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Thermal power capex up

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  Published in Stocks and Investing on Wednesday, October 15th 2025 at 22:05 GMT by The Financial Express
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India’s Thermal Power Sector Sees a 40% Surge in Capital Expenditure, According to New Ministry Data

The Ministry of Power’s latest financial snapshot reveals that thermal power plants across India have attracted a dramatic 40 % increase in capital spending over the past fiscal year. The figure, which tops the sector’s growth rate since the COVID‑19 slowdown, underscores the government’s continued emphasis on coal‑based generation to bridge the looming gap between rising demand and renewable capacity deployment.

Key Highlights

The Ministry’s report, released on 12 September 2024 and available as a PDF on the official site, cites the following contributing factors:

• Strategic Projects: The launch of the 2,600 MW Sawai Madhopur plant and the expansion of the Hadiya coal‑based plant to 1,200 MW.
• Modernisation Drive: Upgrades to aging 500 MW units in Rajasthan and Karnataka aimed at improving efficiency and reducing emissions.
• Financing Landscape: A surge in concessional loans from state‑run banks, notably the Power Finance Corporation and the National Bank for Agriculture and Rural Development, which helped keep project costs under control.

Contextualising the Surge

India’s electricity demand is forecast to climb by ≈ 14 % over the next decade, driven by industrialisation, a growing transport sector, and electrification of rural households. While renewables accounted for about 32 % of new capacity in FY 2023‑24, the Ministry notes that the remaining 68 % was coal‑based, primarily to ensure grid stability and to provide a cushion against intermittency.

A press release issued concurrently with the report highlighted that the thermal sector’s share of total generation rose from 41 % in FY 2022‑23 to 43 % in FY 2023‑24. This uptick was attributed to a combination of new plant construction and capacity addition through retrofitting.

“The increase in thermal CAPEX reflects our commitment to meeting short‑term demand while simultaneously investing in cleaner coal technologies,” said Minister of Power, Shri Ravi Shankar Prasad in a televised statement.

Linking to Further Resources

The Ministry’s PDF report (link: https://www.mop.gov.in/thermal_power_capex_report_2024.pdf) provides granular data on individual projects, cost breakdowns, and timelines. It also references the National Energy Efficiency Mission (NEEM), which offers subsidies for retrofitting old units with advanced emission control technologies.

In addition, the article links to a 2024 report from the International Energy Agency (IEA), summarising global trends in coal utilisation. The IEA’s “Coal 2024 Outlook” (link: https://www.iea.org/reports/coal-2024) underscores a continued rise in coal use in emerging economies, despite a global shift towards renewables.

Policy Implications

The Ministry’s commentary stresses that the surge in CAPEX aligns with the “National Solar Mission 3.0” and the “National Hydrogen Mission”. The government is positioning thermal plants not only as load‑following units but also as storage buffers for intermittent renewables, leveraging their rapid ramp‑up capabilities.

Further, the Ministry is working with the Central Electricity Regulatory Commission (CERC) to revise tariff structures for thermal units to reflect their higher capital costs while maintaining affordability for consumers.

Looking Ahead

As the country gears up for the 2025–2030 electricity demand horizon, the Ministry’s data suggests that thermal power will remain a cornerstone of the energy mix. The forthcoming “National Thermal Power Policy 2025” is expected to:

• Incentivise clean coal technologies such as supercritical and ultra‑supercritical units.
• Expand cross‑border energy trading with neighbouring countries to optimally utilise thermal capacity.
• Introduce performance‑based incentives for units that demonstrate high efficiency and low emissions.

The reported 40 % jump in CAPEX is a clear signal that India is willing to invest heavily in thermal infrastructure to ensure a stable power supply, even as it continues to accelerate its renewable portfolio. The synergy between high‑capacity coal plants and cleaner technologies will be crucial for meeting both economic growth and environmental commitments in the years ahead.