The availability of adequate transmission capacity remains the only major concern in ensuring that electricity prices in the spot market do not skyrocket this summer.
“There is no shortage of power in the country. The only issue is transmission capacity. The government has asked Power Grid Corporation of India to expedite its projects, which has seen results on ground. Despite a harsh summer, I don’t think electricity prices will be too high this year. Apart from the southern region, prices shouldn’t be going beyond ₹3 a unit,” Rajesh Mediratta, Director – Business Development at Indian Energy Exchange, told BusinessLine. Temperatures across the country have started rising already, and water levels at 24 of the 31 major reservoirs across the country are lower than last year.
With electricity prices on the spot market creeping up, to ₹4.2-4.35 a unit, in the southern region, there were apprehensions among industry watchers that peak summer could see the situation deteriorate.
“The sudden spikes in spot electricity prices have only happened when the transmission capacity was low. For an hour or two, it has touched ₹5.4 a unit to ₹4.73 a unit. But this is because only 500 MW of transmission capacity has been available for the south-west corridor when the demand is for 1,000 MW,” said Mediratta.
He also added that State government purchases from the spot market in the southern region have seen a slight increase. “Kerala regularly purchases from the spot market anyway. But of late, there has been a slight increase in purchases from Telangana, Tamil Nadu and Kerala of 50-100 MW,” Mediratta added.
Ready for summer
Government officials claim they are sufficiently prepared for the summer in terms of power capacity.
“Thermal power generation, which gives the largest chunk of electricity to the system, is still operating at around 62 per cent plant load factor. For the summer, nine gas-based power plants have also agreed to operate on imported natural gas which will enhance supply,” said a senior official of the Central Electricity Authority.