Surge in spot power prices unlikely to be sustained: ICRA

| | Updated on: Sep 15, 2017
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The recent rise in spot energy tariff is unlikely to be sustained amid available surplus thermal capacity, rating agency ICRA said today.

“The current increase in spot prices has been driven by a demand uptick with 5.4 per cent growth in April–August 2017. This growth was largely supported by a better demand in few states like Uttar Pradesh (15.5%), Telangana (12.3%), Maharashtra (9.5%), Andhra Pradesh (7.0%) and Karnataka (5.8%),” Sabyasachi Majumdar, ICRA Ratings Senior VP and Group Head, said in a statement.

Majumdar further said,” ICRA’s opinion the spike in spot tariff is likely to be temporary and unlikely to be sustained given the still moderate demand, albeit encouraging, growth and surplus thermal capacity available to meet energy demand.”

The average spot power tariff on the Indian Energy Exchange (IEX) has recently witnessed an increase it was Rs 3.12/kwh in August 2017 and Rs 4.11/kwh in September 2017 (till 14th September), representing an increase of 44 per cent and 69 per cent on y-o-y basis, respectively.

Spot power tariff had shot up to as much as Rs 9.9/kwh in one time interval of 15 minute time block on September 13, 2017.

ICRA said that the better energy demand coupled with the reduction in hydro and nuclear based generation in FY 2018 (till August) had led to an improvement in all India thermal plant load factor (PLF), which has increased to 58.0 per cent in August 2017 as against the reported PLF of 54.4 per cent in July 2017. This is significantly higher than the PLF of 51.9 per cent seen in August 2016.

However, it said that the sustenance of this improvement in thermal PLF is dependent upon the recovery in the all India energy demand which is the function of demand growth from industrial segment and extent of an improvement in off-take capacity of distribution utilities, post implementation of UDAY scheme.

Published on January 10, 2018

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