Power capacity addition trickles in April-June, only 45 Mw added

Fresh capacity addition in power has started on a sombre note. Out of the 1820 Mw envisaged to be added during April-June of this fiscal year, only 45 Mw has been added in thermal power generation, data from the Central Electricity Authority (CEA) showed.

The meagre capacity addition of 45 Mw came from private thermal power producers. No fresh capacity was added from  nuclear and hydroelectric sources. In the thermal power sector too, central and state generating utilities drew a blank.

For the full fiscal 2019-20, the country is planning to add 12186.14 Mw power. In FY19, actual capacity addition was only 5922 Mw against the target of 8106 Mw. 

According to Fitch Group-owned India Ratings & Research, capacity ramp-up in coal-fired thermal power generation is projected to stay subdued both in FY20 and FY21. The tepid growth is attributed to the phasing out of 2000 Mw of end of cycle thermal power plants, stress that stalks 85 per cent of the private-owned power plants in various stages of construction, squeeze in availability of formal credit, drying of long-term power purchase agreements (PPAs) and the slow pace of commissioning of fresh thermal power projects across Central, state and private sectors.

Between FY19 and FY20, power demand is expected to log a healthy growth. However, only a fraction of this incremental demand is expected to be met by the renewable energy sources. Considering the absence of any major alternatives to meet the growth in demand, the proportion of excess capacity in the thermal power sector would decline further during this period.

The slowdown in new thermal capacity addition by the state and central thermal sectors would also support the absorption of the excess thermal capacity over this period. Fresh project starts for thermal projects declined steeply to a mere 1.6 GW in FY19 from an average of 10 GW per year over FY15-FY18.