Coal-based Power Plants Likely To Run At 60% Capacity Utilisation In 2019


Coal-based Power Plants Likely To Run At 60% Capacity Utilisation In 2019

The capacity utilisation of coal-fired power plants is expected to hover between 60% and 62% in 2018-19 because of large capacity additions in the past five years, according to India Ratings and Research (Ind-Ra).

Capacity utilisation of coal-based thermal power plants are unlikely to fall below 60% in FY19, even under a blue-sky scenario in which solar addition increases to 18GW annually while new coal-based capacity of 8GW is added. However, coal-based thermal power plants operating at sub 60% PLFs would continue to face challenges in meeting their debt service obligations.

It however says that central government-owned utilities are positioned more favourably than private developers given their ability to better manage counter-party, fuel and off-take risks.

This prompted the analysis firm to keep its outlook for the sector at stable-to-negative for FY19 despite visible improvements in the financial health of select distribution companies and lower dependence of generating companies on imported coal. The improvement in the financial health of certain discoms is attributed to lower transmission and distribution losses, tariff hikes and cost rationalisation.

The agency has maintained a stable outlook on most of its rated power sector entities for FY19, as it expects the entities would continue to manage fuel and counter-party risks due to a favourable tariff mechanism, a comfortable liquidity position and support from central and state governments.

Ind-Ra opines cash flows of certain discoms would improve further in FY19, driven by marginal tariff hikes, increasing proportion of single-part tariff power purchases, installation of prepaid or smart meters to improve collection efficiency and lower billing errors, softer merchant tariff rates, continued usage of higher domestic coal than imported coal, and stable or marginally higher PLFs, leading to lower per unit cost as fixed cost gets absorbed over larger volumes. Read More

READ  Britain Outlines Plans For 2025 Coal-Power Phase Out

Leave a Reply

Your email address will not be published.