Thermal Plant Load Factors to Remain Healthy Amid Rising Power Demand: ICRA

ICRA projects a healthy thermal plant load factor of 70% in FY2025 due to a 6% rise in power demand. The 'Stable' outlook for the thermal power segment is driven by improved load factors and new power purchase agreements. However, power distribution outlook remains 'Negative' due to limited tariff hikes and losses.

ICRA anticipates that thermal plant load factors will maintain a robust capacity utilization of 70% by FY2025, driven by a projected 6% growth in power demand, as reported on Thursday.

The thermal power segment outlook remains 'Stable' after an increase in the plant load factor and rising demand, improving the prospects for new power purchase agreements (PPAs). However, ICRA's outlook for the power distribution segment is 'Negative,' hindered by limited tariff increases and continued operational losses.

ICRA noted the implementation of the Late Payment Surcharge (LPS) scheme has improved payment discipline among state distribution utilities (discoms) and power generation companies since August 2022. Despite the positive trends in thermal PLF, overall growth in electricity demand is prompting a need for new thermal capacity additions, especially with the government aiming to boost new thermal power projects, including those by private sector participants.

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