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Thermal Power Plants’ Performance Set to Improve Meaningfully; India Ratings

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India Ratings and Research (Ind-Ra) believes that the operating performance of thermal power plants could improve meaningfully, given the change in the incremental demand supply equation after a decade.

 

"The incremental demand is likely to outstrip the incremental capacity addition. This lowering of supply is driven by i) the limited capacity addition of thermal power plants, ii) the retirals/phasing out of old capacities largely from the state sector, and iii) the slowdown in renewable capacity addition. The demand side is likely to remain robust on account of a pickup in the industrial activity, early signs of capex revivals, given the strong balance sheet position of corporate India, and pick-up in exports. This is likely to translate into higher plant load factors (PLFs) beginning FY22 which have continued to fall since FY11," the ratings agency has said.

Thermal Power Plants’ Performance Set to Improve Meaningfully; India Ratings

Ind-Ra expects a pick-up in PLF of plants which are placed lower in the merit order, followed by others.

"4QFY21 was a precursor of the way operating performance of plants could rise. The biggest beneficiaries of the upward swing in generation would be the players with open merchant capacity and good merit order positioning, followed by regulated plants. Though regulated plants tend to get their fixed cost recovery basis plant availability, a higher PLF would result in better operating parameters leading to energy savings, and a higher PAF would result in capacity incentives," the ratings agency has noted.

Read more about: india ratings power
Story first published: Tuesday, June 15, 2021, 10:14 [IST]
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