Short-term power prices are likely to remain elevated in the near term on account of a continued increase in imported coal prices, according to ratings agency Ind-Ra.
It noted that a large part of the increased power generation would continue to be met through coal-based plants, although coal output is not increasing to the desired level. This is reflected in low inventory stocks at power plants, and therefore, a part of the increased energy demand will have to be met through imported coal, Ind-Ra said.
In light of the expected high imported coal prices, the short-term power prices in India are likely to remain elevated, it stated.
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The speedy recovery in power demand post the second wave of COVID-19, coupled with lower-than-adequate domestic coal output, led to a reduction in coal inventory levels at various power plants, it said.