Demand surge seen lifting coal-fired power plants out of misery

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NEW DELHI: The surge in power demand is seen giving India’s Coal-fired power plants a fresh lease of life as they are expected to operate at 62% of their capacity in the current fiscal, the highest in five years, to fill the gap arising from electricity consumption outpacing thermal capacity addition.
The plant load factor, or the run rate, of coal-fired plants is expected to increase by 300 basis points in the current fiscal, a development that Crisil Ratings on Monday said will benefit a third of the 73 GW (gigawatts) private sector generation capacity the most by improving their credit risk profiles and pushing operating profits to five-year highs.
The agency’s senior director Manish Gupta pegged the annual coal-based capacity addition at 2% in the past five years against annualised demand growth of 3.4%. He expected the capacity addition to be 3.5% (7 GW) this fiscal against 6% demand growth on the back of 7.3% GDP growth estimate.

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“Private players are averse to adding coal-based capacities in line with the government’s plan to meet 50% of the cumulative demand from renewable generation by 2030. However, renewable addition will meet barely a third of the incremental demand in fiscal 2023 and the onus will be on coal gencos to fill the gap,” Gupta said.
Ankit Hakhu, director, said all-time high merchant power prices have started pushing discoms (distribution companies) to enter term contracts with gencos in the past 12 months. The trend will pick up further due to the new Central rule barring discoms from buying merchant power over unpaid bills of gencos.
India’s annual power demand recovered sharply in 2021-22, rising 8.2% from a year ago, “tracking the 8.7% growth in GDP (gross domestic product) as the pandemic impact eased.
The power ministry last week said demand has been growing at 15-20% (month-on-month) in energy terms since August-September 2021 onwards.
The Central Electricity Authority pegs India’s total installed capacity at 401 GW. Coal-based capacity is pegged at 2,04,079 MW (mega watt), hydro 46,722 MW and renewables 1,01,532 MW.

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