March 17, 2026 - Coal-based thermal power could see an increased role in the coming months as supplies from gas and hydro fall, according to brokerages. Currently, about three-fourths of India’s electricity comes from coal, while renewables account for 22% of generation.

Morgan Stanley has flagged rising risks of lower gas and hydro supplies in the first half of FY27. “Thermal coal-based power generation could take increment load, with a risk of higher solar curtailment in specific pockets, which would support a smoother ramp-up in thermal coal power,” the global brokerage said in a report. 

Gas and hydro power generation accounted for 2% and 9% of India’s power generation in FY26, respectively.

Geopolitical Headwinds

JM Financial said given the current geopolitical developments, it envisages higher probability of a scenario of persistently high LNG prices and intense summer leading to a spike in coal-fired generation to meet evening demand.With potential gas and hydro deficits, brokerages expect higher plant load factors (PLFs) for thermal utilities. Under Section 11 of the Electricity Act, 2003, the government can direct power plants to maintain output during extraordinary circumstances—a measure seen as likely if shortages materialise. 

Grid Resilience

Morgan Stanley expects that power demand volatility, coupled with emerging supply risks, could benefit thermal-heavy companies such as Adani Power and JSW Energy. Tata Power and Torrent Power could gain if Section 11 is invoked, while NTPC’s valuations may re-rate depending on peak deficit conditions.