India’s power sector is likely to maintain a strong growth trajectory through this year, supported by robust electricity demand, rising peak load, continued thermal generation, and rapid renewable capacity additions, according to a report by 360 ONE Capital.
With power consumption expected to stay firm amid expanding industrial and commercial activity, utilities with a mix of fuel-secure thermal assets and scalable renewable portfolios are likely to be best positioned for sustained earnings growth. India’s electricity consumption rose around 8 per cent YoY during April-June 2026 to nearly 485 billion units.
Peak power demand touched 270.82 GW in May, driven by extreme heat wave conditions, delayed monsoon onset, and higher cooling demand. Exchange-traded electricity volumes on the Indian Energy Exchange also grew nearly 16 per cent year-on-year in Q1FY27, reflecting increased reliance on short-term markets during periods of tight supply.
The sector is expected to benefit from a dual-track energy strategy, with thermal generation continuing to provide reliable base-load power even as renewable capacity expands. Coal remains the backbone of India’s electricity system, contributing around 70 per cent of total power generation and providing dependable base-load power, the report said.
India’s installed power generation capacity crossed 548 GW as of June 30, with non-fossil sources accounting for around 54 per cent of total capacity. Around 16.8 GW of new capacity was added during the quarter, including 13.2 GW of renewable capacity, 2.9 GW of coal-based thermal capacity, and 650 MW of hydropower.
Overall power generation grew 8 per cent year-on-year during the quarter, with thermal generation rising 7 per cent and renewable generation increasing 21 per cent. The sector’s outlook for 2026- 27 remains favourable, with energy security considerations and the possibility of an El Niño impact potentially supporting thermal demand, the brokerage noted.
Against this backdrop, the brokerage expects a strong quarter for several utilities, including improved generation and capacity additions supporting earnings. However, higher interest and depreciation costs could weigh on some renewable-focused companies in the near term.
Coal inventory levels and the pace of capacity execution will remain key monitorables. Over the longer term, the combination of rising electricity demand, thermal capacity additions, renewable expansion, and storage development is expected to create a favourable growth environment for the power sector. ANI
