Source :http://energy.economictimes.indiatimes.

com/news/power/outlook-for-indias-power-sector-negative-
in-fy18-india-ratings/57187204

Outlook for India's power sector negative in FY18: India

Ratings
It is owing to large under-utilised capacities, muted demand, bunched capacity
addition, soft merchant power prices, continued investments in renewable
capacities, lack of power purchase agreements and weak discoms
Debapriya Mondal | ETEnergyWorld | February 16, 2017, 17:07 IST

New Delhi: India Ratings and Research (Ind-Ra) today said it has maintained a stable
negative outlook on power sector for the next financial year despite an improvement in
coal availability, restructuring of distribution companies’ debt and operationalisation of
stuck projects.

The firm in its report said it is owing to large under-utilised capacities, muted demand,
bunched capacity addition, soft merchant power prices, continued investments in
renewable capacities, lack of power purchase agreements and weak discoms.

India Ratings said while credit profiles of large-sized power companies appear to have
stabilised, the sector’s return on capital employed remains unattractive and small private
companies are the worst hit.

“With a sub-50 per cent plant load factor (PLF), they have a high probability of debt
default. Under the current scenario, the survival of such players is not possible,” the
research firm said.

It said there is a possibility of sector consolidation, which could be triggered by the new
bankruptcy code.

“Ind-Ra expects the PLFs of coal-based power plants to decline further in FY18 and rise
thereafter, though they would continue to remain sub-65 per cent until FY22,” it said.

India added nearly 115 Gigawatt of coal-based capacity over since FY11. However,
demand growth did not keep pace with such capacity addition. This has put pressure on
the PLFs of coal-based thermal power plants.

In the past, coal and discom financial health were the two key constraints to the overall
PLF. However, demand, solar capacity addition and discom financial health will be the
major factors putting pressure on PLF in future.

“Ind-Ra believes nearly 45 GW of private sector coal-based capacity running at sub-50 per
cent PLF is currently stressed, with a debt of nearly Rs 1.9 trillion. The private sector has
been hit harder due to lack of PPAs for the entire capacity,” the report said.

Earlier, the private sector kept a part of the capacity untied due to high short-term prices.
The PLF of the private sector’s coal-based power plants fell to 56.3 per cent in FY17 from
83.9 per cent in FY10.

“Given short-term power prices are likely to remain benign and discoms’ unwillingness to
sign PPAs, these capacities are unlikely to see an increase in PLF,” the report said.
According to Central Electricity Authority estimates, 50 GW of capacity has a high
probability of getting commissioned over FY18-FY22.

“Central and state power utilities account for 60 per cent of the 50 GW capacity, followed
by the private sector (40 per cent). PPAs have been signed for the capacity belonging to
central and state power utilities. This will put further pressure on the coal-based capacity of
private power generators,” Ind-Ra said.

It further said solar power tariffs across the world declined to $24 MWh compared the
lowest solar power tariff of $48MWh in India.
“Given the wide difference, Ind-Ra believes there is ample room for domestic solar power
tariffs to fall. This belief is more likely as solar panel prices fell 15 per cent in second half of
FY16,” Ind-Ra said.

Solar power tariffs globally are a function of strong counter party, higher PLF, single axis tilt
use and lower borrowing cost. Moreover, battery storage advancements worldwide could
alter solar power economics and make solar a more price and consumer-friendly energy
source, it said.

Source :http://www.livemint.com/Industry/rufXYuN0JLfnyzs3gSe7gN/By-2026-Indias-power-demand-would-
be-met-TERI.html

By 2026 India’s power demand would be met: TERI

The report estimates that beyond 2023-24, new power generation
capacity could be all renewables

India has an ambitious target of 175,000 MW of renewable power by 2022 including

100,000 MW of solar power. Photo: Bloomberg
New Delhi: Current installed capacity and the capacity under construction would be able
to meet India’s power demand till about 2026 and no new investments are likely to be
made in coal-based power generation till that time, said a report released by The Energy
and Resources Institute (TERI) on Monday.
The report also estimates that beyond 2023-24, new power generation capacity could be
all renewables, based on cost competitiveness of renewables as well as the ability of the
grid to absorb large amounts of renewable energy together with battery-based balancing
power.
The report titled, ‘Transitions in the Indian Energy Sector - Macro Level Analysis of
Demand and Supply Side Options’ was released by Piyush Goyal, minister for power, coal,
new and renewable energy and mines, at a conference organised by TERI. TERI is a
Delhi-based think tank working on environment and energy issues.
“Universal access to electricity is one of the primary aims of the government, and meeting
demand is a major facet of this initiative. We see India becoming the energy capital of the
world. We are looking at several initiatives towards making solar energy price competitive
to coal,” said Goyal, while speaking at the conference.
The report also said that between 2014 and 2024, India has a 10-year window and during
this if the price of solar and battery reaches the Rs5/unit mark, all new capacity additions
would be in renewables.
TERI director general Ajay Mathur, who was present on the occasion, said “the target to
achieve the UNFCCC (United Nations Framework Convention on Climate Change)
commitments presents tremendous opportunity to put India at the forefront of economies
transitioning towards low carbon growth”.
“This includes improving electricity access, clean technology development, manufacturing,
and job creation. Our report shows that the cost of renewable electricity and its storage is
on a steady decline and could stabilise at around Rs5 per KWh. This would enable India to
move decisively towards renewables for future generation. What this means is that India
has a 10-year window where no new investments are likely to be done in coal, gas, or
nuclear energy generation,” Mathur said.
“The decarbonisation of power generation is also an opportunity to move other carbon-
based sectors like transport to electricity, thus multiplying the benefits of clean energy
generation,” he added.
India has an ambitious target of 175,000 MW of renewable power by 2022 including
100,000 MW of solar power.