Power plants’ capacity utilisation at record low

NEW DELHI: This summer has been the worst ever for both consumers and power generation companies. Thermal plants have run at the lowest capacity in 20 years, plagued by a combination of acute fuel scarcity and the inability of cash-starved distribution companies to buy electricity from plants using costly imported fuel. Most coal-based power plants can’t recover even their operating costs while running gas plants has become commercially unviable due to almost zero availibility of fuel. Ironically, new plants using the fuel-saving ‘supercritical’ technology are the worst hit as their efficiency decreases at low utilisation.

The average plant load factor (PLF), a measure of capacity utilisation, has dropped to an unprecedented 68.75% for coalbased power plants during the April-June quarter when normally demand for electricity is high.
Average utilisation of coalfired plants dipped to 64% this June. Gas-based power projects operated at just 29% of their capacity during the first quarter and at 22.5% last month.

Experts said power companies were forced to cut down their generation due to fuel shortage and distribution utilities’ reluctance to buy imported fuel-based high cost electricity. Early monsoon led to fall in demand in some states that added to the woes of the generation companies. “The situation is a culmination of various things, including coal and gas shortage and less requisition by states adding up to non-productive use of capital investments. The

PLF is close to the 68.5% level that the power plants touched in the early 90s,” PricewaterhouseCoopers executive director (infrastructure) Kameswara Rao said.

Rao said while distribution companies are forcing power cuts on consumers despite availability of electricity, coal-based generators are forgoing incentives on their investments at this PLF. However, he said operating gas plants at such low level was not feasible.

Deloitte Touche Tohmatsu India senior director Shubhranshu Patnaik said average PLF of Indian thermal plants has been low since late last year, but was expected to pick up during April-June when demand is higher than other periods.

Association of Power Producers director general Ashok Khurana said, “It is surprising to see plants are backing out of generation in the month of June for want of demand. This clearly shows the distribution utilities are suppressing demand to avoid buying the high cost power resulting in low PLF.”

India’s largest power producer NTPC failed to generate close to 10% of its capacity since April. It lost 6 billion units (1,700-mw) generation due to less demand from state distribution companies and 4 billion units (1130 mw) due to fuel scarcity till June. The company did not generate 20.4 BUs (5,800 mw) last fiscal.