Ind-Ra: Gas-Based Power Plants Await Revival

Ind-Ra: Gas-Based Power Plants Await Revival

The plant load factor (PLF) of gas-based power plants (GBPPs) is likely to decline further in FY18, says India Ratings and Research (Ind-Ra). The expectation is based on the a) closure of the scheme for the revival of GBPPs by way of government subsidy through the power system development fund, b) higher variable cost of generation than that for coal-based power plants and other alternatives c) availability of lower-cost power on the power exchanges and d) no improvement in the domestic gas production.

The Indian government had announced a subsidy scheme in FY16 to revive GBPPs, leading to PLFs of GBPPs marginally improving to 23% in FY17 from a low of 21% in FY15. The subsidy scheme added only 2%-3% to PLFs over FY16-FY17 compared to the FY15 PLF. The implementation of the scheme led to the additional generation of about 15 billion kWh in FY16 and FY17, which is below 1% of the total electricity generation.

The private sector owned GBPPs were the worst hit (PLFs; FY17: 14.4%; FY11: 70.5%) due to the lack of long-term power purchase agreements (PPAs). The presence of PPAs with the central and state government owned plants allows them get some schedule in the merit order dispatch. Read More…


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