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JAN 12 2018

Subdued growth in thermal power plants utilization as renewables capture demand

  • Economic Times, ET Bureau / Hyderabad
  • Created: Fri 12th JAN 2018


The rising share of renewable energy in India's total power generation has started impacting utilization levels of thermal power plants with a bulk of the incremental growth in power demand being met by solar and wind power stations.

In the nine months between April and December 2018, the country's demand for electricity grew by a healthy 5.8 per cent, largely because of higher power consumption in five states including 13.5 per cent in Uttar Pradesh, 12.5 per cent in Telangana, 8.9 per cent in Madhya Pradesh, 7 per cent in Maharashtra and 6 per cent in Gujarat.

Surprisingly, the higher demand growth did not translate into higher Plant Load Factors (PLFs) for thermal power plants that account for a bulk of India's power generation capacity. The All-India thermal PLF stood at 59.7 per cent in the April-December period, a marginal improvement over 59.2 per cent in the corresponding period previous year.

"The extent of improvement in the thermal PLF was moderated by the increase in the share of renewable energy-based generation in the overall generation mix to 7.9 per cent in 9M FY2018 from 6.9 per cent in 9M FY2017, supported by large capacity addition in the renewable energy segment," said Girishkumar Kadam, Sector Head and Vice President at ratings agency ICRA. "Going forward, any sustainable improvement in demand growth remain linked with the extent of improvement in the financial profile of state-owned discoms and demand recovery from industrial segment," he added.

ICRA also said the progress in implementation of the UDAY scheme in improving the operating efficiency remains slow with AT&C loss levels in many of the states continuing to remain much higher than the targeted loss level agreed under UDAY. "Also, the tariff revision approved by SERCs in many states remains lower than the revision stipulated under UDAY. The success of the UDAY scheme is mainly linked to these two factors and any deviation would impact the financial turnaround of the discoms and, in turn, demand prospects," the agency said in a statement.

Commenting on spot power tariffs, ICRA said the average tariffs in the spot market have come down to Rs 3 per unit in December 2017 from Rs 4.09 in September. Going forward, prices are likely to be in the range of Rs 3-3.5 per unit, Kadam said.

Among the other key factors, coal dispatch to power sector by state-run Coal India (CIL) improving by 15 per cent in the four months between August and November 2017 as compared to a decline of 0.5 per cent in the dispatch for power plants in the previous four months (April-July 2017).



Uttar Pradesh TOTAL Gujarat Madhya Pradesh Maharashtra Telangana Renewable Energy Coal Wind Coal India Limited Power Generation Tariff Wind Power Energy CIL Capacity Addition Power Electricity India Solar

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