Thermal power share to dip to 50% by FY22: Report

The report showed that owing to past bad experiences, long-term PPAs (power purchase agreement) in thermal power are unlikely to pick-up in the future.

India’s dependence on thermal power will reduce to 50 per cent by 2021-22 and 43 per cent by 2026-27 on the back of renewable energy (RE) capacity additions, a report said.  Thermal power includes diesel, gas and coal-based electricity generation which contributes 63 per cent of total electricity generation capacity in India as per the report.

“India is chasing ambitious RE targets and enhancing its T&D (Transmission & Distribution) infrastructure. Increasing RE use is decreasing dependence on coal. Contribution of the thermal sector will reduce to 50 per cent by FY22 and 43 per cent by FY27,” said a report by Praxis Global Alliance and Zetwerk.

The recent study by Praxis Global Alliance, a leading management consulting and advisory firm, and Zetwerk, an Indian B2B marketplace for manufacturing products and services, highlights the impact of COVID-19 on the overall power sector including key segments – generation, transmission, and distribution.

According to the report the installed power generation capacity has increased at 8.6 per cent CAGR over the period FY12- FY19 and renewable energy is growing at the fastest pace. New private investment in the generation sector is expected to be largely in the renewable sector, it added.

The report showed that owing to past bad experiences, long-term PPAs (power purchase agreement) in thermal power are unlikely to pick-up in the future. Renewables sector is likely to continue with long-term PPAs, it added.

Government can play an instrumental role in ensuring the good financial health of DISCOMs to ensure cash flow along the supply chain and aggressively chasing the capacity addition targets for renewable energy generation, Aryaman Tandon, Director, Praxis Global Alliance, said.

India’s power sector has a great potential to grow post-COVID as demand and power prices have started to recover now, Zetwerk CEO and Co-Founder Amrit said.