Consolidation in thermal on cards

Power Sector Ministry is making its efforts to make India self-dependent as far as coal is concerned. Union Minister of State (IC) for Power, Coal, New & Renewable Energy and Mines, Piyush Goyal, said that India has been losing precious foreign exchange in importing coal, when India has abundant natural resources for the same. Indian coal industry has not been able to grow at more than 1-2% as our coal plants don’t have technology to utilise our grade of coal and also are less efficient with imported coal.

Government is taking strides at one end to address concerns of thermal power plants and upgrade their technology to push domestic coal burning, and on the other hand is also giving impetus to renewable resources.

During the last there years, the installed capacity of solar power plants has increased to 10,000 MW, which is a four fold increase. This is expected to cross 20,000 MW in next 15 months, and it can ring in great benefits to manufacturers of solar cells and silicon wafers.

India’s demand for renewable energy is expected to grow by seven times in 2035, according to the latest BP Energy Outlook, which means the share of renewable energy in the country’s fuel mix will increase from 2 per cent to 8 per cent in 2035.

With large scale deployment, we can expect that gap between the per unit cost of solar energy and thermal energy to narrow down. We are already seeing that. 

Recently, renewable energy producers won a contract to develop the world’s largest solar power plant of 750 MW in Rewa, Madhya Pradesh, the tariff for which is below Rs 3 per unit. 

Such endeavours can compel thermal energy companies which are already operating at 40% plant load factor to improve efficiency and ring in the otherwise hard to get PPAs (power purchase agreements). We expect this move can also lead to consolidation in power sector with more thermal power plants up for sale.