Additionally, with increasing share of intermittent renewable energy and rise in industrial open access consumption, it is also expected that overall power procurement structure would undergo a shift as discoms are likely to prefer short/medium-term procurement instead of long-term PPAs, the agency stated.
As much as 35 giga-watt (GW) of conventional power generation capacity is expected to be added between FY19-23 compared with 88 GW added over the past five fiscals, research firm Crisil has said. The slowdown has been attributed to the diminishing scope for new long-term power purchase agreements (PPAs) as major distribution companies (discoms) have already tied up excessive long-term PPAs to meet their respective demand.
Additionally, with increasing share of intermittent renewable energy and rise in industrial open access consumption, it is also expected that overall power procurement structure would undergo a shift as discoms are likely to prefer short/medium-term procurement instead of long-term PPAs, the agency stated.
“A considerable number of under-construction capacities face a potential liquidation risk in FY19-23,” Crisil added, citing the lenders’ reluctance to extend further capital as several under construction projects remain mired in uncertainty.
As FE reported earlier, out of the 25,185 MW thermal generation capacity under construction by the private sector, only 5,085 MW had announced specific commissioning dates, while others were listed by the Central Electricity Authority (CEA) as ‘uncertain’.
Currently, nearly 70,000 MW generation capacity is under construction in the country. According to the CEA’s national electricity plan, coal-based capacity addition of 6,445 MW is required during FY17-22. This accounts for additional under construction coal power plants, committed capacity addition of 3,300 MW nuclear units, 6,823 MW of hydro, 118 GW of renewable capacity, and the likely retirement of 22,716 MW of coal plants by FY22.
In FY18, 8,710 MW of thermal capacity was installed against the target of 13,441 MW. The FY19 target is 8,216 MW.
Crisil expects rapid urbanisation and rural electrification to raise residential power requirement, in turn increasing overall power demand at compound annual growth rate (CAGR) of 6.5-6.8% in FY19-23. Power demand clocked a CAGR of 3.8% over the last five years. Industrial demand, however, is seen to grow at a moderate pace in line with growth in the gross domestic product (GDP) and gradual pick-up in economic activity. Overall investment in the power sector over FY19-23 is seen to be `8.5-9 lakh crore.
Source: financialexpress
