Differentiated impacts of climate physical risks on the Indian power sector

As India faces decarbonization and climate hazards, analyzing financial implications of climate-related risks for power sector is critical. This study presents a forward-looking, location focused, technology-wise analysis of physical climate risks for Indian power companies using novel asset-level methodologies. To assess physical risks, particularly flood exposure, we use spatially explicit modeling across 424 power-generating assets representing over 90% of India's capacity. Monte Carlo simulations reveal that without protective infrastructure, average losses exceed 19%, with 99th percentile tail risks surpassing 24%. However, investment in 100-year flood protection reduces average losses to under 1% and tail risks to below 2%. Results show that the effectiveness of risk mitigation varies significantly by technology and geography, with coal and gas assets benefiting most from protective investments, and coastal regions like Kerala and Gujarat showing highest vulnerabilities. This study provides a comprehensive empirical quantification of physical climate risks for Indian power firms at asset levels.