Reimagining power

India's power sector has been in terrible shape for the past 15 years and it is the single largest contributor to the non-performing assets in the financial system. However, there have been a sequence of interesting developments in the past year or two. Capacity additions clearly indicate the rising importance of renewables. New capacity in renewables in 2016-17 amounted to 11.3 gigawatt, while new capacities in coal, hydro and nuclear amounted to 10.6 GW, 1.6 GW and 1 GW, respectively (see Figure 1). In fact, conventional capacity additions have declined, from 23.9 GW added in 2015-16. It is true that renewables have very low plant-load factors (PLF) compared to thermal power plants, so these numbers are deceptive but they do indicate the sharp rise in the importance of renewables in the mix. The energy mix is still very much dependent on thermal. The known installed capacity (this may be an underestimate since it is increasingly easy to set up captive rooftop solar) as of March 2017 is given in Figure 2. About 42 per cent of total capacity is owned by private players, with the Centre owning about 25 per cent and the states controlling about 32 per cent. Thermal coal contributed close to 80 per cent of generation. Renewables actually contributed about 7 per cent to generation in 2016-17, although the installed capacity amounts to about 17 per cent. Hydro has lower installed capacity but higher PLF and contributed about 11 per cent to generation. This is a pointer to the differences in the PLF referred to above. Coal-based generation capacity suffers from a low PLF. A well-run thermal plant can easily run at 95 per cent of its rated capacity. But Indian plants averaged around 60 per cent in 2016-17, which was down from 62 per cent in 2015-16. This is partly because of inefficiencies such as poor supply chains. Coal is supplied by a monopoly (

This article was originally published on July 06, 2017.