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Home » Industry Analysis » Lower fuel availability: A risk in regulated thermal power plants

Lower fuel availability: A risk in regulated thermal power plants

By December 8, 2017 12:35 pm IST

Lower fuel availability: A risk in regulated thermal power plants
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According to India Ratings and Research (Ind-Ra), most of the operating thermal power entities, after seeing better coal availability over FY14-FY17, have now begun to face lower domestic coal availability. Hence, the research agency said, there is a possibility of an increase in the reliance on imported coal and thus susceptibility to volatility in imported coal prices. Though most of the government-owned regulated entities have coal linkages or additional coal supplies through memoranda of understanding, in Ind-Ra’s opinion, their ability to secure a continued coal supply could come under pressure.

India’s coal-based electricity generation has grown higher than domestic coal production since FY11, with the balance coal requirements having been met through imported coal. However, the ability of the generators to schedule power basis imported coal has reduced, given the high imported coal prices and the emergence of alternative sources of energy.

Coal-based electricity generation increased at a healthy pace of 5.4 per cent yoy in FY17 and 5.6 per cent yoy in 1HFY18, while the imported coal usage fell 18 per cent yoy each in FY17 and 1HFY18 to 66.1 million tonnes and 28.4 million tonnes, respectively and domestic coal production has not increased at the same pace as coal based generation. Specifically, the growth in coal output slowed down to 3.2 per cent yoy in FY17 and 1.5 per cent Y-O-Y in 1HFY18.
This increase in generation, despite muted growth in domestic coal production and decline in imported coal, has been a combination of the following factors:
• A decline in the inventory available at the plants
• Higher efficiency plants resulting in lower specific energy consumption (FY16: 0.69kg/kWh, FY15: 0.67kg/kWh, FY14: 0.65kg/kWh), and

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