Thermal power plants are reporting higher capacity utilisation, reversing the trend that persisted for more than seven years as fewer new units came up and generation from other sources fell.
Between April and November this year, utilisation was close to 60%, which analysts say is a level that makes plants financially viable. Power generation during the period was around 4.5% higher than the previous corresponding period.
Capacity utilisation had fallen to 59% in this period last year, dropping regularly since 2010. However, it started rising since August this year. Capacity utilisation in April-November has exceeded the target of 58.32%.
Sabyasachi Majumdar, senior vice president at ICRA Ratings, said that at 60% capacity utilisation margins of thermal power plants which provide for operating costs including interest cost, other than coal costs, starts to get fully covered. Less than 60% may lead to losses.
Private sector plants and central generators exceeded their capacity utilisation targets by 2.8 %.
Majumdar said capacity utilisation rose because of of increased demand for thermal power as generation from other sources such as hydropower declined.
In the past year, 5,000 megawatts of new capacity came up, which is much lower than the previous year, which helped increase utilisation, said Ashok Khurana, director general of the Association of Power Producers.
“The government intends to slow down on thermal capacity addition and increase renewable generation capacity. As lesser thermal capacities are added plant load factors will start to rise gradually,” he said. Read More