PLF of coal-based power plants already fell to 56.1% for FY20 compared to 60.3% for FY19. Thermal PLF had touched an all-time low of 48.9% in October 2019.
Lower industrial output is seen to further reduce the utilisation levels of thermal power plants in the current fiscal. Care Ratings expects “decline in plant load factor (PLF) of thermal power plants to below 53% during FY21 on account of subdued demand from industrial and commercial segments and gradual ramp-up in economic activity post COVID-19 lockdown”. PLF of coal-based power plants already fell to 56.1% for FY20 compared to 60.3% for FY19. Thermal PLF had touched an all-time low of 48.9% in October 2019.
PLF of thermal power plant fell with annual electricity consumption recording a meagre growth of 1.3% in FY20, the lowest in six years. Industrial and commercial consumers have a 45% share in total power consumption. In FY20, power consumed by highly industrialised states like Gujarat, Maharashtra and Tamil Nadu was lower than their respective volumes in FY19, underscoring the fact that muted activity in factories was one of the principal reasons for the fall in demand for electricity.
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To be sure, the rising share of renewable energy has also contributed to the fall in thermal PLFs. Power supplied from renewable energy in FY20 was 8.8% higher than FY19 with such generation capacity rising by about 12% in the same period. Extended monsoon and the consequent reduction in demand in agriculture sector and lower cooling requirement in the domestic and commercial sectors were also responsible for lower demand and thermal PLFs.
Even in the low-demand scenario, thermal power plants with long term power purchase agreements (PPAs) can recover their fixed costs which they are contractually entitled to receive for recovering capital expenses. However, the plants need to display a minimum plant availability of 83% to claim the fixed costs. Care Ratings noted that since power plants now have higher coal inventory, they will be in a position to declare higher plant availability, making fixed cost recovery easier.
However, “merchant power from independent power producers are likely to be impacted due to absence of long-term PPAs with discoms and anticipated fall in spot prices which could make them highly susceptible,” the agency noted. About 25-30 giga-watt of thermal power capacity have no long term PPAs.