Thermal power plants performance set to improve; Excess capacity could decline over FY22-FY24

The operating performance of thermal power plants could improve meaningfully, given the change in the incremental demand supply equation after a decade, according to research agency India Ratings (Ind-Ra).

This lowering of supply is because of the limited capacity addition of thermal power plants, the retirals or phasing out of old capacities largely from the state sector and the slowdown in renewable capacity addition, it said.

“The demand side is likely to remain robust on account of a pickup in industrial activity, early signs of capex revivals, given the strong balance sheet position of corporate India, and pick-up in exports,” the firm said in a statement.

This is likely to translate into higher plant load factors (PLFs) beginning FY22 which have continued to fall since FY11. The research agency also expects a pick-up in PLF of plants which are placed lower in the merit order.

“The biggest beneficiaries of the upward swing in generation would be the players with open merchant capacity and good merit order positioning, followed by regulated plants,” it said.

ET Energy World
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