Covid-19 may impact India’s coal-fuelled power plants using Chinese equipment

The Covid-19 outbreak has now cast doubts over a part of India’s conventional electricity generation space, with around 90 giga watt (GW) coal-fuelled capacity based on Chinese power generation equipment.

With supply chains being disrupted, this installed and under-construction capacity has been placed with Chinese manufacturers such as Dongfang Electric, Shanghai Electric and Harbin Power. Mint earlier reported about concerns over Chinese equipment and their operation and maintenance, given the strategic importance of such power projects.

This comes in the backdrop of India’s domestic power demand, expected to go up with more people staying indoors, given the three-week nationwide lockdown from midnight Tuesday, in the world’s largest such exercise aimed at stemming the spread of coronavirus.

According to Mint research, of around 62 GW of under-construction coal fuelled capacity, orders for 30% or 18.6 GW has been placed with Chinese manufacturers. Apart from competitive prices, the developers were attracted by aggressive financing options, which involved not only low interest rates, but also relaxed covenants.

To be sure, commercial and industrial electricity demand is likely to come down given the expected shift in electricity load patterns that also comes in the backdrop of the onset of summer. Also, given India’ installed power-generation capacity of 368.69 GW, the disruption in supply chain may not have an immediate impact on the Indian power markets.

India’s peak electricity demand came down to 145,495 MW on 23 March from 163,729 MW on 20 March. India’s peak demand in FY19 was 168,745 MW and touched an all-time high of 176,724 MW in April last year.

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