Thermal Power

  • Global proven crude oil reserves are estimated at 1730 bn barrels, proven natural gas at 196.9 tn cubic meters, and proven coal at 1,055 bn tonnes.1
  • The target of electricity generation from conventional sources for the year 2020-21 was fixed as 1330 bn Unit (BU).
  • Total installed generation capacity of 384GW transformed country from a power deficit to a power surplus country.
  • The installed generation capacity is around 379 Giga Watt which is more than adequate to serve the electricity peak demand of 190 GW.26
  • Total Coal reserves in India are estimated to be 326.50 bn tonnes, out of which 155.61 bn tonnes are proven reserves.2 Proven natural gas reserve measures up to 1233 bn cubic meters (BCM), as reported in March 2018.3
  • NTPC Group achieves over 100 bn Units of cumulative generation in the current financial year that indicates improved performance and an increase in demand for power.
  • India is well on its way to achieving and surpassing  its nationally determined contribution (NDC) target which was 40% capacity by non-fossil-fuel sources by 2030.
  • India is the third-largest producer of electricity and consumer of energy.4
  • Arunachal Pradesh state has one of the highest potentials for generating hydro-power in India. It is divided into five river valleys having immense hydropower potential, currently estimated at 50,328 MW, or approximately 22%of India's current power generating capacity.22
  • Power consumption moderated from its double-digit YoY growth in October, it grew at 3.5 per cent in November, signalling sustained recovery in commercial and industrial activity as compared to a growth of 4.6 per cent in September 2020.
  • Conventional power generation capacity to be commissioned by 2024-25 is at various stages of construction in the country which includes Thermal 36,765 MW, Hydro 10,164.50 MW and Nuclear 4,800 MW.
  • The Hydro based generation has decreased by 8.22% and Nuclear based generation has increased by 4.60% during December 2020 as compared to last year during the same period. 
Reasons to Invest
  • In July, the Installed Generation Capacity is 384115.94 MW comprising of 234058.22 MW of Thermal, 46322.22 MW of Hydro, 96955.51 MW of Renewable Energy Sources (RES) and 6780 MW of Nuclear.
  • Electricity generation (weight: 19.85 per cent) increased by 9.0per cent in July 2021 over July 2020. Its cumulative index increased by 14.6 per cent from April to July 2021-22 over the corresponding period of the previous year.
  • The revised Tariff Policy 2016 ensures an adequate return on investment to companies engaged in power generation, transmission and distribution. It also ensures the financial viability of the industry to attract investments by companies.
  • NTPC to set up India’s single largest solar park at Rann of Kutch.
  • The government of India, through the Ministry of Power, launched the initiative of Ultra Mega Power Projects (UMPPs) in 2005. It comprises of 4,000 MW super thermal power projects (both pit head and imported coal-based) with the objective to develop large capacity power projects in India. Power Finance Corporation Ltd (PFC) was appointed as the nodal agency to facilitate the development of these projects. Various inputs for the UMPPs are tied up by the Special Purpose Vehicle (SPV) with the assistance of the Ministry of Power and Central Electricity Authority (CEA). CEA is involved in the selection of sites for these UMPPs.
  • The Ministry of Power has brought the guidelines for determination of tariff through a transparent process of bidding for procurement of power from UMPPs based on allocated domestic captive coal blocks and to be set up on Build, Own and Operate (BOO) basis.
  • UMPPs projects in the pipeline:6
    • Husainabad in Deoghar district in Jharkhand
    • Bijoypatna in Chandbali Tehsil of Bhadrak District, Narla & Kasinga sub-division of Kalahandi District in Odisha
    • Kakwara in Banka Distt in Bihar
    • Niddodi village in Karnataka
    • Sites in Tamil Nadu and Gujarat for their second UMPPs and a site in Uttar Pradesh are being examined
  • Hon’ble PM Shri Narendra Modi approved an investment of INR 1810.56 cr for 210 MW Luhri Stage-I Hydro Electric Project located on river Satluj. This project will generate 758.20 mn units of electricity annually. The power generated from the Project will help in providing Grid stability and will improve the power supply position.19
  • The new Electricity (Rights of Consumers) Rules, 2020 were issued to make the electricity follow easy and transparent.23  
  • The all India power generation installed capacity by the end of 2026-27 is estimated to be 6,19,066 MW which includes 2,38,150 MW Coal, 25,735 MW Gas, 63,301 MW Hydro, 16,880 MW Nuclear and 2,75,000 MW Renewable Energy Sources to fully meet the electricity demand projected as per the 19th Electric Power Survey on All India basis.27
  • All India installed capacity in 2029-30 is estimated to be 8,17,254 MW which includes 2,66,911 MW Coal, 25,080 MW Gas, 71,128 MW Hydro, 18,980 MW Nuclear and 4,35,155 MW  Renewable Energy Sources.27
  • India is world leader in Energy Transition. India’s NDC is to increase the share of non-fossil fuels to 40% of the total electricity generation capacityby 2030 but at the current rate we might be able to achieve almost 50 percent from non fossil fuel by 2030.
  • India completed electrifying 28.02 mn homes in 18 months and achieved universal household electrification.


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Recent Announcements

16th September 2021: Power Minister addresses energy industry under US India Strategic Partnership Forum

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15th September 2021: PFC issues India’s first-ever Euro Green Bond

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13th September 2021: Power Minister invites US companies to participate in upcoming bids for green hydrogen and electrolysers.

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02nd September 2021: NHPC Completes Renovation & Modernization of 180 MW Baira Siul Power Station in Himachal; Commercial Operations Commenced.

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26th August 2021: Ministry of power sets up a Regulatory Compliance Monitoring division for monitoring the regulatory parameters and for timely intervention towards resolution.

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  • With a production of 156.1 Tera Watt-hour (TWh), India is the world’s third-largest producer of electricity.India is also the third-largest consumer of energy.8
  • The Power industry accounts for almost a quarter of the projected investments amongst all the infrastructure industries between 2012-17.
  • FDI in the Power industry between April 2000 to December 2019 stood at USD14.65 Bn.9 Electricity generation installed capacity increased by 39.2% from 248.5 GW in March 2014 to 370.1 GW in March 2020.10
  • Coal Supply to Thermal Plants Recorded More than 2 mn Tonnes.
  • As of March 2020, India has a total thermal installed capacity of 230.59 GW. Almost 86% of the thermal capacity comes from coal and the rest from Lignite, Diesel and Gas.11
  • Electricity generation (weight: 19.85 per cent) increased by 7.3 per cent in May, 2021 over May, 2020. Its cumulative index increased by 21.5 per cent during April to May, 2021-22 over the corresponding period of previous year.
  • Power Finance Corporation (PFC) non-banking financial firm under Ministry of Power records highest ever net profit of 8,444 cr for FY 21, up 49% on year on year (Y-o-Y) basis.
Growth Drivers
  • Expansion in industrial activity to boost demand for electricity.
  • A growing urban and rural population is likely to boost demand for energy.
  • Increasing market penetration and per-capita usage are expected to provide further impetus to the energy industry.
  • Ambitious projects and increasing investments across the value chain in various sectors with high electricity demand.
  • CCEA approved INR 1810.56 cr for Luhri stage-I (210 MW) HE Project in Himachal Pradesh. 
  •  Power Finance Corporation (PFC) is a PSU under the Ministry of Power, registered a growth of 80% in its standalone net profit to INR 2085 cr and 14% growth in the loan assets as compared to the same period in FY20. The total income also registered an increase of 15% to INR 9,232 Cr.
  • Cabinet Committee on Economic Affairs, chaired by Prime Minister Shri Narendra Modi, has approved the Revised Cost Estimate (RCE) of North Eastern Region Power System Improvement Project (NERPSIP) at an estimated cost of INR 6,700 cr. 
  • In the transmission sector 268 ckm of 765kV AC lines, 251 ckm of 400 kV AC lines and 13 Ckm of 220 kV AC lines have been laid during the month APRIL-2021.
FDI Policy
  • Under the automatic route, 100% Foreign Direct Investment (FDI) is allowed in the Power industry for generation from all sources (except atomic energy), transmission and distribution of electric energy and power trading, subject to all the applicable regulations and laws.
  • FDI in power exchanges up to 49% registered under Central Electricity Regulatory Commission (Power Industry) Regulations, 2010 under the automatic route, subject to the following conditions, as laid down in the Policy:
    • Foreign Institutional Investors (FII)/ Foreign Portfolio Investors (FPI) purchases shall be restricted to the secondary market only
    • No non-resident investor/entity, including persons acting in concert, will hold more than 5% of the equity in these companies
    • The foreign investment will have to comply with the Securities & Exchange Board of India (SEBI) regulations and the applicable laws/regulations, security and other conditions
  • The cumulative FDI equity inflow in the Power sector is USD 15,368.62 mn during the period April 2000 to June 2020. This constitutes 2.81% of the total FDI inflow received across sectors.


Read more about Foreign Direct Investment Policy in India >

Sector Policy


  • Elimination of licensing for electricity generation projects
  • Increased competition through international competitive bidding
  • Demarcation of transmission as a separate activity


Revised Tariff Policy, 2016:

  • Ensure the availability of electricity to consumers at reasonable and competitive rates
  • Ensure financial viability of the sector and attract investments Promote transparency, consistency and predictability in regulatory approaches across jurisdictions and minimize perceptions of regulatory risks
  • Promote competition, efficiency in operations and improvement in the quality of supply
  • Promote the generation of electricity from renewable sources 
  • Promote hydroelectric power generation including Pumped Storage Projects (PSP) to provide adequate peaking reserves, reliable grid operation and integration of variable renewable energy sources
  • Evolve a dynamic and robust electricity infrastructure for better consumer services
  • Facilitate the supply of adequate and uninterrupted power to all categories of consumers
  • Ensure creation of adequate capacity including reserves in the generation, transmission and distribution in advance, for the reliability of supply of electricity to consumers. 


  • Govt. of India undertook the initiative for setting up of Ultra Mega Power Projects of 4 GW capacity each, to reap the benefits of economies of scale, and provide fast capacity addition. The Ministry of Power identified Power Finance Corporation (PFC) as the nodal agency for the UMPPs. To enhance investors' confidence, reduce risk perception and get a good response to competitive bidding, PFC incorporated Special Purpose Vehicles (SPVs) for each UMPP. The SPVs take up the bidding process on behalf of the power procuring (beneficiary) states. The purpose of the SPVs is to carry out the bid process management and obtain various clearances/consents for the projects. Thus, the same is transferred to the successful bidder along with the SPV, who are selected through the tariff-based International Competitive Bidding (ICB). The logistic support provided by the SPV, prior to award of the project, is considered necessary - to enhance the investor’s confidence, reduce risk perception and get a good response to the competitive bidding process. Based on the above initiative of the Government of India and its implementation process, four UMPPs -Sasan in Madhya Pradesh, Mundra in Gujarat, Krishnapatnam in Andhra Pradesh and Tilaiya in Jharkhand - were awarded to the successful bidders. Mundra UMPP and Sasan UMPP are fully commissioned and are generating electricity.


  • The government of India launched two schemes, namely, Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY) and Integrated Power Development Scheme (IPDS) in December 2014. It provides a capital subsidy to the States for strengthening sub-transmission and distribution networks in rural areas and urban areas. Under the DDUGJY scheme, a capital subsidy is being provided for feeder separation, electrification of unelectrified villages and households, metering and system strengthening & augmentation of the distribution system in rural areas. The erstwhile scheme of RGGVY was subsumed in DDUGJY as a separate component for rural electrification in the country. Under the IPDS Scheme, a capital subsidy is provided for strengthening and augmentation of the distribution system. A capital subsidy is also provided for the metering of distribution transformers/feeders/consumers, and IT enablement in the distribution sector in the urban areas. The erstwhile Restructured Accelerated Power Development and Reform Programme (R-APDRP) scheme was subsumed in the IPDS as a separate component for IT enablement and system strengthening.


  • The Ministry of Power has launched the UJALA (Unnat Jyoti by Affordable LED for All) scheme for the replacement of 770 mn incandescent domestic bulbs with energy-efficient LED bulbs in the country.
  • EESL distributes 36.69 cr LED bulbs, Installs 1.14 cr LED streetlights under UJALA; Results in cumulative energy savings of 55.32 bn kWh per year.
  • EESL installs about 1.14 cr LED streetlights under SLNP; Results in estimated energy savings of 7.67 bn kWh per year 


  • The Fuel Supply Agreement with Coal India Ltd. will ensure the availability of coal for power companies over the long term.


  • To reduce dependency on imported coal, a PPP policy framework is planned to be devised with Coal India Ltd. to increase coal production.


  • The Government of India is planning to revise the National Electricity Policy to bring out far-reaching changes in the Power industry. This includes ensuring a cleaner atmosphere by increasing renewable generation including rooftop solar PV generation, increasing electric vehicles in cities and towns, improved power supply reliability to consumers through the smart grid. This policy would also encourage efficient utilization of resources including land and water.


  • The Scheme "UDAY" (Ujwal DISCOM Assurance Yojana) was formulated and launched by the Government in November 2015, for the financial and operational turnaround of State-owned DISCOMs (Electricity Distribution Companies). The scheme UDAY envisages reform measures in all sectors – generation, transmission, distribution, coal, and energy efficiency. The scheme aims to reduce the interest burden, reduce the cost of power, reduce power losses in distribution and improve the operational efficiency of DISCOMs. The scheme also incentivizes the States by
  • Exempting State takeover of DISCOM debts from Fiscal Responsibility & Budget Management (FRBM) limits for two years
  • Increased supply of domestic coal
  • Coal linkage rationalization
  • Liberally allowing coal swaps from inefficient to efficient plants
  • Allocation of coal linkages to States at notified prices and additional/priority funding in schemes of the Ministry of Power and the Ministry of New & Renewable Energy, if they meet the operational milestones in the scheme.
  • The scheme also envisages that the States accepting UDAY and performing as per operational milestones will be given additional/priority funding through DDUGJY, IPDS and Power System Development Fund (PSDF) or other such schemes of the Ministry of Power and Ministry of New and Renewable Energy. These States shall also be supported with additional coal at notified prices and, in case of availability through higher capacity utilization. The States not meeting operational milestones will be liable to forfeit their claim on IPDS and DDUGJY grants.


  • The Integrated Power Development Scheme (IPDS) envisages strengthening of sub-transmission and distribution network including metering at all levels in urban areas. The major components of the scheme are as under: 
  • a) Strengthening of sub-transmission and distribution network 
  • b) Metering 
  • c) IT application-ERP and Customer Care Services 
  • d) Provisioning of Solar Panels 
  • e) Ongoing works of R-APDRP to be completed. 

The projects worth INR 30,692 cr has been sanctioned under IPDS, against which, INR 14,402 cr has been released towards projects and INR 206 cr released for enabling activities.


  • The government of India launched Pradhan Mantri Sahaj Bijli Har GharYojana – Saubhagya in September 2017 with the objective to achieve universal household electrification by providing electricity connections to all willing un-electrified households in rural and all poor households in urban areas across the country, by March 2019. 


  • This programme aims to impact India’s climate change action. If all 300 mn lights in India were replaced, the total energy savings would be 40,743 mn kWh/year, avoided peak demand of 22,743MW/year and CO2 reductions of 37 mn tons per year.

Perform Achieve and Trade (PAT) scheme, targeting carbon emission reduction in 13 energy-intensive sectors, leads to energy savings of about 17 MTOE and results in mitigation of about 87 mn tonnes of CO2.

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Financial Support


  • For the year 2020-21, INR 220 Bn (~USD 3.08 Bn) has been allocated for the power and renewable sectors. Highlighting the importance of solar, the budget included that a large solar capacity would be developed along the railway tracks on lands owned by the Indian Railways. The government aims to electrify 27,000 km of railway tracks, she said. Besides this, for solar cells not assembled (8541 40 11) and for those assembled in modules or made up into panels (8541 40 12), the government has proposed a basic customs duty of 20%.
  • To attract investment in the power sector, the concessional corporate tax rate of 15% could be extended to new domestic companies engaged in the generation of electricity.
  • The Budget has also proposed a 100% profit deduction for three years out of 10 years for startups with a turnover of up to INR 1 Bn (~ USD 13.98 Mn).


  • Industries and infrastructure sectors including the power/energy efficiency sectors with in-house R&D centers get a write-off in revenues and capital expenditure incurred on R&D.
  • A weighted tax deduction is given under section 35 (2AA) of the Income Tax Act to industry/private sponsored research programmes.
  • A weighted deduction of 200% is granted to assesses for any sums paid to a national laboratory, university or institute of technology, or specified people with a specific direction. The said sum will be used for scientific research within a programme approved by the prescribed authority.


  • India offers additional incentives for industrial projects in certain states.
  • Incentives are in areas such as rebates in land cost, the relaxation of stamp duty exemption on the sale and lease of land, power tariff incentives, a concessional rate of interest on loans, investment subsidies, tax incentives, backward area subsidies and special incentive packages for mega projects.


  • Incentives are available for the setting up of projects in special areas like the North-east, Jammu & Kashmir, Himachal Pradesh, and Uttarakhand.
Investment Opportunities

Thermal Power Projects

Hydro Electric Projects


  • Components
  1. Separation of agriculture and non-agriculture feeders
  2. Strengthening and augmentation of sub-transmission and distribution systems including metering
  3. Rural electrification including off-grid solutions
  • Objectives
  1. Electrification of 18452 un-electrified villages by 01 May 2018
  2. Providing electricity access to 50 mn households
  • Investment Opportunities

Total Outlay: $11.67 Bn

1. System Strengthening: 

Power Transformers: 14,491 nos

Distribution Transformers: 317,068 nos 

Conductors: 869,521 km 

Energy Meters: 11 mn nos

2. Metering the un-metered

Feeder/Boundary/ DTs: 1.19 mn nos

Energy Meters: 9.99 mn nos

  • Achievements 
  1. 1227 additional villages were identified by the states for electrification in addition to 18452 un-electrified villages reported by states in 2015. Out of these 19679 villages, electrification in 18379 villages have been completed and remaining 1305 villages found to be inhabited/grazing reserve.
  2. Under the DDUGJY scheme, the country has achieved 100% electrification of villages. As 2.81 cr households were electrifying in record time.
  3. The government of India launched the Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) scheme with a total outlay of INR 75,893 cr (DDUGJY: INR 43,033 cr and RE Component: INR 32,860 crore).20


Total outlay: $11.78 Bn with gross budgetary support of $7.39 Bn from Government of India (including erstwhile R-APDRP)

  • Components
  1. Strengthening of sub-transmission and distribution networks in the urban areas
  2. Metering of distribution transformers/feeders/ consumers in the urban areas.
  3. IT enablement of the distribution sector and strengthening of distribution network under R-APDRP.
  • Investment opportunities

1. Metering: $317.07 Mn; Sub Stations (New + Augmentation): $592.61 Mn; HT / LT Lines (New + Augmentation): $1.27 Bn; DTs (New + Augmentation): $495.23 Mn; UG Cabling (HT & LT): $339.87 Mn; Rooftop Solar / net metering: $36.30 Mn; Misc. (ABC cable, R&M, Capacitor etc): $696.76 Mn.

  • Objectives
  1. Electrification of 18452 un-electrified villages by 01 May 2018
  2. Providing electricity access to 50 mn households


Explore projects to invest in Thermal Power sector >

Foreign Investors
  • CLP Holdings (Hong Kong)
  • GE Energy (USA)
  • AES (USA)
  • Kosep (South Korea)
  • Abellon Clean Energy (Canada)
  • GDF SUEZ (France)
Key Achievements
  • During the period Apr’19 – Dec’19 Raw Coal dispatch from Coal India Limited (CIL) was 417.079 Million Tonne (Provisional). Total Indian raw coal production has increased from 565 MT IN 2013-14 TO 729 MT IN 2019-20. This is registered as an absolute increase of 163 MT as compared to an increase of 73 MT in the preceding 5 years.
  • Sustainable Alternative Towards Affordable Transportation (SATAT) has envisaged developing 5000 CBG plants with a total CBG production capacity of 15 MMTPA by 2023.15
  • During September 2020, the production from coal mines according to the CM  (SP) Act, 2015 was 2.345 mn tonne.16
  • Revenue in September 2020 by coal mines production was INR 45.96 cr.16
  • The total electricity generation from renewable sources in the country during the month of September 2020 was 1,20,273 MU as against the generation of 1,15,991 MU during the corresponding period last year, showing a growth of 3.69%.19
  • SJVN Bags 679 MW Lower Arun Hydro Electric Project in Nepal. 
  • Cabinet approves Revised Cost Estimates for the strengthening of Transmission and Distribution in Arunachal Pradesh and Sikkim.24 
  • During the month of February 2021, the capacity of Thermal is 1300 MW and Hydro is150 MW which is the result of new ventures in the Thermal Sector.28
  • The 2000MW coal-based Simhadri Station is the first power project to implement an open sea intake from the Bay of Bengal which has been functional for more than 20 years.
  1. “BP Statistical Review of World Energy- June 2019,” British Petroleum (BP) Website,
  2. Annual Report, Ministry of Coal-
  3. Annual Report, Ministry of Petroleum and Natural Gas,
  4. “Energy is the key driver of Socio-Economic growth’,” PIB Website: PMO,
  5. “Power Sector at a Glance - ALL INDIA,” Ministry of Power Website, 
  6. “ULTRA MEGA POWER PROJECTS,” Ministry of Power Website,
  7. “BP Statistical Review of World Energy- June 2019,” British Petroleum (BP) Website,
  8. “Energy is the key driver of Socio-Economic growth’,” PIB Website: PMO,
  9. “Fact Sheet On Foreign Direct Investment (FDI) From April 2000 To December 2019,” DPIIT website,
  10. “Power Sector at a Glance - ALL INDIA,” Ministry of Power Website,
  11. All India Installed Capacity (in MW) of Power Stations, Central Electrical Authority, Ministry of Power,
  12. “Outlay on major Schemes,” Union Budget Website,
  13. Ministry of Power- Annual Report,
  14. PIB Release,,years%2C%20said%20Shri%20Pralhad%20Joshi.&text=The%20coal%20and%20lignite%20PSUs%20have%20planned%20to%20spend%20Rs.
  15. Annual Report, Ministry of Petroleum and Natural Gas,
  16. Ministry of Coal- Monthly Report,
  17. Ministry of Power- Monthly Report
  18. PIB
  19. Ministry of Power- Monthly Report,
  20. PIB Release,
  21. PIB Release,
  22. Indian Investment Grid,
  23. Ministry of Power,
  24. PIB Release,
  25. PIB Release,
  26. PIB Release,
  27. PIB Release,
  28. Ministry of Power- Monthly Report,

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