• Gas-based power generation to grow at double the pace of demand growth: Morgan Stanley

    Power generation from gas-based plants is expected to grow at nine per cent Compounded Annual Growth Rate (CAGR) as compared to the overall demand growth of 4.5 per cent over the next five years, according to multinational investment bank Morgan Stanley.

    This will be possible because gas-based power will be more competitive than imported coal-based plants and is also helped by blending with low-cost renewables.

    “We expect the share of gas-based generation in the power mix to rise 80 basis points in the next five years (3.5 per cent in 2019-20 to 4.3 per cent in 2024-25),” the bank said in a report published last month.

    The report noted the reasons why gas-based power generation fulfills multiple objectives — competitive gas prices will help the government to lower coal imports and fulfill environmental obligations and also complement the growth of renewables.

    It also said that clean gas and hydro are viable alternatives in complimenting renewables. Creating new hydro capacity takes a significant amount of time in India while gas plants require less time to ramp up and down and they also have a very low technical minimum level to operate.

    Shifting power generation mix to Renewables (12.5%) & Gas (4.3%) rise slowly

    Gas-based power generation to grow at double the pace of demand growth: Morgan Stanley
    Gas-based plants also have low auxiliary consumption and consume less fuel to start up as compared to domestic coal-based plants.

    Demand for gas by power generators has stagnated over the past seven years, with the key challenges unavailability of adequate gas supply as well as costly prices, which have further pressured the financial health of State Electricity Boards. This has led to stranded and under-utilized capacity, creating stress on lenders.

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