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Coal-based thermal power units' plant load factor (PLF) or capacity utilisation will improve to 65 per cent in the current fiscal year despite record renewable energy capacity addition, according to Crisil Ratings.
"Healthy PLFs along with lower receivables and encouraging fuel supply will support the credit profiles of private coal-based generating companies (gencos)," Crisil Ratings said in a statement.
The PLFs of coal-based power plants in India will improve to 65 per cent this fiscal despite record renewable energy (RE) capacity addition, it added.
Over the past two fiscals, electricity demand witnessed a robust 8-9 per cent annual growth, driven by the post-pandemic economic rebound, the agency noted.
During this period, 34 gigawatts (GW) of capacity has been added, with 90 per cent of it in RE, the statement said.
In GW terms, this is a 9 per cent growth in power capacities, but on normative terms this was only 4-5 per cent growth as capacities operate at varying PLFs, and in this incremental supply, coal-based power plants remain an important cog, accounting for 69-71 per cent of total power generation because of the intermittent nature of RE with lower PLFs, it added.
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Crisil Ratings Director Ankit Hakhu said, "Power demand is seen growing 5-6 per cent, and a part of the incremental requirement will be met by the newly added RE capacities, including 18 GW in wind and solar, the highest ever. That said, a good portion of the incremental generation will be met by existing coal-based power plants".
This will prove beneficial for thermal PLFs, which are likely to improve by 100 basis points (bps) to over 65 per cent in fiscal 2024, as no material coal-based capacity is envisaged in this fiscal and relatively low-capacity addition of hydro, biomass and nuclear, Hakhu said.
Crisil Ratings Team Leader Mithun Vyas said, "Overall, we expect coal-based power plants rated by us to witness over 20 per cent on-year rise in cash flow from operations (CFO) this fiscal. Consequently, CFO to total debt for these power plants will improve from 11 per cent as on March 31, 2023, to an estimated 15 per cent as on March 31, 2024".
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