Revamping Old Thermal Power Infrastructure – Power Sector’s Newest Opportunity

Revamping Old Thermal Power Infrastructure – Power Sector’s Newest Opportunity

In the last two and half years, Indian power sector has undergone a visible transformation across its complex value chain. Piyush Goyal, the Minister of State with independent charge for Power, Coal and New and Renewable Energy has established a rejuvenation framework for the ailing state distribution companies (discoms) through the UDAY scheme. There has been an increased thrust on renewable energy with India aspiring to be a global leader in solar power over the next few years.

The changes have been a combination of structural ones (which will have a long term impact) and sharp interventions solving immediate problems. The structural changes are largely in the areas of conventional energy sources, transmission and distribution, while the focused changes were undertaken mainly for renewable and power consumption devices. With the supply and the consumption side more or less stable, the other area of the value chain – conventional energy generation – seems to be the next up for a makeover.

Thermal power, the largest conventional source of power in India, has been a sector under tremendous stress. About 70 per cent of all installed power generation capacity in India is thermal, 85 per cent of which is coal fired. These coal based plants are owned by the central government (approximately 25 per cent of the installed base), various state governments (approximately 35 per cent of the installed base) as well as by private players (approximately 40 per cent of the installed base). The business dynamics of these three ownership categories vary widely.

Central government ownership of thermal power is through its power sector central public sector enterprises (CPSEs). National Thermal Power Corporation (NTPC), among the best managed CPSEs in the sector, has been expanding its installed base and running at plant load factor (PLF) of around 77 per cent over the last year. It also manages its operations efficiently, with the plant availability factor around 85 per cent in the trailing 12 months. NTPC has captive power buyers with a small number of large plants driving economies of scale. Read More…

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