Capacity utilisation of thermal power plants remained subdued in April-December period this fiscal at 59.7 per cent even as the electricity demand grew at 5.8 per cent, rating agency Icra said.
The domestic electricity demand has grown by 5.8 per cent during April-December 2017-18 period mainly led by a significant pick-up in electricity demand in Uttar Pradesh (13.5%), Telangana (12.5%), Madhya Pradesh (8.9%), Maharashtra (7.0%) and Gujarat (6.0%), it said in a statement.
However, it said that despite the recent rise in the electricity demand growth, there is only a marginal improvement in the all India thermal plant load factor (PLF) -- an indicator of capacity utilisation -- to 59.7 per cent for the first nine months of FY2018 as against 59.2 per cent in the corresponding period of previous year.
Girishkumar Kadam, Sector Head & Vice President, Icra said, "The extent of improvement in the thermal PLF was moderated by the increase in the share of renewable energy- based generation in the overall electricity generation mix to 7.9 per cent in 9M (nine months) FY2018 from 6.9 per cent in 9M FY2017, supported by large capacity addition in the renewable energy segment."
Kadam further said that going forward, any sustainable improvement in demand growth remains linked with the extent of improvement in the financial profile of the state-owned distribution utilities (discoms) and demand recovery from the industrial segment.
However, the progress in implementation of the UDAY scheme, in terms of improving the operating efficiency remains slow with AT&C (aggregate technical and commercial or distribution) loss level in many of the states continuing to remain much higher than the targeted loss level agreed under UDAY.
Further, the tariff revision approved by State Electricity Regulatory Commissions (SERCs) in many of the states remains lower than the revision stipulated under UDAY.
The success of the UDAY scheme (meant for revival of debt laden discoms) is mainly linked to these two factors and any deviation would impact the financial turnaround of the discoms and in turn, the demand prospects.
The increase in demand growth, coupled with the decline in generation from hydro, nuclear and wind sources led to a sharp jump in short-term traded power tariffs on the Indian Energy Exchange (IEX) in August 2017 and September 2017.
However, as highlighted by ICRA earlier, the spike in spot power tariff was temporary and the tariffs thereafter declined during the months of November 2017 and December 2017. The average spot power tariff during December 2017 remained at Rs 3 per unit as against Rs 4.09 per unit in September 2017.
"We expect the spot energy tariff to remain subdued i.e. in the range of Rs 3 to 3.5/unit, given the surplus generation capacity available so as to meet the energy demand," Kadam added.
Among other key factors, the coal supply issues have been resolved to an extent, with coal dispatches to power sector by Coal India Limited (CIL) improving by 15 per cent during the period from August 2017 to November 2017 as against a decline in coal dispatches by 0.5 per cent witnessed in the first four months of FY2018.
Also, the board of CIL has recently approved the signing of fuel supply agreement (FSAs) with the winning bidders in the first auction held by CIL for award of fresh coal linkages under the SHAKTI scheme, which would benefit 10 power projects with an aggregate capacity of 9 GW, it added.
Disclaimer: No Business Standard Journalist was involved in creation of this content
