How is India planning to achieve 86.4 GW of additional thermal power by 2035–36? 

According to the National Generation Adequacy Plan (2026‑27 to 2035‑36) prepared by the Central Electricity Authority (CEA), India will need about 3,15,000 MW of coal- and lignite‑based thermal capacity to meet projected electricity demand by 2035‑36.

As of March 31, 2026, installed coal and lignite capacity stood at 2,28,560 MW, leaving a minimum gap of 86,440 MW that must be added over the next decade. Minister of State (MoS) for Power Shripad Naik informed the Rajya Sabha in Parliament’s Monsoon Session that this shortfall defines the thermal capacity addition requirement through 2035–36—essentially, the 86 GW figure is the minimum adequacy requirement to keep up with rising demand while renewables scale up.

Current Status: 64 GW already in the pipeline

The government has already lined up most of this 86 GW pipeline through projects under construction or awarded. Naik’s reply lays out the status clearly: 

• Total additional thermal capacity required by 2035‑36: 86,440 MW
• Thermal capacity already commissioned in FY 2026‑27 (till June 2026): 2,260 MW
• Capacity under construction: 47,545 MW
• Capacity awarded and due for construction: 16,000 MW

That means 63,545 MW of the required 86,440 MW is already at various stages of implementation (under construction or awarded). In practical terms, India has already tied up about three‑quarters of the needed additional thermal capacity, with only roughly 23 GW still to be planned or advanced to executable status over the coming years.

This build‑out is happening against a backdrop of largely balanced power supply as up to June 2026, India’s highest peak demand was 2,70,832 MW, almost fully met by a supply of 2,70,820 MW, indicating only a marginal gap. The government explicitly states there is adequate availability of power in the country as of now.

India’s power shift: Renewables take the lead

India’s power sector is undergoing a major transformation, with renewable energy now accounting for a larger share of the country’s installed electricity generation capacity than fossil fuels. While thermal power additions continue to play a crucial role in ensuring grid stability and meeting rising demand, their share in the overall energy mix is expected to gradually decline as clean energy drives future capacity expansion.

As of June 30, 2026, India’s total installed power generation capacity stood at 5,48,858 MW, with non-fossil sources contributing 2,97,369 MW (54.18%), surpassing fossil fuel-based capacity of 2,51,489 MW (45.82%). Since April 2014, the country has added 324.7 GW of generation capacity, marking a significant shift from a power-deficit nation to one that is power-sufficient, with renewables emerging as the primary engine of future growth.

‘Renewables to remain key drivers, share of thermal power in overall installed capacity expected to decline’ 

Speaking to the Financial Express Digital, Ankit Jain, Vice President and Co Group Head – Corporate Ratings of ICRA Limited estimated that while about 32 GW of thermal capacity is likely to be added up to FY32 (involving Rs 3–4 trillion capex), renewables will dominate incremental additions. “The share of thermal power in the overall installed capacity at the all-India level is expected to decline to 30% in FY2032 from 43% in March 2026,” he said. 

Jain further added that “while renewables would remain the key drivers of capacity expansion going forward, the thermal segment has seen an increase in under-construction capacity over the past few quarters at over 54 GW.”

In terms of generation mix, he said, “the share of thermal in the total energy generation is expected to decline to 55% in FY2032 from 71% in March 2026, whereas the share of renewables and large hydro generation is estimated to increase to 42% by FY2032 from 26% in FY2026.” 

Despite the falling share, ICRA noted that thermal remains crucial as a baseload provider, and recent bidding activity by state DISCOMs for long‑term PPAs (around 22–23 GW awarded in 2025 across Maharashtra, Uttar Pradesh, Bihar, Assam, Karnataka and West Bengal) underlines its continuing system‑critical role.

How is this thermal cycle different and also ‘de‑risked’?

A key element of India’s strategy to add 86 GW of new thermal capacity by 2035–36 is that this investment cycle is structurally more conservative and de‑risked than the boom‑bust phase of 2010–2015. Instead of building plants on speculative merchant assumptions, the current cycle is anchored in much stronger power purchase agreements (PPAs) and offtake security.

As highlighted in the Equirus report “India Power – A Different Current,” long‑term PPA coverage has risen sharply from about 50–60 per cent in 2010–15 to around 85–88 per cent today, and more than 90 per cent of capacity under construction already has PPAs tied up before a single brick is laid. This shift dramatically cuts merchant risk and gives lenders and developers far greater revenue visibility, making the entire capex programme more bankable and less vulnerable to demand or tariff shocks than in the previous cycle.

Equally important is the improvement in fuel security and financial discipline backing this build‑out. Over 80 per cent of India’s operating thermal fleet now sits on secured long‑term fuel supply agreements (FSAs), which reduces exposure to coal availability constraints and price volatility that plagued plants in the past. On the balance sheet side, the report points to more conservative leverage and lower funding costs compared to the earlier capex spree, when aggressive debt‑fuelled expansion left many projects stressed once demand underperformed.

Put together—high PPA coverage, robust FSAs, tighter leverage and cheaper capital—these factors mean the upcoming 86 GW of thermal capacity is being rolled out in a more controlled, risk‑mitigated framework, designed to avoid a repeat of the stranded asset and NPA problems that marked the last big thermal boom.

Supercritical, better-hedged thermal capacity upgraded to 97 GW, of which 18 GW is already comissioned

As the Equirus report notes, “unlike the boom‑bust cycle of FY10–FY15, this investment cycle is supported by stronger PPAs, fuel security, disciplined leverage and lower funding costs, materially reducing sector risk,” and this financial and contractual reset is being matched by a clear technological shift. 

The original plan for roughly 80 GW of new thermal capacity by 2032 has been upgraded to about 97 GW by 2034–35, of which around 18 GW has already been commissioned since 2023 and roughly 40 GW is under construction, much of it based on supercritical and ultra‑supercritical technologies that cut coal consumption per unit of power.

This combination allows India to maintain reliable baseload supply while simultaneously improving plant efficiency and lowering emissions intensity per kWh from coal, and the revised ~97 GW policy target aligns closely with the Central Electricity Authority’s “minimum” requirement of 86,440 MW by 2035–36—together explaining why such a large slice of the needed capacity is already moving through the implementation pipeline.

How India is building a smarter grid for both coal and renewables

Beyond adding 86 GW of new thermal capacity, India’s strategy hinges just as much on a massive build-out of its transmission network and deployment of modern grid technologies so that both thermal and renewable power can be moved reliably across the country. The National Electricity Plan envisages about Rs 9,16,142 crore of investment in transmission infrastructure between 2022 and 2032, calibrated to rising electricity demand, planned generation additions and the large-scale integration of renewables into the grid. Since 2014, this has already translated into substantial physical expansion as of May 30, 2026,

India has added 2,17,199 circuit kilometres of transmission lines and 9,38,495 MVA of transformation capacity, along with 84,390 MW of new inter-regional transfer capacity, taking total inter-regional capacity to 1,20,340 MW. This enlarged, more interconnected grid enables large volumes of power to be shifted across regions, bolstering reliability and allowing new generation—whether coal, solar, wind or hydro—to be evacuated and balanced at a national scale.

To operate a grid with both high renewable penetration and a substantial thermal baseload, the government is rolling out a suite of advanced grid-support technologies. These include Static Synchronous Compensators (STATCOMs), Battery Energy Storage Systems (BESS), synchronous condensers and other modern control and support tools designed to stabilise the network.

Collectively, they are meant to enhance grid reliability and flexibility, smooth the inherent variability of solar and wind generation, and enable coal plants to run as flexible balancing resources rather than inflexible, always-on baseload units. This technical modernisation is critical if India is to integrate large quantities of intermittent renewables without compromising system stability.

Beyond Coal: Nuclear and non-fossil as long-term pillars

Even as India pursues 86 GW of additional thermal capacity, it is simultaneously pushing an aggressive expansion of non-fossil and nuclear power. As of June 2026, total installed capacity stands at 548.86 GW, with non-fossil sources already forming a majority share.

The government has also set a target of 100 GW of nuclear capacity by 2047, signalling a deliberate shift towards low-carbon firm power alongside renewables. In this architecture, new thermal capacity is being calibrated as supporting, reliability-focused capacity rather than the sole backbone of the system; over time, as solar, wind and nuclear scale up, thermal’s relative share in the mix is expected to decline, even if its absolute capacity rises to meet adequacy needs.

India’s path to adding about 86 GW of new thermal capacity by 2035–36 rests on a multi-layered strategy rather than a simple buildout. The Central Electricity Authority’s National Generation Adequacy Plan has defined the requirement clearly: coal and lignite capacity of 3,15,000 MW by 2035–36, implying a minimum addition of 86,440 MW. A large part of this is already in motion, with around 63,545 MW either under construction (47,545 MW) or awarded (16,000 MW), plus 2,260 MW already commissioned in FY 2026–27.

This pipeline is being executed in a de-risked investment cycle characterised by high long-term PPA coverage, strong fuel supply agreements, more disciplined leverage and better project economics, while technology upgrades—especially supercritical and ultra-supercritical plants—and revised policy targets of roughly 97 GW by 2034–35 align adequacy with efficiency and emissions goals. Massive planned transmission capex of over Rs 9 lakh crore, grid-modernisation tools like STATCOMs and BESS, and expanded inter-regional transfer capacity ensure this new coal fleet can be integrated into a renewables-heavy grid.

With non-fossil capacity already exceeding half the total and a 100 GW nuclear target on the horizon, India is not simply adding coal; it is constructing a more resilient, contract-backed, fuel-secure and grid-integrated thermal fleet designed to underpin a rapidly growing, increasingly renewable-dominated power system through 2035–36 and beyond.

Disclaimer: This article provides general market and sector information based on official data and research reports, and should not be construed as financial or investment advice. Readers are advised to assess industry trends independently and consult a qualified financial advisor before making any investment decisions.