Power capacity addition slowest in FY18, renewables contribute 69%

The country witnessed its lowest capacity addition in power in 2017-18. Incremental addition in power capacity was only 17,200 Mw, the slowest since 2013-14. Renewable energy sources contributed 69 per cent to the capacity addition in the last fiscal, while coal-based thermal power accounted for only 27 per cent of the new capacity installed.

Data from the Central Electricity Authority (CEA) shows that the share of thermal power in an overall generation has fallen from 66.8 per cent in FY17 to 64.8 per cent in FY18. Last fiscal also saw the lowest net thermal power capacity addition since 2013-14 at 4200 Mw.

“Renewable energy sources have achieved power parity and in some tenders, solar tariffs have even fallen below the cost of the most competitive coal-based generation. The demand and sentiment have tilted in favour of renewables. Besides this, the continuing coal crunch due to insufficient railway rakes has throttled power capacity addition in thermal power”, said an official with a power producer.

A year update report on Power by CARE Ratings says renewable energy capacity auctioned over the last 24 months has been coming online. FY18 witnessed 11,900 Mw of new capacity addition from renewable sources. Of this, solar energy accounted for 80 per cent share with a net addition of 9,400 Mw.

In 2017-18, the country generated 1307 billion units of electricity, higher by 5.3 per cent over FY17. Thermal power, made up by coal, gas and diesel based units accounted for 79.7 per cent of the generation. Hydro power and imports from Bhutan comprised 10 per cent whereas renewable energy and nuclear power had a share of eight per cent and three per cent respectively. 

Electricity generation by the renewable sources recorded 25 per cent spike over FY17 and totalled 101 billion units.

Plant Load Factor (PLF) of thermal power plants showed a marginal improvement from 59.8 per cent in FY17 to 60.7 per cent in FY18. Among thermal power units, gas-based stations continued to be crippled by below par capacity utilisation at 22.9 per cent during 2017-18. Around 11 per cent of the thermal power plants are gas-based and are hamstrung by limited production of natural gas domestically. Most of the natural gas imported and those produced within the country is being diverted to priority sectors like fertilisers and also for city gas distribution (CGD).

In the current fiscal, electricity generation is expected to rise by 6-7 per cent. Rural electrification will spur demand as millions of households would be connected to the grid in the coming months. Under Saubhagya scheme, the Union government has an ambitious target to electrify all households by December this year.

The report by CARE Ratings points that availability of domestic coal will still be a sticky issue in this fiscal. As power plants grapple with coal shortages, there is a possibility of hike in power tariff. Higher power tariff on the spot markets would in turn impact the power intensive industries.