Power consumption grew at 9% in FY23: Report

Power consumption growth: The power consumption grew at a healthy nine per cent, reaching approximately 1500 BUs, a report by CareEdge stated on Monday. The power demand in India has seen a significant surge following the Covid-induced slowdown. According to this report, this trend is expected to continue, with a projected growth rate of 7 per cent annually, leading to an expected demand of around 1908 BU by FY27. The report added further that meeting this demand necessitates an addition of approximately 212 GW in power capacity from FY22 to FY27.

Capital Expenditure Requirements

In a bid to accommodate this growth, a substantial capital expenditure of around Rs 14.5 lakh crore is anticipated for the same period, with a major portion allocated to renewable energy and the rest to conventional sources. “This investment will predominantly be funded through equity (25 per cent) and debt (75 per cent), primarily from infrastructure finance companies focused on the power sector,” the report added. 

The report mentioned further that power-focused Infrastructure finance companies (IFCs) are positioned to significantly contribute to this expansion, with an improved financial profile characterized by a reduction in gross NPA ratios and an increase in returns on total assets. 

Their role is critical, given their ability to provide long-term loans and expertise in loan assessment and monitoring. 

While banks' exposure to the power sector has remained stable, power-focused IFCs have seen consistent growth in their loan books, indicating an increasing market share. This trend is expected to continue, with a projected disbursement of close to Rs 2.9 lakh crore in FY24, primarily driven by increased funding in the renewable sector and government schemes