By Subhabrata Ray & Neeraj Padhi
As India advances its green transition and renewable energy goals, it is equally important to recognise the longstanding significance of thermal power in the energy mix. India is the world’s third-largest electricity consumer,
with power demand expected to triple by 2050. This trajectory places reliability and scale at the core of planning. While renewables take centre stage, thermal power still holds the fort as the backbone of electricity generation and a key pillar of energy security. It remains the dependable workhorse, keeping the lights on and ensuring grid stability.
The Current Thermal Power Landscape
India’s total installed power capacity stood at 476 GW as of June 2025, with thermal power accounting for 240 GW, 50.52 percent of the total installed capacity. The addition of just 4.53 GW of thermal capacity in FY 2024-25, far short of the 15.4 GW target, and only 5.4 GW in FY 2024 highlights a growing gap between targets and actual buildout.
While the shift to renewables is necessary and expected, the slower thermal expansion invites reflection, especially given its continued role as the workhorse of India’s power mix. With energy demand rising, relying predominantly on variable sources without strengthening dependable and dispatchable capacity risks peak power shortages and avoidable strain on the grid.
In this light, it is equally imperative to also understand that while global geopolitics have started to weaponise energy security, country’s geography looks towards balanced installation of thermal energy generation infrastructure especially the North – Eastern territories of India as a vital demonstration of strength, stability, strategic superiority and reliance, emphasizes Mr. Neeraj Padhi, Managing Director of Fitzroy Energy & Minerals Limited.
Role of PSUs and the Government
India’s public sector undertakings and central government entities continue to bear significant responsibility for thermal power generation. Companies like NTPC, DVC, and NLC India have maintained capacity, often upgrading old plants with more efficient, environmentally compliant technologies. The government has also supported the development of new supercritical and ultra-supercritical thermal plants, which are cleaner and more efficient than legacy coal-fired ones.
Earlier, the Ministry of Power called for a fresh review of thermal power projects, emphasising the need to enhance capacity rather than scale it down, as renewables alone cannot not meet country’s growing power demand and grid pressure. A pragmatic policy supporting thermal alongside renewables is increasingly seen as essential for staying ahead of the curve and ensuring uninterrupted power supply.
The Private Sector: Tidying the House, Lighting the Way
Private players in the power sector are beginning to respond to evolving market signals, with structural realignments quickly becoming par for the course. JSW Energy has carved out JSW Neo to lead its renewables thrust, CESC has launched its solar-focused subsidiary Purvah Green Projects, while NTPC floated NTPC Green Energy to drive its clean energy ambitions. In parallel, Vedanta’s upcoming demerger follows the same playbook. By hiving off its thermal power assets into a standalone unit, the company is paving the way for clearer decision-making and streamlined financing. Assets such as Talwandi Sabo, along with Athena Chhattisgarh and Meenakshi Energy, previously distressed thermal plants acquired by Vedanta, are now gearing up for operational focus with greater autonomy. The logic is clear: maintaining a standalone conventional baseload power portfolio ensures clearer accountability, improved project timelines, and more focused capital deployment.
But this isn’t just about corporate restructuring, it’s about aligning with a national imperative. The Central Electricity Authority (CEA) projects that India will require 283,000 MW of coal and lignite-based capacity by 2032, necessitating at least 80,000 MW of additional capacity to be added by 2031–32. Vedanta’s move to add 15,000 MW thermal capacity is not a vanity metric, but can be a meaningful addition to India’s energy backbone. With demand soaring and supply margins tightening, such expansion brings timely reinforcement to the national grid. Execution-ready assets and green-lit clearances mean the private sector is not starting from scratch but is already out of the blocks.
This diversified, disciplined, and demand-responsive approach contrasts with putting all eggs in one basket. With energy demand growing rapidly and tolerance for shortfalls becoming low, this horses-for-courses strategy is essential to keep factories humming, households lit, and progress on track. Setting up a standalone power entity also sends the right signals to investors. In a sector where long-term vision and timely execution are critical, structural transparency is foundational. This corporate reshuffle could well be the lodestar for others navigating the changing tides of India’s power landscape.
Way Forward
Thermal power, when managed responsibly, remains a vital pillar of India’s energy future. As private and public players renew investment, upgrading ageing infrastructure, streamlining regulatory approvals, ensuring credit support and driving financial and sustainable innovation will be key to a balanced, forward-looking approach. Even as India advances on its clean energy path, thermal power continues to play a stabilising role, ensuring the focus remains on modernising legacy infrastructure, not phasing it out entirely.
(The authors - Subhabrata Ray, Founder & Chief Executive Officer, Raydiant Partners Private Limited & Neeraj Padhi, Managing Director, Fitzroy Energy & Minerals Limited.)
Views are personal and do not represent the stand of this publication.
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