India Ratings and Research (Ind-Ra) in its latest report has said that short-term power prices are likely to remain elevated in the near term on account of a continued increase in imported coal prices. It noted that a large part of the increased power generation would continue to be met through coal-based plants, although coal output is not increasing to the desired level. It said this is reflected in low inventory stocks at power plants, and therefore, a part of the increased energy demand will have to be met through imported coal.
According to the report, the average inventory at thermal power stations increased to 38.6 mt in 2020-21, led by a decline in thermal power generation requirement (2019-20: 28.6 mt). However, it said that with an increase in thermal generation requirement, the inventory levels are now correcting, and have reduced to an average of 23.6 mt in the period under review. It pointed out that the speedy recovery in power demand post the second wave of COVID-19 infections, coupled with lower than adequate domestic coal production, led to a reduction in coal inventory levels at various power plants.
Ind-Ra estimates an increased imported coal requirement likely in second half of 2021-22 as domestic coal production would increase gradually. Alternatively, in case the PLFs (plant load factor) of imported coal-based plants would continue to remain low due to high international coal prices, it estimates the energy deficits are likely to increase in the second half.
