Coal shortage may push up power tariffs

The shortage is also affecting the health of captive power producers.

The reducing Plant Load Factor (PLF) or the efficiency of the independent power projects, due to coal shortage, may lead to increased power tariff this summer. According to sources, the shortage of coal led to increase in the spot power prices at energy exchanges to as high as Rs 11 per unit last year. A similar situation may happen this year too if the coal situation does not improve, they said.

The PLF is indicator of the efficiency of the power plants. A low PLF of a power plant means it is not fully utilising its capacity, leading to an overall shortfall in production. According to the latest Central Electricity Authority (CEA) data, the PLF of private independent power projects (IPPs) came down to 52.29% in March this year, compared to 58.48% last year. However, the PLF of Central sector power projects increased marginally to 78.47% in February from 77.52%.

The source said due to the lower PLF, the private developers are unable to operate at a higher capacity to remain viable. Since government-run plant National Thermal Power Corporation (NTPC) has better access to coal, its share in electricity generation has been on the rise. In contrast, IPPs, which have the capacity to generate about 50,000 MW with an investment of Rs 2.5 lakh crore, are under severe stress.

He said there is fear that due to coal shortage, it is unlikely that the IPPs would be able to utilize their full capacity during this summer, when the demand is at its peak. At present, electricity is being traded at over Rs 5 on Indian Energy Exchange.

As per the data of the CEA, as on 25 April, as many as 17 power plants are having super critical coal stock (of less than four days) and 10 plants are having critical stock (of less than seven days). There are a total of 114 coal based thermal power plants all over the country.

President of Independent Power Producers Association Ashok Dasgupta said decreasing PLF is not a good sign for the power sector and the implications will not be good. “There may be several reasons for this, which include coal shortage. Ideally, power plants should be able to utilize 70-80% capacity,” he said.

Coal shortage is also affecting the health of captive power producers. According to secretary of the Indian Captive Power Producers’ Association (ICPPA), Rajiv Agarwal, their power plants are running at 20-30 % capacity due to severe shortage of coal, which has been going on for a long time. The association is the apex body of captive power producers (CPPs), have an installed capacity of about 40,000 MW.