The previous fiscal year experienced a surge in demand due to a severe heat-wave, a favourable base, and an economic recovery. ICRA predicts that sustained demand growth will enhance the prospects of signing new power purchase agreements for thermal independent power producers. The agency also forecasts an improvement in the all-India thermal plant load factor from 64.2% in the previous fiscal year to 65.1% in the ongoing financial year.

In FY23, average spot power tariffs in the day ahead market of the Indian Energy Exchange remained high at Rs 5.9/unit. This was primarily due to substantial demand growth, constraints in coal supply, and elevated open market coal prices. While prices are expected to moderate in FY24 with improved coal supply and a moderation in demand growth, tariffs are still projected to remain higher at Rs 4.5/unit compared to the long-term average of Rs 3-3.5/unit. Furthermore, the coal stock level for domestic power plants stands at a satisfactory 13 days as of May 15, 2023, compared to 8 days during the same period in the previous year.