Credit rating agency, India Ratings and Research (Ind-Ra) in its latest report has maintained a neutral outlook for the power sector for FY23, as it believes the overall plant load factor (PLF) of thermal power plants would continue to improve and reach closer to 60% in FY23. This is given the consistent growth in power demand and continued dependence on coal-based generation in the absence of any major increase in the capacity additions in any other sector except renewables.
Further, the rating agency said that a lower-than-expected addition in FY23 in renewables would aid the PLF recovery. Ind-Ra however expects the demand growth to come back to a normal level of 6%-7% in FY23, given a higher base. The impact of third covid wave remains lower on power demand, given the less stringent curbs imposed by local/state governments, although any stringent lockdowns in case of the emergence of any strong covid wave could derail the growth in power demand.
As per the report, coal availability could pose a risk to the overall demand and thus PLF recovery, given the higher reliance on domestic coal as international prices remain high. The domestic coal availability to the power sector would remain dependent on an improvement in the domestic coal production and its allocation to the power sector both of which improved in 9MFY22.
