Thermal Power Plants’ Capacity Utilisation On The Rise After 7 Years Of Downtrend

Thermal Power Plants’ Capacity Utilisation On The Rise After 7 Years Of Downtrend

Capacity utilisation of thermal power plants has started edging up after a downtrend of more than seven years, data from power department showed.

Analysts attributed it to fewer units being commissioned and a fall in generation from other sources Between April and November this year, capacity utilisation was close to 60 per cent, which analysts said is a level that makes plants financially viable.

Power generation during the period was about 4.5 per cent higher than the year-ago period. Capacity utilisation had fallen to 59 per cent in this period of 2016, dropping regularly since 2010. However, the downtrend reversed from August this year, with capacity utilisation in the April-November period exceeding the target of 58.32 per cent.

Sabyasachi Majumdar, senior vice-president at ICRA Ratings, said that at 60 per cent capacity utilisation, margins of thermal power plants, which provide for operating costs including interest cost, other than coal costs, start to get fully covered. Less than 60 per cent may lead to losses.

Private sector plants and central generators exceeded their capacity utilisation targets by 2.8 per cent, data showed. Majumdar said capacity utilisation increased because of higher demand for thermal power as generation from other sources, such as hydropower, declined.

Last year, 5,000 megawatts of new capacity came up, which is much lower than the previous year’s, which helped increase utilisation, said Ashok Khurana, director-general of the Association of Power Producers. Read More

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