India has added record power capacity of around 57,700 Mw in the 11th five-year Plan period, but a large part of it is still awaiting fuel. About 35,000 Mw of coal-based power capacity has reached commercial operations in the period between April 2009 and March 2012, but around half of this capacity is operating at 40-45 per cent utilisation. The latest of the 5,940 Mw added in 2011 is also included in the capacity that has been suffering from low coal supply.
“If any power project is operating at 40 per cent capacity, it is stranded. We have never seen cases of coal-based power being stuck until now. The coal sector has failed the power sector,” said Ashok Khurana, director general of the Association of Power Producers.
Power projects based on domestic coal were hurt by lack of production from Coal India. International coal, too, became a tougher bet owing to high spot prices, making it difficult for projects to achieve full plant load factor. On an average, coal-based power plants can reach plant load factor of around 75 per cent. “Underutilised generation capacity is a national waste,” said Debashish Mishra, senior director of Deloitte Touche Tomatsu.
However, coal-based capacity might get some respite due to the softening spot coal prices, the trend now. This imported capacity, however, will not help all power projects in a country also fraught will infrastructural road-blocks. “Power projects located in the interiors are affected even more if they fail to get required domestic coal, as the cost of transportation of imported coal is not practical,” Mishra said.
An unexpected reduction in the production of natural gas from Reliance’s KG D6 fields impacted the capacity utilisation of gas-based projects as well. Production from the fields fell, and is around 35.57 mscmd in March this year, against the planned production of 70.38 mscmd. Some experts say production of other fields in the KG basin, like ONGC and GSPC, have been slow, giving no confidence on replenishing stranded gas projects. Lack of gas is believed to be a much more serious issue than coal worries. While coal can be imported, this is not the case with gas-fired projects, which are planned on a different cost structure.