Power shortages likely to persist as thermal capacity lags power demand
The Hindu
Power shortages/coal demand spikes in the peak seasons are likely to continue going forward, according to foreign brokerage report.
Power shortages are likely to continue in the short to medium term on rising demand in the peak season and the persisting supply-demand mismatch, according to a foreign brokerage report which attributed the recurring annual crisis to the slower thermal capacity addition in the past few years.
Thermal capacity addition has lagged power demand that grew steadily at 4% annually between FY10 and FY19 as against thermal capacity addition which rose only 9% during this period. The capacity addition declined to just about 2 per cent between FY19 and FY22 when demand jumped 5 per cent.
Thermal power contributes as much as 75% of the country's total power generation.
This demand-supply mismatch has been due to multiple stressed projects, focus on renewable, the report by Bank of America Securities said on Monday.
Besides, harsh seasons and higher economic activity have increased the peak power deficit to 1.3% as against 0.4% in FY20-21.
With new capacity expansion to take least two-three years and renewables generation limited to 10-11% on lower plant load factors, the report said that power shortages/coal demand spikes in the peak seasons are likely to continue going forward.
As the government is trying to resolve the crisis with the resolution of stressed capacity and increasing coal supplies by allowing imports, lenders are in for good times, the report said.