India’s power sector is gearing up for a massive transformation. According to a new UBS Research report, the country’s power generation capacity is expected to reach 780 gigawatts (GW) by FY30, growing at an impressive annual rate of 10%. That’s significantly faster than the 6% average GDP growth seen between FY15 and FY25. With electrification accelerating across industries and households, the link between GDP and power demand is evolving too. Historically, peak power demand grew at 0.85 times the rate of real GDP. Now, that ratio is expected to climb to nearly 0.92.
The report predicts a sharp rise in peak power demand, hitting 335GW by FY30. To meet this surge, India will need to add a whopping 305GW of power generation capacity in the next five years alone. That’s three times the capacity added between FY20 and FY25. While renewables like solar and wind will dominate new additions, thermal power isn’t going anywhere. UBS notes that thermal plants will remain critical for grid stability when renewable sources aren’t generating.
Investment is key to achieving these targets. The power sector was once dominated by government-owned thermal plants, but the renewable energy boom has brought in a wave of private players. The report suggests this trend will continue. “As long as the economics are favourable, the private sector will likely keep investing in renewable energy generation,” it states. Meanwhile, the government is expected to focus on thermal energy, targeting an additional 80GW of capacity by FY32.
Thermal power isn’t fading into the background just yet. It’s projected to contribute around 40% of new power generation in the medium term. But solar power faces its own hurdles. UBS estimates that only about 60% of announced solar cell capacity will actually be commissioned, thanks to heavy capital and technology requirements.
Financially, the sector looks robust. The research projects a 30% compounded annual growth rate (CAGR) for the power sector’s profit pool between FY25 and FY30. Companies under UBS’s coverage are expected to deliver 34% revenue growth and 46% earnings growth from FY25 to FY28. That’s a clear sign of the sector’s expanding opportunities.
With such rapid growth on the horizon, India’s power landscape is set for a radical shift. Balancing renewables and thermal energy while ensuring grid stability will be crucial. Private investment is driving much of the renewable expansion, but government-backed thermal projects will remain a backbone for reliability. Solar may face bottlenecks, but the overall outlook for the industry is undeniably strong.