India’s energy landscape is witnessing an unprecedented transformation, with power demand soaring to an astounding 250 gigawatts (GW) in FY25, a remarkable leap from 148 GW in 2014. This staggering 68% increase over the past decade is largely attributed to industrial growth, advancements in agricultural practices, wider access to electricity, and the rising popularity of air conditioning systems.

Surge in Power Demand Driven by Air Conditioning

A recent report from the International Energy Agency (IEA), titled Global Electricity Outlook (2025), reveals that air conditioners contributed approximately 60 GW to the peak load in 2024. This figure is projected to rise significantly, potentially accounting for one-third of total demand and reaching 140 GW in the near future.

• Demand Growth: Energy consumption from air conditioning units is expected to triple by 2050, equating to the installation of 10 new air conditioners every second for three decades.
• Emerging Sectors: Additionally, the burgeoning demand from data centers and the increasing use of artificial intelligence are set to further escalate electricity consumption.

The IEA predicts a robust annual growth rate of 6.3% in India’s electricity demand over the next three years, surpassing the 5% growth observed from 2015 to 2024. The National Electricity Plan anticipates that peak demand could climb by 55%, reaching 388 GW by 2032.

Investment Opportunities in the Energy Sector

In this evolving energy scenario, two companies are poised to reap the benefits of escalating demand. Let’s delve into their potential.

1. TD Power Systems

TD Power stands out as a leading manufacturer, specializing in generators of up to 200 MW capacity. As of Q3 FY2025, the company has successfully delivered over 6,907 generators across 110 countries, with a significant market presence in Europe and North America.

• Diverse Offerings: Their product range includes steam, hydro, diesel, and gas generators, catering to various industries like cement, sugar, oil and gas, and data centers.
• Revenue Growth: The company achieved a 26% increase in revenue, totaling ₹9.4 billion in 9MFY25, driven by heightened demand in gas engines and turbines. The net profit surged by 37% to ₹1.2 billion, showcasing effective cost management and economies of scale.

Looking forward, TD Power’s order backlog has reached ₹13 billion, with a diversified inflow of ₹10.6 billion in 9MFY25, marking a 40% rise compared to the previous year. The company anticipates a 20% increase in revenue, projecting ₹15 billion for FY26.

• Expansion Plans: To meet the growing demand, TD Power is investing ₹1.4 billion in a new manufacturing facility, which will commence operations in FY26.

2. Power Grid Corporation

Power Grid is India’s largest power transmission firm and a Maharatna Central Public Sector Undertaking. As of Q3 FY25, it operates a vast network comprising 179,594 circuit kilometers of transmission lines and 280 substations, boasting a transformer capacity of 552,961 mega volt-amperes.

• Reliable Operations: The company is responsible for about 84% of inter-regional transmission capacity, with a system availability rating of 99.81%.
• Stable Revenue Model: Nearly 95% of its income derives from long-term transmission service agreements, ensuring predictable revenue streams.

In terms of financial performance, Power Grid reported stable revenue and profit figures of ₹34,869 crore and ₹11,379 crore in 9MFY25, respectively. The company holds a promising order book of ₹1.4 lakh crore, providing visibility for earnings over the next three years.

Future Prospects and Conclusion

The Indian government’s commitment to invest ₹4.9 lakh crore between FY27 and FY32 underscores the urgency to scale up power generation capacity to meet the anticipated demand of 997 GW.

Both TD Power and Power Grid are well-positioned to harness the growth potential in India’s evolving energy landscape. TD Power offers substantial growth prospects with its expanding export market and robust order book, while Power Grid provides stable returns backed by long-term contracts and a commitment to infrastructure development.

As India’s electricity demand continues to climb, investors may find opportunities in these two key players, balancing growth potential with the stability of returns, depending on their investment strategy.

Disclaimer

This article is intended for informational purposes only and should not be considered investment advice. Always consult with a financial advisor before making investment decisions.