The power generation segment is the cornerstone of India’s economy, ensuring energy security for over 1.4 billion people and facilitating the nation’s transition to a $5 trillion economy. Over the past decade, India’s power generation landscape has witnessed expansion and evolution, fuelled by consistent regulatory measures, a swift pivot towards green energy and increased use of conventional power sources.
Power Line takes a look at India’s power generation segment…
Segment growth and performance
According to the Central Electricity Authority (CEA), as of January 2026, the total installed generation capacity in the power sector stood at 520.51 GW. Fuel-wise, coal-and lignite-based power plants had the highest share at 43.77 per cent, followed by solar at 27.01 per cent. Large hydro contributed to 9.82 per cent of the installed generation capacity, followed by wind at 10.49 per cent, gas at 3.86 per cent, bioenergy at 2.23 per cent, nuclear at 1.68 per cent and small hydro at 1 per cent. The share of renewables reached nearly 50.56 per cent (including large hydro), as of January 2026.
The installed power capacity grew at a CAGR of 4.96 per cent between 2018-19 and 2024-25. While conventional power capacity has grown at a CAGR of 1.46 per cent during the past six years, renewable energy (excluding large hydro) has surged ahead and grew at a CAGR of 10.17 per cent driven by falling costs of renewable electricity generation, robust government policies, record investments, cost-reflective tariffs, rapid tendering and project allocation activities. Further, as per the CEA’s General Review Report 2025, the installed capacity of captive power plants in India reached around 80,926.07 MW.
In 2024-25, about 33,399 MW of generation capacity was added. The renewable energy segment contributed the highest capacity addition of 28,724 MW, followed by thermal at 3,875 MW and hydro at 800 MW. In 2025-26 (till January 2026), generation capacity addition reached 52,537 MW, which included 39,657 MW of renewable energy sources. The cumulative electricity generation grew at a CAGR of 4.86 per cent between 2018-19 and 2024-25. Likewise, thermal generation grew at 3.93 per cent and renewable energy generation at 12.36 per cent during this period.
On the operational performance front, till January 2026, the plant load factor (PLF) of thermal power plants (TPPs) declined to 63.2 per cent from 65.41 per cent in the same period of the previous year. With respect to sectors, the PLF of TPPs in the central sector declined to 66.94 per cent from 69.57 per cent in the previous year. Likewise, the PLF in the state sector declined to 56.94 per cent from 59.21 per cent in the previous year.
Regarding new projects, the power generation segment has witnessed a slew of new announced capacities amid considerations on rising peak demand and resource adequacy. In this regard, the recent key announced thermal generation fleet includes Adani Power’s 2,400 MW (3×800 MW ultra-supercritical units) at Pirpainti Bhagalpur, Bihar; NTPC’s 2,400 MW (3×800 MW units) at the Nabinagar super TPP Phase II at Aurangabad, Bihar; Neyveli Uttar Pradesh Power Limited’s 660 MW unit at Ghatampur, Kanpur, Uttar Pradesh; NTPC’s 800 MW (advanced ultra-supercritical unit) at Korba, Chhattisgarh; and Adani Power’s 800 MW unit in Bihar.
Likewise, the recent key announced hydropower projects include NHPC Limited’s 1,856 MW Sawalkote hydropower project in Jammu & Kashmir; North Eastern Electric Power Corporation Limited’s 700 MW Tatto II project in Arunachal Pradesh; Adani Power and Druk Green Power Corporation Limited’s (DGPCL) 570 MW Wangchhu hydropower project in Bhutan; Tata Power and DGPCL’s 1,125 MW Dorjilung hydroelectric project in Bhutan; and the Brahmaputra basin master plan to establish 76 GW of hydropower projects in India’s north-eastern region.
Recent developments
Draft National Electricity Policy 2026
The draft National Electricity Policy [NEP], 2026, notified in January 2026, has highlighted multi-pronged approaches to ensure energy security and integrate clean energy generation into the grid. It recognises the importance of coal-based power stations in catering to baseload electricity demand, along with an emphasis on co-firing/blending of alternative fuels and coal gasification to facilitate clean operations in TPPs.
The thermal power generation segment has consistently experienced issues in fuel management. With respect to issues such as fuel transportation cost and logistical roadblocks, the draft NEP 2026 has recommended the development of new coal-based power plants in proximity to coal mines. Apart from this, the need for advance planning of transport infrastructure such as rail links, conveyor belts and pipe conveyors for coal power plants has been put forward in the draft policy to ensure supply chain readiness. Likewise, the draft policy spotlights coal quality monitoring and recommends coal suppliers to keep quality checks on an “as-delivered at plant-end” basis to reduce coal grade slippage.
Regarding the operationalisation of gas-based power plants in India, the draft NEP 2026 acknowledges the need for adequate arrangements for flexible gas supply to cater to peak and balancing loads. Further, it also suggests exploring the opening of capacity markets to guarantee the long-term financial sustainability of gas-based power plants.
SHANTI Bill, 2025
India’s rising energy consumption and clean energy initiatives strongly necessitate the expansion of nuclear power generation capacity. In this regard, in December 2025, the government notified the Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India [SHANTI] Bill, which aims to modernise India’s nuclear energy legal framework. Among multiple developments, the bill intends to enable private sector participation and repeal the Atomic Energy Act of 1926 as well as the Civil Liability for Nuclear Damage Act of 2010. Further, it confers statutory status to the Atomic Energy Regulatory Board and strives to enhance regulatory oversight over safety, security, safeguards and liability in nuclear power generation operations. On the other hand, the bill preserves certain activities and facilities to be undertaken only by the central government or its wholly owned institutions.
Captive generation
In October 2025, the Ministry of Power (MoP) issued the draft Electricity (Amendment) Bill, 2025 to provide regulatory certainty by empowering the central and state governments to devise rules to govern captive generation. Likewise, in September 2025, the MoP issued draft amendments proposed in Rule 3 (Requirements of Captive Generating Plant) of the Electricity Rules, 2005, which aimed to resolve regulatory issues related to group captive structures, proportionate consumption and entitlement of captive users, verification of captive status and assessment period, among others. In brief, the draft amendment is likely to reflect more scrutiny for group captive arrangements, provide more regulatory governance, and avoid contentions on captive ownership and consumption aspects.
Utilisation of advanced technologies in power generation
The necessity of power plant generation automation has arisen as a result of the growing complexity of operations, challenges associated with grid integration, need for flexibilisation, and the demand for increased efficiency and reliability in contemporary electricity systems.
In power plant operations, digital control systems (DCSs) and supervisory control and data acquisition (SCADA) systems have emerged as essential technologies as they offer automated control, centralised monitoring and data-driven decision-making capabilities. Further, SCADA systems have helped DCSs by facilitating real-time plant monitoring, swift detection of key faults through alarms, and collection of pertinent data for further analysis and process optimisation. Further, the implementation of smart grid technologies supports the optimal balancing of power generation aligned with demand by enabling real-time monitoring and dynamic demand response.
The adoption of emerging technologies such as carbon capture, utilisation and storage (CCUS) is likely to accelerate, driven by policy push, pilot projects and increased investments. The outlay of Rs 200 billion in Union Budget 2026‑27 over the next five years to support the deployment of CCUS and its initiatives across different sectors, including power, offers a pathway to decarbonise the power generation segment.
Likewise, biomass co-firing has been recognised as a major technology intervention towards cleaner coal power generation, as well as to mitigate agricultural stubble burning and address waste management challenges. In November 2025, the MoP issued a policy on co-firing biomass pellets in coal-based power plants. As per the policy, coal-based power plants must utilise 5 per cent of biomass pellets/torrified charcoal from FY 2025-26 onwards.
Alongside these technologies, interventions such as ammonia co-firing and advanced ultra-supercritical (AUSC) technology are likely to help coal‑based power plants in reducing their carbon footprint. Although these technologies are under the feasibility/pilot project stages and await large-scale deployment, they are expected to support incremental decarbonisation of coal-based power plants in the near future.
Manufacturing
Manufacturing has become critically important in the power sector for ensuring energy security, economic development, supply chain resilience and technological self-reliance. India has a robust manufacturing ecosystem for power plant equipment, led by major domestic and joint venture companies. Further, initiatives such as Make in India have catalysed the growth of power generation equipment manufacturing in recent years. Manufacturing firms, such as Bharat Heavy Electricals Limited, have been driving indigenous manufacturing and have diversified into several engineering and manufacturing activities across the core sectors of the economy. Other players, such as Toshiba JSW Power Systems Private Limited, Triveni Turbine Limited and GE Power India Limited, have developed state-of-the-art manufacturing facilities for power generation equipment in India.
Future outlook
As per the power generation capacity expansion plan of the MoP, the projected thermal capacity requirement is likely to reach 307 GW by FY 2034-35. To cater to this demand, the installation of an additional 97 GW of coal-and lignite-based generation capacity is expected to be integrated into the grid.
Further, to fulfil this estimated target, thermal capacity installation of about 17.3 GW has been commissioned since FY 2023-24. As of January 2026, the under-construction capacity of thermal stood at 39.5 GW (including 4.8 GW of stressed TPPs). Moreover, contracts of 229 GW have been awarded and await construction. In addition, about 24 GW of coal-and lignite-based capacity is at various stages of planning. Under-construction hydropower capacity stands at 12.9 GW, while planned capacity hovers at 4.2 GW, which is envisaged to be executed by FY 2031-32. Likewise, under-construction nuclear capacity is 6.6 GW and is envisaged to be completed by FY 2029-30, while the planned capacity stands at 7 GW.
In energy storage systems, as of January 2026, under-construction pumped storage project capacity stands at 11,620 MW/69,720 MWh, while the concurred and capacity of projects yet to be constructed stands at around 6,580 MW/39,480 MWh. Further, under-construction BESS capacity is 9,653.94 MW/26,729.32 MWh, while BESS capacity under tendering is around 19,797.65 MW/61,013.4 MWh. Such under-construction, planned and tendered capacities in the power generation segment are expected to cater to the upcoming electricity demand in the coming years.
Challenges and the way forward
Cybersecurity has become a critical concern as the industry transitions towards a more digitalised, decentralised and interconnected grid. The primary challenges arise from the convergence of information technology (IT) and operational technology (OT), which increases vulnerability against potential intruders.
Further, as the penetration of renewable energy increases, the wide adoption of decentralised assets like solar inverters and battery storage systems introduces thousands of new entry points for cyber threats. This necessitates the strengthening of cybersecurity regulations and mandatory vulnerability assessments of IT and OT systems.
Coal-based power generation is expected remain dominant in India, accounting to for over 70 per cent of the total generation despite aggressive renewable energy integration. The sector continues to suffer from financial challenges propelled by outstanding payment dues from discoms, in addition to environmental and regulatory hurdles, and operational challenges such as falling plant load factors (PLFs). These issues can be resolved by the introduction of reforms, regulatory and policy overhaul, and the swift implementation of operational and technical modernisation.
In conclusion, India’s power generation segment is at a critical juncture, balancing the shift towards clean energy generation technologies and the conventional energy generation technologies needed for serving baseload demand. The segment’s future will be determined by its capability to modernise its conventional thermal fleet to serve as a flexible backup and integrate 500 GW of non-fossil fuel capacity by 2030.