Exchange prices of power increase, hit ceiling price in peak hours

At the Indian Energy Exchange, price of power booked for the next day—day-ahead market or DAM—stood at ₹6.78 per unit, up 23% from ₹5.51 a month earlier. Further, the duration of power price hitting the cap of ₹10 per unit rose to 12 hours a day, up from four hours a month earlier.

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"During daytime, prices have been around ₹3.5 per unit and market participants have been leveraging RTM (real-time market) segment to optimize their power procurement costs. However, during peak hours, market prices have hit a ceiling price of ₹10/unit," an industry executive said on condition of anonymity. Peak hours are generally at evening and night.

Power distributors with long-term power purchase agreements aren't hampered by the price fluctuations, since they're bound by tariff agreements. Meanwhile, those buying from exchanges are unable to pass on the higher costs to end users.

On a monthly average, though, June prices in the day-ahead market are marginally up to ₹5.4 per unit compared to ₹5.3 in the whole of May.

Rohit Bajaj, executive director, business development, strategy and regulatory affairs, Indian Energy Exchange (IEX) said: "The recent temperature surge has significantly pushed up power demand, with the country's peak demand reaching 250 GW this year surpassing the previous high of 243 GW recorded in September last year. In the first two months of the current financial year, India has seen a nearly 14% year-over-year increase in electricity consumption."

Demand still elevated

India's peak power demand touched a record 250 GW on 30 May. Although demand has since eased, it is still at elevated levels. On 17 June, it was at 240 GW, while on 18 June, the demand was at 239 GW, according to data from the Grid Controller of India. The power ministry on Tuesday said peak demand in the northern region touched a record 89 GW on 17 June. The heightened demand comes in the backdrop of a persistent heatwave sweeping north India. However, with the Indian Meteorological Department (IMD) projecting the heat wave conditions to abate starting 20 June, there might be some respite ahead.

Also read |  How India is managing power demand amid the brutal heatwave

"Discoms in Delhi purchase about 200-700 MW power from exchanges. It depends upon the requirement. Although volumes purchased from exchanges are not very significant compared to the quantum tied up through long-term agreements, they play a key role in the current high-demand scenario and peak demand hours," an official with a discom in the national capital said on condition of anonymity. On Wednesday, Delhi’s peak power demand hit a record 8656 MW at around 3 pm.

Peak power demand is expected to hit 260 GW this summer. This year, India saw record peak power demand in May, while last year, the record was in September. So, despite some respite from the heat wave, in the months ahead, demand may continue to rise.

Amid such high demand, northern states have also witnessed multiple instances of power supply tripping. The Northern Regional Load Dispatch Centre on Sunday said the grid supplying power to northern states recorded a cumulative load drop of 16.5 GW after multiple such incidents. The tripping impacted Haryana, Punjab, Uttar Pradesh, Rajasthan, Delhi, Uttarakhand, Himachal, Pradesh and Chandigarh.

Stocks at the highest level

Meanwhile, the coal ministry has stated that stocks at thermal plants are at the highest levels. As of 16 June, stock was over 45 million tonnes, 31.71% higher than 34.25 million a year earlier. The demand of coal-based power has grown by 7.30% so far this financial year compared to FY24.

Also read |  India's peak power demand hits another record at 250 GW

"Short-term purchases account for about 13% of the total power supply to the discoms, and out of that, exchange volumes are about 5-5.5%. Currently, most of the demand on the exchanges is from northern states like Punjab, Haryana and Uttar Pradesh, as the monsoon rains are yet to hit the northern region. So far, it is expected that the southwest monsoon this year would be normal or above normal. If the projections hold then we may see an ease in demand going ahead. Otherwise, the demand and price may continue to see an upward trend," said Vikram V., Vice-president & co-group head, corporate ratings, ICRA.

Last week, a weather department official said that high heat in large swathes of northwestern and eastern India has slightly slowed down the monsoon's progress. Meanwhile, El Nino climate conditions, associated with the warming of sea surface temperatures, have developed over the equatorial Pacific Ocean, triggering concerns over extreme weather events worldwide and a weak monsoon in India.