India likely to fall short of total power capacity addition target in FY18

The country is likely to fall short of its total power capacity addition target of 13171.15 Mw for 2017-18. At the end of December 2017, only 4765 Mw fresh capacity has been added.

Annual report of the Union power ministry presents a depressing trend for power capacity addition in this financial year, especially for thermal power. Of the targeted 11366.15 Mw capacity addition, only 4300 Mw fresh capacity in thermal power has been created by the end of December. In thermal power, the performance of Central and state-owned utilities has been lacklustre. It was proposed to add 4800 Mw power in the central sector but an actual achievement is only 910 Mw. Likewise, state utilities have added 660 Mw as against the intended capacity of 3546.15 Mw.

Private power producers have fared better, inching close to the assigned target for the financial year. At the end of December 2017, capacity addition in private thermal power was 2730 Mw compared to their targeted figure of 2940 Mw.

Nuclear power has drawn a blank as far as capacity addition goes. Through this source, 500 Mw was proposed to be added in FY18.

Hydropower capacity addition, too, has been tepid. Only 465 Mw in hydropower capacity has been added vis-a-vis the target of 1305 Mw.

Slow capacity addition in new power is despite a robust monitoring mechanism for capacity addition programme put in place by the Ministry of Power. The monitoring is done at three levels – Central Electricity Authority (CEA), the ministry and Power Project Monitoring Panel.

In 2016-17 too, the power capacity addition target had missed its target. New capacity of 16654.5 Mw was targeted against which actual achievement was 14209.8. The target slippage in last financial year was largely due to zero capacity addition in nuclear power where 1500 Mw fresh capacity was supposed to be added.

An industry source said the plunging tariffs at solar and wind power auctions and the government’s enormous thrust on meeting renewable energy targets have slowed the pace of thermal power generation. Cost of renewable power generation now is at par or even lesser than the average cost of power production by even the most competitive producers like NTPC.

Coal-fired thermal power plants across the country are under stress due to recurring hikes in coal prices and revision in railway freight charges. Prices of thermal grade coal since the last notification by Coal India on January 9 this year have moved up by 15-18 per cent. This apart, the levy of evacuation charge of Rs 50 per tonne is estimated to increase the cost of generation for coal-based power plants by 13-15 paise per unit.

Plant Load Factors (PLFs) of thermal plants, including the ones operated by NTPC, have been steadily declining over the years due to flagging demand. From 77.5 per cent in 2009-10, the PLF has fallen to 59.88 per cent at the end of 2016-17.

Source: BUSINESS STANDARD