Power plant PLFs to remain 22-year-low amid muted energy demand

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Plant load factors (PLFs) of power companies are unlikely improve in FY17 from the 61.7 per cent average over the first nine months of FY16, the ongoing year, says India Ratings & Research (Ind-Ra).

This is despite an improving fuel supply it says, as demand growth for electricity is expected to stay muted.

The all-India PLF for thermal plants have fallen 21.5 per cent since the peak of 78.6 per cent in FY08. Ind-Ra expects electricity demand to grow by four to five per cent and generation by five to six per cent in FY17. The country added 80 Gw of coal-based generation capacity over FY11-15, giving room for higher generation, with the improvement in coal supply and lower global coal prices.

Industrial demand, 40 per cent of the total, has seen muted growth. The current focus on more use of more efficient devices is also said to be leading to lower demand growth.In its recent ‘Corporate Outlook FY17’ report, Ind-Ra has maintained a stable to negative outlook on the power sector and a stable outlook on most of its rated entities in the segment. It says it expects its rated entities will continue to manage fuel and state power utility risks, owing to a favourable rate setting mechanism, comfortable liquidity and support from the central and state governments.

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