India's thermal plant efficiency to drop amidst commercial demand slump

The average load factor of thermal plants dropped to 52.55 in March.

The power load factor (PLF) in India’s thermal power plants is projected to sink to below 53% in FY 2021 amidst subdued demand from industrial and commercial segments, according to data from CARE Ratings.

This refers to the ratio of total energy used vs. the peak demand during the period used to measure energy efficiency.

As a result of the pandemic along with subdued demand from industrial states and extended monsoon, the average PLFs of thermal power plants declined to 56.08% for FY 2020 compared to 60.30% for FY19. PLF for thermal power plants further declined to 52.55% for March 2020 mainly on account of the lockdown.

Further, data from the Power System Operation Corporation of India (POSOCO) revealed that energy met crashed 22.54% to 2800 kWh on 11 April, far below the average energy met of 3615 kWh during February 2020.

The electricity demand from industrial and commercial customers fell whilst the residential demand is tipped to rise amidst the lockdown. As per the Central Electricity Authority (CEA), India electricity demand only edged up 0.26% during FY 2020.

Also read: India's electricity demand slump could last through May

With this, power plants continue to have higher inventory and will be able to declare higher plant availability which would allow them to recover fixed costs if they have two-part tariff long term power purchase agreements.

On the other hand, merchant power from independent power producers are likely to be impacted due to absence of long-term power purchase agreements with distribution companies and anticipated fall in spot prices.