High coal prices, weak rupee leading to a crisis in power generation firms

Essar,Adani,Tata plants under stress ; Gujarat government sets up panel to help stranded assets.


The high cost of imported coal and rupee weakening against US dollar, Power generation companies are witnessing crisis, with Essar group shutting down its 1200 Megawatt(MW) power projects and Adani group utilising only the part of its installed capacity in Mundra ,Gujarat. The cost of wind and solar infrastructure in the country, with a tariff of Rs 2.43-3 per kWh is extremely competitive, and almost 10-20 per cent cheaper than coal-fired power generation.

                   Image result for images of coal rate 2018

Why it is important??

Coal plays a vital role in electricity generation worldwide. Coal-fuelled power plants currently fuel 37% of global electricity and, in some countries, coal fuels a higher percentage of electricity.Modern life is unimaginable without electricity. It lights houses, buildings, streets, provides domestic and industrial heat, and powers most equipment used in homes, offices and machinery in factories. High cost of power generation would reduce the capacity of the firms for power generation , would greatly impact human lifestyle and businesses as well.

Stocks impacted.

Reliance Power Ltd.(CMP :Rs.29 ,Market Cap : Rs.8331crore, FY2020 PB: 94x)

Adani Power( CMP :Rs.20, Market cap:  Rs.7964 crore , FY2020 PB: -2.5x)

Torrent power (CMP:  Rs. 219, Market cap : Rs. Rs.10571 crore, FY2020  PB: 212x)

Tata power (CMP: Rs.69 , Market cap :Rs. 18973 crore, FY2020 PB: 68x)

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