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Thursday, 21 Nov 2019
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Thermal power plants face shut down as demand falls

Thermal Power


A total of 133 thermal power units across the country were reported to have shut down due to lack of demand. As on 11 November 2019, of the 262 coal, lignite and nuclear units reported to be out-of-service for a variety of reasons, 133 units (nearly half) were shut down as operators were faced with low demand or were unable to ink pacts with distribution utilities for sale of power.

The demand for electricity in the country is a key indicator of the growth in terms of both industrial and domestic. However, in recent years, the Power sector has been undermined due to a variety of factors. The demand for power in India contracted 13.2 percent Y-oY in October 2019, registering a steepest monthly decline in over 12 years. This contraction in demand has had an impact on all the three stakeholders – power producer, power distributor and lender (in this case banks).

Moreover, of the total installed electricity generation capacity of 3,63,370 MW, the peak demand met was just 1,88,072 MW as on 7 November 2019.

A total of 119 thermal units across mostly northern and western states were faced with ‘Reserve Shutdown’, a technical term for a unit shut down due to lack of demand, while another 14 units on account of developers not managing to ink power purchase agreements (PPAs) with electricity distribution utilities.

Thermal Power Table
Source: Central Electricity Authority

As per the data of units monitored by the Central Electricity Authority’s (CEA) Operation Performance Monitoring Division updated till 7 November 2019, the cumulative capacity of units under forced shutdown was over 65,133 MW; most of these units have been shut for days, sometimes months. A decline of 9.2 percent was registered in the renewable power generation and thermal power generation declined by 2.5 percent. However, on the other hand the hydel-based energy generation grew by 9.1 percent on Y-o-Y basis.

CEA also stated that the states of Maharashtra and Gujarat saw the sharpest decline, with demand crashing over 22 percent in Maharashtra and by nearly 19 percent in Gujarat during November 2019. This has been partly attributed to the extended monsoon and flooding in western states, which brought down the demand.

Aggregate demand was also weak in other industrialised states such as Telangana, Karnataka, Tamil Nadu and West Bengal. However, the states of Haryana and Punjab recorded growth in demand.

As per the data available with Projects Today, from 1 April 2018 till date, a total of 57 thermal power projects have been facing issues due to various reasons. Of these, a total of 36 projects have been deferred during the period, entailing an investment of Rs 2,53,941 crore with a cumulative capacity of 46,577.25 MW. On the other hand, a total of 21 projects entailing an investment of Rs 1,08,101 crore have been abandoned with a total capacity of 20,565 MW.

 
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