Electricityprice in spot market soared to a record of Rs 12.95 per unit on Sunday, while the peak hour price touched Rs 8.78 a unit as festive demand and dry weather increased consumption, while stressed generating units do not have the resources to seize the opportunity to supply.
Aggressive buying by state power distribution companies of Maharashtra and Gujarat, increased demand due to warm weather conditions, less hydel and wind power generation could have led to the rise in the electricity price. The prices have been rising since last 15 days, sources said.
The average price this week has been Rs 6 a kWh, while the peak reached Rs 8.7 a unit, according to IEX data. The national peak power demand rose 6% since September 1, while total power supplied rose 9%.
Solar power and thermal plants generation has risen by 16% each since September 1. The buy bids at exchanges have increased by 85%, while sell bids fell 7% in the last 15 days. The total power sold increased 57%.
Industry observers said Sunday was a one-off day as buy bids touched 265 million units against sale bids of 215 million units on the exchange, a gap of 50 million units or 2,000 mw. “About 15 days back, lot of dicsoms were selling their surpluses,” said an industry insider.
Central Electricity Authority chairman Pankaj Batra said demand from Maharashtra was high because of the ongoing Ganapati festival while Gujarat has also been aggressively buying. “Last few days, Gujarat has been buying 2,500 mw, while Maharashtra around 2,000 mw,” he said. The hot weather conditions due to depleting rainfall contributed to the increased load, Batra told ET. “Sunday, however, must be one of the important days of Ganapati festival for immersion,” he said.
Last October, power prices on exchange touched Rs 10 per unit for a 15-minute slot due to coal shortage. The prices touched a five-year high of Rs 11.41 per unit in May this year due to aggressive bidding by captive units.
However, forthcoming assembly polls and agricultural demand in October could further trigger rise in the spot power market prices. Association of Power Producers director general Ashok Khurana said cashstrapped power plants’ inability to pay for imported coal has led to the spike in power prices.
“Many of generators under NCLT or in stress category have acute liquidity issue with no bank willing to enhance their working capital. Consequently, these assets don’t have working capital to buy imported coal. E-auction quantities are drying up and prices too have shot up. Therefore, the fuel shortages, are causing spike in prices,” he said.
Data uploaded last by the power ministry on September 5 on electricity generation showed a capacity of 89,000 mw under shutdown against 184 GW online capacity. Thermal plants operated in August at 53% of their capacity, CEA data showed.
Industry observers said gas-based power plants should be used to manage such peak power scenarios. The proposal has been under consideration by the government for a long time. A high-level empowered committee led by cabinet secretary PK Sinha is already looking into flexible coal utilisation for short-term power contracts by generation companies. In its meeting on Friday, the committee also discussed status of gas-based power plants.
The Economic Times