India’s thermal capacity utilisation to be around 68% in FY24-FY25

The plant load factor (PLF), or capacity utilisation, of India’s thermal power plants (TPPs) is expected at 68 per cent in the current financial year as well as FY25 on account of rising demand for electricity from the industrial and commercial sectors.

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India Ratings and Research (Ind-Ra) in its latest report said that PLFs are estimated to be in the range of 65-70 per cent in the medium term, considering the current and historical capacity addition trend and forecasted energy demand in FY30, under the National Electricity Plan (NEP).

The country’s power demand grew around 7 per cent y-o-y during 9MFY24, due to increased economic activity, delayed monsoons and humid conditions. This has led to a significant increase in thermal PLFs over 68 per cent during the period (FY23: 64 per cent).

“Ind-Ra expects thermal PLF to be around 68 per cent during FY24-FY25 with a 5-6 per cent y-o-y increase in power demand,” the agency said.

High demand

The extreme weather conditions and increased economic activity witnessed during FY24 have led to the power consumption reaching nearly 1,308 billion units (BU) during 9MFY24 (FY23: 1,618 BU).

Thermal PLF during the period has been 68.1 per cent (9MFY23: 62.7 per cent). Hydro projects underperforming around 17 per cent in terms of generation during 9MFY24 added to the load requirement from thermal projects.

Thermal continues to be the major source of power for the country with around 75 per cent share in the generation, followed by renewables at about 23 per cent during 9MFY24.

Growing renewables

Ind-Ra expects the renewable sector to continue to contribute a significant portion to the new capacity additions. It projects a capacity addition of nearly 25 gigawatts (GW) in FY25, against FY24 (18-20 GW), FY23 (15GW) and FY22 (16GW).

“With the total installed power capacity expected to more than double by FY32, renewables is likely to account for 60-65 per cent share in the overall capacity mix. This is supported by the under-construction capacity of around 50 GW as of October 2023, as per CEA,” Ind-Ra said.

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However, thermal capacity additions are expected to continue, with 29 GW already under construction as of December 2023. The government is planning to add another 30 GW of thermal capacity by 2032, in addition to the earlier target of 50 GW.

Thus, thermal PLFs are expected to remain healthy to meet the projected energy demand of 2,666 BU in FY32, unless renewable capacity increases much more than the current trend and planned thermal capacities are added, it added.

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