Growth in coal-based power installed capacity down to 10.8%

Growth in India’s coal-based installed power-generation capacity is on a decline, despite an increase in production and availability of coal in the country. The coal-based installed capacity in 2015 grew at 10.77 per cent, compared with 10.99 per cent the previous year, 13.65 per cent in 2013 and 15.32 per cent in 2012.

The annual rate of growth in the total installed power capacity (coal-based plus renewable) also declined in 2015 – to 8.78 per cent from 8.99 per cent a year earlier – despite renewable power installed capacity growing 18.06 per cent, against 7.57 per cent in 2014.

The rate of growth in renewable power capacity has more than doubled in a year, primarily due to a push to solar power, even as wind power capacity addition is at decadal low.

The government, though, has considerably improved the fuel supply position, with coal auction and availability of domestic gas to stranded plants. The massive push to solar power has also added to the total capacity.

Despite these, power sector executives fear that investment in the Indian power sector could see a lull for the entire 13th Five-Year Plan period.

“The pipeline for future projects is clearly dry. Stranded projects might start in another two-three years; financials would still remain an issue,” CEO of one of India’s top-three power companies had told Business Standard in an earlier conversation.

Power sector experts say another reason is overcapacity vis-à-vis demand, but the slowdown seen in thermal power hints at a vicious circle. “The more worrying aspect is that the 2016 pipeline for thermal power looks bleak. A thermal power cycle takes four years. Even if 10,000 Mw (of capacity) comes up by 2018-19, there will still be a mismatch, if the country’s economy grows as envisaged,” said a power sector expert based out of Delhi.

He added there was a strong likelihood of a situation similar to 2007 — when capacity addition achievements were way behind targets — if not the same.

“The comforting fact is that there is a lot of capacity that is underutilised. But if the economy is to witness double-digit growth, the power capacity addition needs to match the uptick in the economy,” he said.

In renewable power, too, the trends in wind and solar power are contrasting. While solar projects to the tune of 922 Mw were added, taking the installed capacity to a historic high of 4,600 Mw, wind power capacity addition further slowed to 1,300 Mw in 2014-15. Wind power installed capacity addition was 1,700 Mw in 2013, and 3,500 Mw in 2012.

At 24,759.32 Mw, wind power, however, continues to have the lion’s share of the total renewable capacity of 38,283.5 Mw.

“It is ironic that a domestic industry like the one for wind power is on a downturn, with nil capacity addition. Our indigenous wind sector enjoys a dominant position in the world. Solar power capacity growth is commendable, but government can push its ‘Make in India’ plan in the wind sector, which is completely based on domestic manufacturing,” said a renewable energy sector expert.

It was in 2011-12 that total capacity addition had exceeded the target for the year. A record 52 projects, most of them allocated during 2007-09, had been commissioned by the private sector. The situation was similar during the next financial year as well, with a capacity of 20,121 Mw being added, against the target of 15,154 Mw. The year also saw the emergence of 4,000 Mw of ultra mega power projects (UMPP). Of the four commissioned, two are stuck for want of fuel and two are battling tariff-related issues.

Since then, no major power project, including the UMPP ones, have seen the light of the day. In 2014, the bidding for two UMPPs saw all participating private players pulling out.