The country’s thermal power generation, which showed an annual 1% decline in April despite a peaking summer, has grown 5.5% in May, reflecting an increase in demand, reports Sumit Jha in New Delhi. However, this was partly aided by new
units going on stream as utilisation at most units continued to stagger. According to an IDFC report, the plant load factor of thermal units — coal and gas-based as well as nuclear — dropped to 63.8% in May from 67.7% in the previous month (see chart).
Thermal units’ PLF had touched 65.11% in FY15, the lowest in 15 years, even as capacity addition overshot the target.
The PLF for coal-based plants has been progressively declining since it achieved a high of 78.75% in FY09. Apart from the economic slowdown that impacted demand growth, paucity of gas led to nearly two-thirds of gas-based capacity getting stranded and the rest operating at grossly sub-optimal levels.
“This (the increase in generation) is in sharp contrast to weak demand in the past two months,” IDFC said. Of course, the increase in generation witnessed in May was higher than the 2% reported in the same month in the previous year.
The April-July period has traditionally been high-generation months owing to the summer heat. Industry experts, however, cautioned against reading this as a definite sign of revival in the economy and added that the data for next three months will be crucial in arriving at a conclusion.
Electricity production, as measured by the index of industrial production, had contracted 0.5% in April (on an unfavourable base of 11.9%), compared with 2% in March.
The rise in generation in May is attributed to newer capacity additions. Thermal capacity addition of 20,830 MW in FY15 was the highest ever and overshot the target.
The falling PLF is also due to the lingering financial problems of most of state-owned distribution companies (discoms). As per official estimates, the accumulated losses of discoms are close to Rs 2 lakh crore now. Despite a financial restructuring plan (FRP) to revive the discoms, most of them refrained from stepping up power purchases given their inability, under political pressure, to meet the FRP performance criteria including timely tariff revisions.
Analysts noted that the capacity addition seen during 2008-12 was despite persisting problems of non-availability of fuels. An increase in domestic coal output — it grew 7% in FY15 and a 10% growth is projected for the current fiscal — has remedied the situation a bit. With the economy showing signs of a recovery and the coal evacuation infrastructure to be in place with the proposed joint ventures among the Coal India, state governments and the railways augur well for the power sector.
The PLF would eventually see an upward trend as a result of lack of new capacity addition going forward, analysts said.
The lack of enough demand for electricity is further manifested in the spot market where the market clearing price over the last three months — March 2015 to May 2015 — reduced from Rs 2.82 per unit to Rs 2.56 per unit.
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