NEW DELHI, 25 JAN

The capacity utilisation of thermal power plants will increase by a percentage point to 69 per cent in 2024-25, led by the growth in electricity demand and limited thermal capacity addition, says rating agency ICRA.

ICRA's outlook for the thermal power segment is 'Stable', supported by the healthy improvement in the thermal plant load factor (PLF), coupled with the reduction in dues from state distribution utilities (discoms) following the implementation of the Late Payment Surcharge (LPS) scheme since August 2022, a statement said.

"The current under-construction thermal capacity is about 30 GW, which is predominantly in the Central and the state-owned generation segment and is expected to be commissioned over the next two to four-year period," Girishkumar Kadam, Senior Vice President & Group Head - Corporate Ratings, ICRA, said in the statement.

In our view, there is a clear need for incremental capacity beyond this pipeline if the annual electricity demand growth continues to exceed 6.0 per cent till 2030, after factoring in the renewable capacity addition, he added.

He stated that if annual demand growth is stronger at 7.5 per cent till 2030, to meet the same, the incremental thermal capacity requirement will need to be as large as 70 GW.

Coal has remained a dominant fuel source to meet the base load power demand in the country, and its share in the overall energy generation mix is estimated to decline from 73 per cent in FY2023 to about 58-60 per cent in FY2030, assuming the renewable capacity addition scenario of 200 GW between FY2024 and FY2030, as per ICRA estimates.

Nonetheless, the share of coal in the generation mix is expected to remain significant till 2030, it stated.

The average spot power tariffs in the day-ahead market (DAM) of the Indian Energy Exchange remained high at Rs 5.4 per unit in YTD FY2024, owing to the sharp demand growth.