Coal based power generation hit by rain, sun and wind

Longer periods of monsoon, coupled with the effect of higher generation from renewable sources such as wind and solar energy have led to lower electricity generation from thermal power plants in June. Overall electricity generation in the month has risen by a meagre 2.2% to 107.8 billion units (BU). This also fuels the fear of a low-demand growth in the sector. Since electricity cannot be stored, power generation is the most robust estimate for power demand. Overall electricity generation in the first quarter of FY18 increased by 5.3% to 333.4 BU. Electricity generation from renewable sources increased by 26% in June from the same month last year.

Renewable energy plants, owing to their ‘must-run’ status, are not asked to back down to stabilise the grid during the period of lower power demand. To save on fuel costs, thermal projects are asked to back down first in such cases. Electricity generation from thermal power plants slipped by 1.6% to 80.3 BU in June. The average plant load factor (PLF) of thermal plants was 57.5%, which is 3.2 percentage points lower than last year. PLF levels at state and private power plants were at 52.4% and 52.1% respectively.

Power plants operating at low PLFs find it difficult to service debts. About 33,000 MW of coal-based power plants currently do not have long-term power purchase agreements due to lack of steady demand. The cumulative cost of these projects is about `2 lakh crore. Out of this, more than 18,000 MW are already commissioned.

Power demand was also affected by higher rainfall in the country in June. “The continuous spell of pre-monsoon showers across northern India in June 2017 led to a reduction in temperature leading to lower power demand,” research firm India Ratings noted. Peak power demand fell by 4% to 149.1 GW. Total energy requirement in the month was 96.8 BU, an annual drop of about 3%. Demand for electricity had grown at a much lower pace than government projections in the last five years.

FINANCIAL EXPRESS

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