Renewable energy has moved ahead of thermal power sector: India Ratings

Renewable energy has moved ahead of thermal power sector: India Ratings


New Delhi: According to research and ratings agency India Ratings, due to falling renewable tariffs, the recent aggressive bidding and adverse perception have led to non-remunerative electricity tariffs causing a scenario of muted power demand for the private thermal power generation projects, it further said that in operating thermal power projects than renewable energy projects private developers are facing more challenges. 

The ratings agency said in a report that in contrast, the large target by the government for renewable capacity addition and the focus on renewable purchase obligation along with falling tariffs in competitive bidding regime have led to an increase in demand for renewable energy. 

It further added that comfort is being provided to developers on payment security by strong counterparties for solar companies including Solar Energy Corporation of India and NTPC but for power projects to have stable revenue receipts in the financial profile an improvement of distribution utilities is important. 

The national average in some states including Uttar Pradesh and Bihar is higher than the average per capita supply of electricity. Also, with reliable and continuous supply yet to be ensured in most states, electricity demand is likely to grow across the country, driven by industrialisation. Alone the industrial sector accounts for 44 per cent of electricity demand nationally in 2015-16. 

India Ratings said in a falling electricity deficit scenario and excess energy tie-ups by distribution utilities, even amid high demand growth, projected generation capacity is well placed to meet the demand. 

The report noted that in the scenario of electricity replacing diesel in applications including diesel generators, agricultural implements and railways, the additional electricity demand can be addressed by a 6 percentage point increase in the plant load factor of thermal plants. 

If all vehicles had become electric in 2016-17, the amount of electricity that would have been required will indicate the quantum of demand that can arise from the electrification of road transport according to the estimates of India Ratings.

News source:

Picture source: