Coal production and availability in the country might be on a high, but the growth of coal-based installed capacity is on a decline. Touching a three year-low, last year the installed capacity grew by 10.77 per cent against 12.48 per cent in 2012.

The annual growth of the total installed capacity has also slowed down with only renewable power generation showing an uptick. The annual installed capacity growth came down to 8.78 per cent in 2015 from 8.99 in 2014 and 12.48 per cent in 2012, the decade’s best year.

Installed capacity of renewable energy touched a record high of 18.06 per cent during 2015. Growth of renewables has more than doubled in one year but that was majorly due to growth in solar power while wind energy battled a decade’s low capacity addition.

The government has though considerably improved the fuel supply position with coal auctions and domestic gas availability to stranded power plants. The massive push to solar power is also adding to the total capacity.

Despite all this, power sector executives fear that the investment in the Indian power sector is likely to go into a lull for whole of the of the 13th Plan period.

“The pipeline is clearly dry for future projects. Stranded projects might start in another 2-3 years but then financials will still remain an issue,” the CEO of one of India’s top three power companies had told Business Standard in an earlier conversation. Power sector experts said one reason was overcapacity vis a vis demand, but the slowdown in thermal power hinted at a vicious circle.

“The more worrying aspect is that the 2016 pipeline for thermal power looks bleak. The thermal power cycle takes four years. Even if 10,000 MW comes up by 2018-19, there will still be a mismatch with demand when the economy grows as is being envisaged,” said a power sector expert based in Delhi.

He added that there was a strong likelihood that a situation similar to 2007 could crop up when capacity addition was way behind the target.

“The comforting fact is that there is a lot of capacity that is underutilised. But if the economy is to witness double-digit growth, the power capacity addition needs to match the uptick in the economy,” he said.

In renewables as well there is a contrasting trend in wind and solar power. While solar power projects to the tune of 922 MW were added to take the installed capacity to historic high of 4,600 MW, wind power capacity addition slowed down further to 1,300 MW in 2014-15.

Wind power installed capacity addition was 1,700 MW in 2013 and 3,500 MW in 2012.

At 24,759.32 MW, wind power, however, continues to have the lion’s share of the total renewables capacity of 38,283.5 MW.

“It is ironic that an industry like wind power is on a downturn with nil capacity addition. Our indigenous wind power sector enjoys the dominant position in the world. Solar growth is commendable but the government can push its Make In India plan in the wind sector, which is completely based on domestic manufacturing,” said a renewable energy sector expert.

It was in 2011-12 that the capacity addition achieved outran the capacity targeted for the year. A record 52 projects, most of them allocated during 2007-09, were commissioned by the private sector. The same was true during the next fiscal year as well, when out of the targeted 15,154 MW, the total capacity set up was 20,121 MW. The same year saw the emergence of ultra mega power projects (UMPPs) of 4,000 MW. Of the four projects commissioned, two are stuck over fuel and two are battling tariff-related issues.

Since then, no major power project, including UMPPs, have seen the light of day. In 2014, bidding for two saw all participating private players pull out.

Source: January 15, 2016, Business Standard