Editorial July 2018

After almost a decade of decline,  the coal-based power industry’s plant load factor (PLF) is finally showing signs of improvement. In the last fiscal year ended 2017-18, overall coal PLFs rose by 95 basis points to 60.52 per cent over 2016-17, and in the first two months of the current fiscal year, the overall industry PLF climbed to 65.19 per cent, an improvement of over 100 basis points over the same period a year ago.

Interestingly, the improvement in PLF was largely contributed to by central and state sector-owned coal-based plants, which reported PLFs of 76.96 per cent and 64.86 per cent respectively during April-May 2018. While the PLFs of state sector-owned plants increased by an impressive 383 basis points during this period, the central sector plants showed an improvement of 303 basis points.

However, the PLFs of private IPPs failed to cross even the 60 per cent mark. They, in fact, declined further to 56.31 per cent, almost 255 basis points lower than the previous year, indicative of the fact that the industry continues to remain under stress owing to coal shortages (mainly due to logistical bottlenecks), besides the legacy problems of lack of demand from discoms.

The improvement in PLF has, no doubt, been modest. But the last time the sector’s PLF crossed the 65 per cent mark was back in 2013-14 (65.5 per cent). In the past few years, cheaper renewable generation has impacted coal-based power demand.

With power demand expected to pick up in large states on the back of the government’s electrification drive and improvements in discom health, there could be enough room for the system to absorb both thermal and renewable power in the future. Can this change in trend be sustained is something the industry will have to wait and watch.

 

GET FREE ACCESS TO OUR ARTICLES

Enter your email address