Thermal power plant utilization levels perk up but fuel challenges crimp earnings outlook


Thermal power plant utilization levels perk up but fuel challenges crimp earnings outlook

Power generation companies ended the September quarter on a mixed note, with tight fuel supplies and a spike in prices in the spot electricity market. Total generation increased 4.4%, less than the 5.3% rise witnessed in the year-ago quarter. Thermal power generation, the largest source of electricity in India, increased just 2.2% compared to 8.4% in the year-ago period.

On the positive side, utilization levels continued to perk up. Average plant load factor of the thermal power sector crossed 61% last month. In the six months to September, utilization levels stood at 60.7%, compared to 59.2% last year and 58.8% in 2016. Also, hydropower generation has seen a remarkable pickup last month with an increase of 23%. Generation during the September quarter is higher by 14.8%, compared to a 3.7% fall in the year-ago period.

The improving utilization levels should please industry participants. Huge capacity additions in earlier years sent thermal power plant utilization levels to sub-optimal levels, clouding the earnings outlook. Read More

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