Thermal power plants' capacity utilization to rise to 69% in 2024-2025: ICRA

The capacity utilization of thermal power plants is anticipated to witness a one-percentage-point increase, reaching 69% in 2024-2025. This growth is attributed to the rising demand for electricity and limited additions to thermal capacity, according to the analysis by the rating agency ICRA. ICRA has affirmed a 'Stable' outlook for the thermal power segment, supported by a commendable enhancement in the thermal plant load factor (PLF). Additionally, the reduction in outstanding payments from state distribution utilities (discoms) has been facilitated by the implementation of the Late Payment Surcharge (LPS) scheme since August 2022.

Senior Vice President and Group Head of Corporate Ratings at ICRA, Mr. Girishkumar Kadam, highlighted that the ongoing construction of thermal capacity stands at approximately 30 G.W., predominantly within the Central and state-owned generation segments. This capacity is expected to be operational over the next two to four years. Mr. Kadam emphasized the necessity for additional capacity beyond the existing pipeline, particularly if the annual electricity demand growth surpasses 6.0% until 2030, even after accounting for renewable capacity additions.

Addressing the potential scenario of more robust annual demand growth at 7.5% until 2030, Mr. Kadam asserted that meeting such demands would necessitate an incremental thermal capacity requirement as substantial as 70 G.W. This underscores the imperative for strategic planning and investments in thermal power infrastructure to align with future energy demand scenarios.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.