Conventional Energy: Macro Remains Hazy But Company Specifics Begin To Appeal


Conventional Energy: Macro Remains Hazy But Company Specifics Begin To Appeal

Macro view of the conventional energy sector remains unappealing. Demand continues to grow at a sedate pace. Utilization levels remain sub-optimal and the government and the financial institutions are yet to find a meaningful solution for stressed projects.

Yet, from the equity markets’ and the listed companies’ perspective, there are enough reasons for investors to continue to keep a close watch on the sector. Apart from the central government’s push to revive and improve the distribution sector (a major reason for most of the industry’s ills now), there are two sets of supportive factors.

One of them is the spike in thermal power generation and spot power tariffs in August 2017. Many reasons were attributed for that— unusual drop in wind and hydropower generation, maintenance outages of thermal capacities and coal shortage. But the situation also illustrated the shortcomings of renewable power—it is variable in nature. Importantly, it highlighted the importance of conventional energy, especially thermal power, to continue to meet India’s energy needs. Read More…

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