Despite higher availability of coal, thermal power generation rose by a meagre 0.3 per cent during July-September quarter as compared to the corresponding period last fiscal, owing to lower system demand, brokerage firm Reliance Securities said in a report.
According to the report, the total power generation during the quarter rose by 1.3 per cent on year-on-year basis to 287 billion units (BUs).
Thermal generation rose by meagre 0.3 per cent owing to lower system demand despite higher coal inventory, while hydel generation improved by 3.5 per cent y-o-y following improved reservoir levels.
Owing to the lower demand, coal production was curtailed in the last few months with high coal inventories to the tune of 50 million tonnes.
"Slow industrial demand along with weak financials of the state-run power utilities (SEBs) led to muted growth. All-India Plant Load Factor (PLF) for thermal sector stood at 54.6 per cent in 2QFY17 compared to 60.5 in 2QFY16," it said.
The report, however, observed that the UDAY scheme would eventually lead to their improved financial health and ability to procure more power.
"Despite lower per capita power consumption as a demand driver, subdued economic activity has led to lower power demand from the industrial consumers, which has led to the SEBs shedding load to the residential and agricultural consumers.
"However, improvement in the policy environment and infrastructure spend coupled with manufacturing activities will aid in reviving demand environment for the power sector," the report said.
According to the brokerage firm, implementation of UDAY scheme is expected to improve power demand in fiscal 2017-18, while increase in coal output would provide a much needed fillip to the sector.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)