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The power sector presents a puzzle. A fast-growing economy should be aligned to higher power demand but that hasn’t been the case in the financial year 2026 till date (FY26TD). India is also in an energy transition driven by decarbonisation policy. This has led to more renewables capacities, and clearance of legislation like Shanti which allows private sector involvement in nuclear, side by side with more thermal capacity.
The transmission system must be rejigged to handle new types of power. At distribution level, discoms are registering lower losses and successful experiments like the privatisation of the Odisha discoms may lead to more privatisations. Net-net, multiple opportunities exist across the power value chain. But currently weak demand and excess supply could drag down earnings and valuations.
The Cabinet has approved the Shanti Bill (Sustainable Harnessing of Advancement of Nuclear Energy for Transforming India), which is a positive policy signal for developers, EPC, component manufacturers, opening the sector to private participation and capping vendor liability. It allows for up to 49 per cent private equity. Rationalising liability may revive a stalled nuclear capex cycle. Timelines are likely to be long, even if the Bill passes without substantial amendment.
Near-term economics are poor.
Nuclear tariffs at ₹6/kWh plus fuel compare badly with ₹4/kWh plus fuel for coal and ₹ 3/kWh plus charging power for battery energy storage systems or BESS. Nuclear currently accounts for 1.7 per cent of installed capacity, with CEA expecting only marginal increase to about 2 per cent by FY30. However, the government’s long term target of reaching 100 GW of nuclear capacity by 2047 implies it could account for over 5 per cent of installed capacity. Nuclear won’t displace coal or BESS on tariff competitiveness, while being a strategic baseload option. Currently, private players are restricted to EPC execution and component manufacturing, while ownership, fuel sourcing, fuel exploration, and plant operations remain with DAE/ NPCIL. The Shanti Bill allows up to 49 per cent equity by private players and limited participation across select nuclear activities.
Firms like NTPC, Tata Power, Jindal Nuclear, Reliance, and Adani Power are actively pursuing small module reactors or SMR.
NTPC targets 30Gw via SMR to phase out old coal plants. Jindal Nuclear plans 18GW by CY47 using SMR, while Reliance has allocated $5.7 billion for energy, including nuclear, and Adani Power targets 30Gw SMR to transition from coal. EPC firms, like L&T, BHEL, Power Mech, MTAR Technologies and Walchandnagar Industries, will support deployment.
Energy demand was 1,149BU (down 0.15 per cent Y-o-Y) during Apr-Nov’25 while peak demand was 243Gw, down 2.8 per cent Y-o-Y. This was despite GDP growth at above 7 per cent. In the long-term, peak demand rose from 148Gw in 2014 to 250Gw in 2024. Overall, per capita consumption increased from 957kWh in FY14 to 1331kWh in FY23.
One reason for low demand in CY2025 was high rainfall (around 108 per cent of normal long-term average) that reduced cooling demands and irrigation needs. If rainfall goes into deficit, or normalises, CEA estimates peak demand could hit 270-280Gw.
About 33 per cent of consumption is industrial, with energy-intensive industries (iron and steel, aluminium, cement and fertiliser) accounting for over 50 per cent of industrial consumption. In H1FY26, production of cement and metals was low growth. Structurally, off-grid capacity is insignificant as yet to impact overall power demand. Off-grid solar capacity is around 5.5 Gw with around 100 Mw installed every month.
The contribution of cooling to peak load was estimated at 60Gw in 2024, and by 2030, cooling may contribute one-third to peak load, reaching 140Gw. For each incremental degree in daily average temperature, daily peak demand increased by over 7Gw in 2024. By 2027, this could be 11Gw.
Out of 505 Gw of installed capacity, as of October 2025, installed renewables was 200 Gw. India added 70 Gw of capacity since March 2024, comprising 57 Gw of renewables and 10 Gw of coal. In FY26, there was aggregate capacity addition of 37 Gw in the past seven months, exceeding 33 Gw addition in full-year FY25.
Weak demand and aggressive capacity addition has led to weak sentiment. Most incremental PPA bids have been for hybrid (solar + wind or solar + storage) and FDRE (solar + wind + storage). Among larger players, Avaada has 6 Gw of projects that lack PPAs, followed by Adani Green (4 Gw of which 1.8 Gw is solar), Renew (3 Gw), JSW Energy (2 Gw) and ACME (2 Gw).
Stock performance across the sector could remain range-bound until demand recovers, and the conversion of bids to PPAs occurs, and there’s movement on the ground with transmission and on nuclear.
