Energy purchase rates for South dip in spot market

The average purchase rate for the South in the spot energy market stood at ₹5.11 per unit three years ago, fell to ₹3.79 in 2015-16 and to ₹2.79 last year. During the April-July period this year, the spot rates were hovering around ₹2.81, thanks to the availability of power for the region due to better evacuation inter-regional grids.

The industry expects spot market prices to remain at ₹2.50 per unit in the South.

New transmission grids The gradual addition of new grids in the South, such as the Raichur-Sholapur transmission corridor, the Narendra-Kolhapur transmission line, the commissioning of the Angul-Srikakulam line in December 2016 and the Wardha-Nizamabad corridor in March 2017, have provided a major boost for Telangana, Tamil Nadu, Karnataka and Andhra Pradesh.

Ramesh K Mediratta, Director, Indian Energy Exchange Ltd, told BusinessLine : “July 2017 witnessed major events in the power market due to increased transmission system. The Southern States purchased a record 71 million units per day in spot market on July 26, 2017. Of this, 58 million units were imported from the Western and Eastern region.”

It is estimated that about 2,960 MW of power was purchased round the clock in the Southern region.

“Such high volumes in the spot market have not triggered any major price rise in the South, with the average per unit price being ₹2.48 and ₹3.31 during peak hours,” he said.

Telangana’s gain Telangana’s State utilities, which have taken up a pilot project to supply 24x7 power to agriculture consumers, benefited from the spot exchange in July. Its savings, at a rate of ₹1 per unit, would work out to ₹7 crore for the purchase of 71 million units. This could translate into annual savings of over ₹2,500 crore.

D Prabkakar Rao, Chairman of TS Transco said: “We have some long-term PPAs (power purchase agreements) where we have committed [to a price of] ₹6.80 per unit, like the one from the Tamil Nadu project. We are exploring ways to address this with cheaper power available through other sources.”

While Andhra Pradesh is saving on electricity costs by replacing expensive power with that bought from the spot market for a few hours every day, Tamil Nadu, Kerala and Karnataka are utilising the eastern and western corridors under long-term access.

North-south price gap Power generated from thermal stations in South are costlier when compared to those in the country’s North which are closer to the coal mines.

While evacuation of power to the South was not possible earlier due to transmission constraints, it has now been made possible due to improved connectivity in the region.

As per estimates, the demand from AP and Karnataka is likely to go up. Power Grid Corporation is strengthening the Angul-Srikakulam-Vemagiri line to AP’s Capital of Amaravati. This will enhance the capacity significantly.

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