Poor demand to keep private power producers under stress in medium term
Rahul Prithiani, Director, CRISIL Research
The irony couldn’t be starker: for a country where significant stretches remain untouched by electricity, leave alone enjoy uninterrupted power. Power producers are battling a glut.
Recent years have seen aggressive capacity additions, led by the private sector. Between fiscal years 2013 and 2017, installed capacity saw a compound annual growth rate of 10%, with a whopping 130 GW (including renewables capacity) added.
However, power demand grew at a tepid 4% a year, given weak financial health of distribution companies (discoms) which restricted their power off-take ability, sluggish industrial growth, and rising energy efficiency measures taken by the government.
Not surprisingly, the average plant load factor (PLF) for thermal plants fell to 60% last fiscal from 70% in 2013. It was even lower for the private sector – for these producers, PLFs were at 56% last fiscal.
This has put the generation companies in a fix. The duress is more in the private sector, which added 87 GW of capacity between 2009 and 2017, a chunk of it without adequate offtake and fuel arrangements.
🔒 This article is for subscribers only. Log in to read.
Published on:
10 October 2017
Published in: NBM&CW October 2017
Share:
We Value Your Comment
