PLF of thermal power plants at subdued level: ICRA

The average plant load factor of thermal power plants on an all India-basis remained subdued in April-August period due to a host of factors including paying capacity constraints of discoms, ICRA said today.

A plant load factor (PLF) is a measure of average capacity utilisation. In the electricity industry, load factor is a measure of the output of a power plant compared to the maximum output it could produce.

"The average PLF for thermal power stations on an all-India basis has remained subdued at 59.3 per cent during 5M FY2017 as against 62.3 per cent in FY2016, due to factors like paying capacity constraints of state-owned distribution utilities, higher generation from the hydro and renewable segment and a sizeable increase in thermal power generation capacity over the last 16 months," ICRA said in a statement.

It further said that going forward, while discoms are likely to benefit substantially from UDAY (Ujwal Discom Assurance Yojana) related measures, improvement in efficiency levels by discoms remains critical for their sustained financial turnaround, and in turn for the healthy off-take and viability of the thermal generation sector.

"We expect average all-India thermal PLF levels to show some improvement...in the near term; although still at subdued levels," ICRA Ratings Senior Vice President Sabyasachi Majumdar said.

"This will be driven by off-take from the discoms, which are likely to benefit with de-leveraging and refinancing of debt on their books under UDAY, policy measures such as flexible utilisation of coal linkages and the e-auction framework for short-term power procurement and improved domestic coal availability," Majumdar added.

Slow progress in signing of the long-term power purchase agreements (PPAs) by the utilities has led to sizeable thermal capacity remaining exposed to price and volume risks in the short-term power market.

In turn, utilities are increasingly showing a preference for tie-up ofshort/medium term PPAs. This is an area of concern for IPP capacity which is awaiting long-term PPA tie-up, especially given the subdued level of short-term traded price level --varying between Rs 2.5-3.5 kwh), both on the reverse auction platform and the power exchange.

Source: http://m.moneycontrol.com/news/economy/plfthermal-power-plants-at-subdued-level-icra_7580921.html

SMART GRID Bulletin July 2017


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