Moneycontrol Pro Panorama | Obits for thermal power prove to be premature

The Indian stock market ended the session on September 12 with handsome gains. Sensex ended the day 312.26 points higher or 0.52 percent at 60,105.40. Nifty added 97.50 points or 0.55 percent to close at 17,930.80.

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The energy crunch and the steady rise in demand is nudging policymakers and planners to revisit their projections for the Indian power sector.
The Central Electricity Authority (CEA) which had suggested no fresh requirement for thermal power plants during 2017-22, is now projecting an additional requirement for coal-based plants in the upcoming five-year periods ending 2026-27 and 2031-32. Note that the estimates are over and above the capacities that are already under construction.

“It is seen that apart from under construction coal-based capacity of 25 GW, the additional coal-based capacity required till 2031-32 may vary from 17 GW to around 28 GW,” CEA said in draft National Electricity Plan. One gigawatt (GW) equals 1,000 megawatts (MW).

The above-mentioned power plants can expand the thermal capacity base by as much as 15 percent, a notable rise compared to FY17-FY22.

Separately, R. K. Singh, Minister of Power and New & Renewable Energy, told the Economic Times the government is working on a plan to revive stalled gas-fired plants. India has 24,899 MW of installed gas-based power plants. A large portion of these gas-based plants are running at below par capacities due to unavailability of the fuel. It is not yet clear how the government plans to resolve the problem of gas shortages. But the minister is confident there will be takers for high-cost power given the rising demand scenario.

The CEA’s initial projections and government’s renewed efforts to revive gas-based plants may not trigger a broad-based revival of the thermal sector, but the prospects are no longer dim, particularly for existing companies.
Given the land acquisition challenges, CEA believes the incremental thermal power capacities must be built in existing power plant locations. That gives the companies such as NTPC an edge. We have recently written on the aspect. You can read it here. Also, the growing requirement for thermal power improves the outlook for Coal India, though much also depends on the company’s ability to raise prices and production.

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R Sree Ram Moneycontrol Pro