Indian power capacity addition is growing at 7 per cent higher than the growth in demand, research firm Crisil said.
According to Crisil, power demand will be muted at 6.2 per cent over the next five years due to slow GDP growth and despite improving financials of discoms. It also revealed that industrial and commercial demand growth is expected to be slow, while household demand growth is likely to be stronger at 10 per cent due to high latent demand.
“In the past, demand growth has been restricted due to lack of generation capacities and constrained power offtake from state distribution companies on account of their weak financial position,” said Prasad Koparkar, Senior Director, Industry & Customised Research, Crisil.
He added that in future, slow economic activity will restrict demand growth, despite an improvement in the financial position of state distribution companies with tariff increases and significant reduction in interest costs on implementation of the financial restructuring plan.
Power demand to GDP growth ratio in the Eleventh Plan stood at 0.83. In the Twelfth Plan, it is expected to improve to 0.9 based on demand growth expectations of 6.2 per cent.
Overall the plant load factors (PLFs) of coal-based plants is estimated to remain subdued at 74 per cent.