal Discom Assurance Yojana (UDAY) 2.0, aiming to address the financial challenges encountered by Discoms. Initially launched in November 2015, UDAY's primary objective was to enhance the operational efficiency and financial recovery of debt-ridden Discoms. UDAY 2.0 is expected to revamp distribution policies with a focus on reducing Discom losses, strengthening the distribution system, and expanding access to electricity. Under UDAY 2.0, the government is likely to implement stringent regulations, including penalties and withholding grants for Discoms that fail to bridge the gap between the average cost of supply (ACS) and the average revenue realized (ARR).

24x7 - Power for All

The joint initiative is undertaken by the central government in collaboration with the governments of 36 states and the Union Territories. It has the objective provide 24 X 7 power supply to 60.5 million households. The capacity target was 389 GW by 2019

SAUBHAGYA

Introduced by the Indian government in September 2017, the Saubhagya Scheme, also known as the Pradhan Mantri Sahaj Bijli Har Ghar Yojana, aims to ensure electricity access to every household across the country. With a target to electrify all households by December 2018, the scheme carries a total project expenditure of INR 163.20 billion. Out of this, INR 14.03 billion has been allocated for rural households, while INR 2.29 billion has been earmarked for urban households.

DDUGJY

The Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY) was launched in September 2017 to continue the electrification process in rural India. The government allocated INR 756 billion for supplying round-the-clock electricity to rural households and the agricultural sector. Of the total investments, 56.87% has been assigned for feeder separation, while the remaining 43.12% has been allocated to strengthen the distribution and transmission system, ensuring reliable and efficient power supply in rural areas.

December 01, 2022- Collaboration

Under the DPE Performance Evaluation System for FY 2022–2023 for CPSEs, REC Limited and Power Finance Corporation signed a Memorandum of Understanding (MoU). A deal was signed between the two organizations in October 2022 to contribute INR 85.21 Bn in financing SJVN Thermal Private Ltd. for constructing a 1,320 MW thermal power plant at Buxar.

November 03, 2022- Expansion

NTPC Ltd, India's largest power generation company, plans to build new thermal power plants in Chattisgarh at Sipat (1x800 MW) and Lara (2x800 MW), Uttar Pradesh at Singrauli (2x800 MW), Odisha at Darlipali (1x800 MW). These four projects will all be expansions, with additional units added to existing thermal power plants.

October 04, 2022- Expansion

The government directed Coal India Ltd to increase coal dispatch to thermal power plants before the festival season. Coal India Ltd (CIL) produced 299 million tons in the first half of 2023. Despite power plants having an adequate coal supply this year, the government aims to prevent a recurrence of last year’s severe coal shortage, which occurred due to significant rainfall disrupting coal production and transportation.

India Thermal Power Market Segmentation

India Thermal Power Market Segmentation by Sector (in %), 2023

India's thermal power sector displays a varied installed capacity distribution among different segments, with private entities constituting 35.69%, state-owned facilities at 32.02%, and central government-controlled projects also at 32.02%. This segmentation indicates a diverse and competitive landscape where private, state, and central entities all play significant roles. The dominance of the private sector in installed capacity suggests a preference for privatization, potentially driven by factors such as efficiency, innovation, and increased investments from private enterprises. Private companies often leverage their financial capabilities and operational agility, contributing to their higher market share. Moreover, government policies and reforms promoting private participation may have further stimulated growth in the private sector. The balanced distribution across segments reflects a dynamic thermal power market in India, benefiting from the contributions of both public and private sectors to meet the nation’s growing energy requirements.

India Thermal Power Market Segmentation by Category (in %), 2023

India's thermal power sector presents an intriguing mix of energy sources. Coal stands out, claiming a significant share of 86.5%, valued for its historical affordability and abundant availability. It remains the reliable go-to choice that consistently meets the country’s energy needs. Gas follows at 10.46%, indicating a strategic shift toward diversification, likely driven by the growing demand for cleaner energy. Lignite and diesel play supporting roles with smaller shares of 2.79% and 0.25%, respectively, catering to specific requirements as specialized contributors within the energy landscape. Despite ongoing efforts to adopt cleaner alternatives, coal continues to dominate as the powerhouse of India’s energy mix, reliably fulfilling the nation’s requirements. This data highlights the delicate balance within the thermal power sector, where tradition and sustainability coexist, and coal maintains a robust position as the primary player in the energy ecosystem.

India Thermal Power Future Market Size, 2023-2029

The installed capacity of thermal power in India reached 237.26 MW in 2023 and is anticipated to grow to 244.28 MW by 2029, indicating a modest Compound Annual Growth Rate (CAGR) of 0.5%. This gradual increase signals a cautious approach in expanding thermal power capacity. Several factors contribute to this growth trajectory. Firstly, the demand for electricity is on the rise, propelled by industrial, commercial, and residential needs. Despite global efforts toward cleaner alternatives, thermal power remains a dependable and cost-effective source to meet the growing energy demand. Economic considerations, the availability of fuel sources such as coal and gas, and existing infrastructure play key roles in maintaining sustained reliance on thermal power. The marginal CAGR suggests a deliberate and balanced expansion, taking into account both energy demand and environmental factors in India’s evolving energy landscape.

Company Profile of major player in India Thermal Power Sector

Company Name	Establishment year	Description
Adani Power Limited (APL)	1996	Adani Power Limited (APL), part of the Adani Group, is a privately operated powergeneration company, with a total capacity of 10,440 MW of thermal power and 40 MW of solar power. The company runs two port-based plants on imported coals, and two inland plants on domestic coals. For domestic coal requirements, the company has entered in a long-term fuel supply agreement with the subsidiaries of Coal India Limited.
Damodar Valley Corporation (DVC)	1948	Damodar Valley Corporation (DVC), owned by the Ministry of Power, Government of India, operates as a producer of thermal power and hydro power DVC was founded as the first river valley project in independent India. The company operates in the area of the Damodar River in West Bengal and Jharkhand. The company operates in the areas of power generation, transmission, water management, mining, and consultancy services. The company has 10 thermal power plants in various locations in West Bengal and Jharkhand, and three hydel-power (hydro) plants in Jharkhand.
JSW Energy Limited	1994	JSW Energy Limited, incorporated in 1994, is a producer and distributor of power in India. The company’s total power generation capacity is 4,559 MW, and it includes 3,158 MW of thermal, 1,391 MW of hydro, and 10 MW of solar power capacity. It has presence in various states including Karnataka, Maharashtra, Rajasthan, Himachal Pradesh, Andhra Pradesh, and West Bengal. The company has stakes in natural resource companies in South Africa and engages in power transmission and trading activities as well as coal mining in South Africa JSW Energy will revamp its renewable and thermal businesses to streamline its renewable portfolio and set up a holding structure that is efficient for fundraising
NPTC Ltd.	1975	NTPC Limited, which was previously known as National Thermal Power Corporation Limited, is a power generating conglomerate that operates with a workforce strength of 18,359 employees. The company was founded by the Indian government in 1975. NTPC Limited has a comprehensive portfolio of power generation from diverse sources including fossil fuel, hydro and renewables, with a total of 55 power stations. The company has an integrated operation with its presence across the power value chain. The company is involved in coal mining, power equipment manufacturing, power trading, power distribution, training of power professionals, rural electrification, and ash utilization through its subsidiaries and joint ventures.
Reliance Power Ltd.	1995	Reliance Power was founded to develop, build, and operate power projects in India and worldwide. They have an extensive portfolio of power generation capacity, both in operation and under development. Each power project is planned to be strategically located close to an accessible fuel supply or load center. The power projects vary in geographic location, fuel type, source, and off-take. The firm owns nearly 6000 MW of operational power production assets. Three coal-fired projects are being developed, fueled by resources from captive mines and supplies from India and elsewhere; one gas-fired project; and twelve hydroelectric projects, six of which are in Arunachal Pradesh, five in Himachal Pradesh, and one in Uttarakhand.
The TATA Power Company Ltd.	1919	The Conventional generation segment of the company is involved in power generation from thermal, hydro, and waste sources. Tata Power Limited has power plants in Mumbai, Jharkhand, West Bengal, Gujarat, and Karnataka. The company has established various public-private partnerships (PPP) for generation and transmission of power; it has PPP with the Damodar Valley Corporation for the development of a 1050 MW thermal power project in Jharkhand and Power Grid Corporation of India to form Powerlinks Transmission. The Next Generation Power Solutions provided by the company includes electric vehicle charging stations in Mumbai, Delhi, and Hyderabad. Through the Transmission business, Tata Power Limited provides power to the Mumbai License Area which includes the Mumbai city, its suburbs, and the hydro power station in Raigad district of Maharashtra.

India Thermal Power Market Macroeconomic Indicators

India's population is currently 1437 million in 2023, increasing by 30 million from 1407 million in 2022. By the end of 2025, India's population is predicted to reach 1500 million.

In the year 2020, The population between the 25-49 age group is the largest age group (36.40%)  in India followed by 0-14 (26.40%), 50+ (19.40%), and 15-24 (18%).

In 2023, India's GDP was valued at USD 3732 billion, up from USD 2710 billion in 2018. The country’s GDP is expected to reach 5000 billion by the end of 2025.

In 2023, India’s Inflation rate stands at 5.66 % an increase of approximately 2.5% from the 2018 inflation rate of 3.94%. During the COVID-19 pandemic in 2020, the inflation rate in India surged unexpectedly to 6.62% from 3.72% in 2019.

As of 2023, India comprises of majority of the middle-class population which is 57% of the total population of India. After the middle class comes the lower class category which comprises 33% of the total population of India. The remaining 10% of the population belongs to a high-income class.

4.1. Sector-Wise Segmentation of Installed Capacity, 2023, in %

4.2. Category-Wise Segmentation of Installed Capacity, 2023, in %

5.1. Company Profile of major player in India Thermal Power Sector

5.2. Services Provided by Major Players in India Thermal Power Sector

6.1. Exports Based on Value in India Thermal Power Sector, INR Bn 2019-2022

6.2. Imports Based on Value in India Thermal Power Sector, INR Bn 2019-2022

6.3. Growth Drivers of India Thermal Power Sector

6.4. Challenges in India Thermal Power Sector

Disclaimer

India Thermal Power Market Frequently Asked Questions

Frequently Asked Questions

India Thermal Power Market (2023-2030)

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Published On

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Summary

Market Overview

India Thermal Power Market Overview

India Thermal Power Market Definition

Taxonomy

India Thermal Power Market Ecosystem

India Thermal Power Sector Market Size by Installed Capacity, in MW 2018-2023

India Thermal Power Market Industry Analysis

India Thermal Power Market Segmentation

India Thermal Power Market Segmentation by Sector (in %), 2023

India Thermal Power Market Segmentation by Category (in %), 2023

India Thermal Power Future Market Size, 2023-2029

Company Profile of major player in India Thermal Power Sector

India Thermal Power Market Macroeconomic Indicators

India Thermal Power Market Frequently Asked Questions