India's power generation up 9 % in Sept. 2011

Oct 15, 2011 12:00 AM

All India generation was up 9 % in September 2011, partly helped by favourable base. Nuclear and hydro generation registered robust growth performance, coupled with moderate growth in coal generation, while generation across gas plants declined.
PLF improved in hydro and nuclear plants but declined for gas and coal due to fuel supply constraints. Coal supply position in September deteriorated year-on-year following lower coal production due to monsoons and strikes at Singareni, with 31 of 85 plants facing subcritical inventory level vs. 25 plants last year.

Power deficit in September worsened as generation was impacted due to fuel shortages, reflected in high merchant rates. Capacity addition in September 2011 was 787 MW, above set target of 577 MW.
We expect 53 GW to be added in Eleventh Plan period vs. original target of 78.4 GW.

Power generation
Generated power increased 8.9 % y-o-y in September 2011 -- strong generation growth in hydro and nuclear sectors compensated for a lower generation in gas plants. Coal generation was up only 6 % mainly due to coal shortages as heavy rains and workers unrest across few mines impacted productivity.
Hydro was up 22.6 % y-o-y and nuclear 31.6 % y-o-y, while gas generation was down 2.7 % y-o-y. Growth in nuclear and hydro was driven by better fuel availability and impressive monsoons.

Key companies
NTPC’s total generation declined 4.8 % y-o-y in September 2011, mainly due to:
(1) 5.8 % decline in coal generation as strike in Singareni coalfield affected coal supply to its 2,600 MW Ramagundam facility, and
(2) Lower generation at 2,600 MW Korba plant due to technical snag and damage of ash-dyke during heavy rains. Most companies with coal-based plants have reported better growth due to capacity additions; however companies with gas-based plants like GMR, Lanco and GVK have seen declines due to lack of ramp-up in gas supply.

Nuclear PLF was up at 77 % in September 2011 vs. 61 % y-o-y, boosted by increased fuel imports, while good monsoons boosted hydro PLF to 63 % from 53 %.
Gas-based PLFs declined to 56 % compared to 59 % y-o-y and coal PLFs fell to 57 % from 61 % due to fuel shortages. Consequently, peak deficit in September 2011 rose to 13.9 % from 8.6 % in August 2011, resulting in higher merchant rates.

Coal production/prices
Following a slowdown in coal output, 31 plants reported sub-critical levels of coal inventory (out of total 85 plants) in end of September 2011 compared to 25 y-o-y. We expect shortage in coal for FY12 with CIL downgrading its production estimates and lower production in Q1FY12.
International coal prices are up 26 % y-o-y in September 2011.

Capacity
Capacity addition in September 2011 was 787 MW, above set target of 577 MW for the period. YTDFY12 the industry has added 8,718 MW capacity (including renewable energy capacity) against a target of 9,668 MW (90 % of target).
In Eleventh Plan period till date, industry managed to add 48.6 GW (including renewable) vs. targeted 73.0 GW, achieving 67 % of its targeted capacity.

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