Crisis of Survival of Thermal Power Plants in India Due to Consistently Falling Capacity Utilization – Factors Responsible and Future Outlook

Abstract

Thermal power plants in India are facing unprecedented crisis. Their capacity utilization (known as Plant Load Factor, PLF) has been consistently falling over the years. In the year 2019-2020 the national average PLF stood at 55.4%, down from 78.6% in 2007-2008. It is predicted that the national average PLF may fall to 48% by 2022. Many new thermal power plants, set up with substantial capital investment are staring at a bleak future. It is an irony that on one hand, the country is power deficit and on the other hand, a large amount of new, efficient and low-carbon-footprint thermal power remains grossly unutilised. Since considerable investment has gone into these thermal power assets, the falling PLF is a matter of concern for all the key stakeholders including the power producers, lenders, regulators and consumers. This paper identifies eleven major factors responsible for this situation and discusses future outlook of these factors. We find that urgent review of fresh thermal capacity addition, immediate phasing out of old inefficient plants and policy support to enable flexible operation of the thermal power generators are imperative to save the sector from imminent collapse.

The Impact of a New Accounting Standard on Assets, Liabilities and Leverage of Companies: Evidence from Energy Industry

“…While there is a rich history of studies exploring determinants of capital structure and related financial issues in energy industry companies [17][18][19][20][21][22][23], to the best of our knowledge, there are no studies on the impact of changes in accounting standards on the value of assets, liabilities, and leverage on assets and equity in the mentioned enterprises. The main objective of the paper is to examine, measure, and analyze the impact of IFRS 16 Leases implementation on the value of assets, liabilities, and leverage on assets and leverage on equity of companies from the energy industry (oil and gas, energy and mining sectorshereafter OGEM) in Poland.…”