Sustained energy demand recovery is absent: Study

The recent uptrend in the electricity demand growth has led to a marginal improvement in the all India thermal PLF (plant load factor or capacity utilisation) to 59.9 per cent for the first five months of 2017-18 as against 59 per cent in the April-August period of last fiscal, ICRA said.

The government has recently launched Saubhagya Scheme with a thrust on rural electrification, which will improve an energy demand in the near to medium term in ICRA s view, if the scheme is implemented in a timely manner.

It said in a statement that a sustained demand recovery, however, is still absent and thus energy demand growth from the relatively high tariff paying industrial and commercial segments remain critical for both the state distribution utilities and IPPs. Also, it added, the stressed thermal capacity (in private IPP (independent power producers) segment remains sizeable at about 60 GW, despite the various policy level initiatives undertaken by the government.

This affected thermal capacity is due to several issues such as lack of long-term (LT) power purchase agreements (PPAs), non-availability of domestic gas and unviable tariffs in the PPAs (power purchase agreements) due to capital cost escalation and fuel pricing issues for imported coal, ICRA said.

"Among this, affected capacity due to lack of LT PPA remains quite significant and estimated at about 25 GW," said Girishkumar Kadam, Sector Head & Vice President, ICRA Ltd.