Home >News >India >Power projects using Chinese equipment stare at dark days

The covid-19 outbreak has now cast doubt on a part of India’s conventional electricity generation space, with around 90 gigawatts (GW) of coal-fuelled capacity based on Chinese power generation equipment.

With supply chains disrupted, the under-construction capacity and the operation and maintenance of the installed capacity have become a cause of concern as the equipment for these comes form Chinese companies such as Dongfang Electric, Shanghai Electric and Harbin Power.

Mint had earlier reported about concerns over Chinese equipment and their operation and maintenance, given the strategic importance of such power projects.

India’s domestic power demand has gone up with more people staying indoors, given the lockdown.

Of 62GW of under-construction coal-fuelled capacity, orders for 30%, or 18.6GW, have been placed with Chinese manufacturers, according to Mint research.

The developers were attracted by competitive prices and aggressive financing options, which involved not only low interest rates, but also relaxed covenants.

The commercial and industrial electricity demand has come down given the expected shift in electricity load patterns, which also comes against the backdrop of the onset of summer. The disruption in the supply chain may not have an immediate impact on power markets given India’s installed power-generation capacity of 368.69GW. The country’s peak electricity demand has come down from 163,729MW on 20 March. Peak demand in FY19 was 168,745MW and had touched an all-time high of 176,724MW in April last year.

The all-time high for electricity in the spot market was 18.2 per unit on 4 October 2018. Of the estimated 1,200 billion units (BU) of electricity generated, the short-term market comprises 130-150BU.

“We may feel the heat of covid-19 in coal-based conventional power in the long run and solar in the short run," said Sambitosh Mohapatra, partner, power and utilities, at PwC India. The outbreak may also impact India’s green energy trajectory, which has around 3GW of solar projects, worth 16,000 crore.

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