The Economic Times daily newspaper is available online now.

    PLF of coal power plants to hit a 5-year high this fiscal

    Synopsis

    This will help improve the credit risk profiles of one-third (25 GW) capacities of private generating companies (gencos) the most, with their operating profit expected to touch a five-year peak, it said.

    PowerAgencies
    The plant load factor (PLF) of Indian coal-based power plants will improve over 300 basis points (bps) to 62% this fiscal — the highest in the past five fiscals — fuelled by strong demand growth and limited capacity addition in the sector, a CRISIL Ratings estimate shows.

    This will help improve the credit risk profiles of one-third (25 GW) capacities of private generating companies (gencos) the most, with their operating profit expected to touch a five-year peak, it said.

    Annual power demand recovered sharply last fiscal, rising 8.2% on-year, tracking the 8.7% growth in gross domestic product (GDP) as the pandemic impact eased. This fiscal, with GDP growth expected at 7.3%, power demand is likely to rise over 6% year-on-year given the high correlation between GDP growth and power demand growth.

    However, capacity addition remains low compared with demand growth. Coal gencos added just ~2% capacity annually in the past five years vis-à-vis annualised demand growth of 3.4% and may add 3.5% (~7 GW) this fiscal against demand growth of over 6%, it said.

    Manish Gupta, Senior Director, CRISIL Ratings, said, “Private players are averse to adding coal-based capacities (none in the past five years) with an eye on renewable power. This aligns with the government’s plan to ramp up renewable generation5 to meet 50% of the cumulative demand by 20306. However, renewable addition will meet barely a third of the incremental demand, in fiscal 2023, and the onus will be on coal gencos to fill the gap. This will power their PLFs to a five-year high of 62% this fiscal, building on their fortunes last fiscal.”


    (You can now subscribe to our Economic Times WhatsApp channel)
    (Catch all the Business News, Breaking News Budget 2024 News, Budget 2024 Live Coverage, Events and Latest News Updates on The Economic Times.)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    ...more

    (You can now subscribe to our Economic Times WhatsApp channel)
    (Catch all the Business News, Breaking News Budget 2024 News, Budget 2024 Live Coverage, Events and Latest News Updates on The Economic Times.)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    ...more
    The Economic Times

    Stories you might be interested in