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Efficiency Of Gas-Fired Power Plants To Decline Further, Says India Ratings

The efficiency of gas-based power plants will decline further in the ongoing financial year as the government ended its revival scheme and costs are higher compared to other sources of electricity, India Ratings and Research said in a report.

The variable cost of the power generated from imported regasified liquefied natural gas at landed prices as low as $5 per million British thermal units is likely to be Rs 2.84 for every kilowatt hour. That’s higher than the cost of electricity coal – both domestic (Rs 1.92) and imported (Rs 2.68), according to the report.

Even the domestic gas supply has not improved since the year ended March 2014, the report said.

The government had announced a subsidy scheme through its Power System Development Fund in the year ended March 2016 to revive gas-based power plants. That improved the plant load factor marginally to 23 percent from a low of 21 percent two years prior to that. The subsidy scheme added 2-3 percent to the load factor, the report said.

The private sector-owned plants were the worst hit with plant load factors falling from 70.5 percent to 14.4 percent in six years to March due to lack of long-term power purchase agreements.

Even if the scheme is brought back, distribution companies’ appetite to buy power at Rs 4.7 a unit would remain low, considering their weak financial health and access to cheaper alternatives.

The credit profile of private sector plants has deteriorated and several projects have already applied for debt restructuring, India Ratings said.

. Read more on Business by BloombergQuint.