For the second time in about a fortnight, spot electricity prices in the day-ahead auction on the Indian Energy Exchange will be uniform at ₹2.57 a kWh across the country, on January 14. On December 29, spot prices were uniform across the regions at ₹2.30 a unit, prompting the Power Ministry to say ‘One nation, one grid, one price’.
According to information available on the IEX, the average market clearing price for January 14 is ₹2.57 a unit, with a cleared volume of 113 million units . This represents an increase of about 40 paise a unit in the other regions and a 90 paise drop in the southern region, over the average market clearing price (MCP) on January 13. In the southern region, the price was ₹3.47 a kWh, while it was ₹2.17 in the other regions. The average MCP was ₹2.59 a unit.
The spot prices have been more or less uniform in all the regions barring the South over the last few days. In the South, the spot prices started increasing after December 29 and were in the region of ₹3-3.60 a unit.
Those who buy electricity on the exchanges will still have to pay the charges for wheeling the electricity across grids. This price will vary depending on the distance the power has to be wheeled and the wheeling charges levied by State transmission utilities.
According to Rajesh Mediratta, Director – Business Development, IEX, there has been a lot of capacity addition in the last five-six years across the country, including in the South. This, combined with demand not keeping pace with supply, has resulted in spot prices dropping region. There has also been a substantial increase in transmission capacity facilitating higher inter-regional wheeling of electricity.
The sellers on the IEX include various electricity distribution companies (discoms), which have entered into long-term contracts at much higher prices and hope to recover at least the marginal cost by selling on the IEX, a few IPPs and some captive power plants. The buyers again include discoms, which are taking advantage of the lower prices, and private companies, according to him.
At the prevailing spot prices, thermal power plants can at best hope to recover the variable cost of generating electricity, according to power sector experts. With falling demand, generators hope to at least earn some money instead of fully backing down their plants.