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Rating agency ICRA has said that it revised the thermal power sector outlook to ‘stable’ from ‘negative’ owing to strong demand growth and realisation of dues from discoms under LPS (late payment surcharge) scheme. The agency mentioned ‘The outlook for the thermal power segment has been revised to stable from negative, supported by the healthy improvement in the thermal PLF (plant load factor or capacity utilisation) level in FY2023, which is likely to sustain in FY2024, coupled with the reduction in dues from state distribution utilities (discoms).

It stated the PLF improvement is driven by the strong recovery in electricity demand growth in the country. A sustained growth in electricity demand is expected to improve the visibility on the signing of new power purchase agreements (PPAs) for the thermal IPPs (independent power producers). Vikram V, VP & Sector Head - corporate ratings, ICRA, said, the all-India thermal PLF level is expected to improve from 58.9% in FY2022 to 64.0% in FY2023 and further to 65.5% in FY2024, led by healthy demand growth and limited thermal capacity addition.

The full-year demand growth for FY2023 is estimated at 9.5-10%, which is likely to moderate in FY2024, though remaining healthy at 5.5-6%. Further, he stated that the power-generating companies are benefiting from the realisation of overdue from discoms under the late payment surcharge scheme notified by the power ministry in June 2022.