(MENAFN- IANS) New Delhi, Sep 3 (IANS) India's power sector saw increased capacity commissioning in July, aided by strong policy incentives, adding 2 GW of conventional and 3.2 GW of renewable capacity, a report said on Wednesday.

This addition has taken year-to-date (YTD) additions in FY 26 to 21 GW, according to an HSBC Global Investment Research report.

The research report projected the commissioning of 11.7 GW of thermal power, 3.8 GW of hydropower, and 36 GW of solar power during FY26. The overall power demand increased 4.4 per cent YoY in August and over 2 per cent in July upon a low base.

"However, it is important to note that, despite the growth last month, power demand hasn't crossed August 2023 highs. This proves the importance of weather-related disruption in determining the strength of India's power demand and its greater weighting than manufacturing-led power growth," the report added.

Cooler weather led to a reduction in thermal plant load to 64 per cent Plant Load Factor (PLF), the lowest level for July in ten years.

A rise in renewable power (excluding hydro) share brings to light the question of grid stability and state discom acceptability, unless battery installation picks up fast, the HSBC report noted.

In July, renewables excluding hydro accounted for 20 per cent of generation, while hydro contributed 13 per cent. While wind contributed 10 per cent of generation, solar lagged at 7.3 per cent share on account of rain.

"We believe that increasing battery storage is the best solution due to its quick commissioning (unlike pumped storage), the firm noted. The government has provided both policy and fiscal support, and recently discovered storage tenders (the most recent at INR6.64/kWh of storage-based power) look promising," the report said.

Chinese anti-innovation policies have raised cell prices, it said, adding that module prices, however, remained stable, indicating overcapacity in the system.

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