Sale of power on energy bourses: price trend subdued

Sale of power on the energy exchanges in the country shows a subdued price pattern during the current financial year, so far, barring two southern States of Tamil Nadu and Kerala, where prices are still ruling high.

The average price realisation this year, so far, has been around ₹3 per unit as against ₹3.52 last financial year during the same period. In fact, due to widespread rains in some States of the Southern region and in other parts, the demand has come down and the sale price in the last few days is lower than last year.

Rajesh K Mediratta, Director, Business Development, Indian Energy Exchange Limited, said that an analysis of current exchange traded pattern shows that it is a lot more attractive now to buy on the exchanges today as opposed to entering into long-term contracts.

A buyer gets the advantage of lower rates prevailing and also the advantage of availability of more power this year as against the last financial as there has been capacity addition. “If you enter into a contract, you get power at cost plus sale rate. Here the rate is lower as it is market demand driven,” he explained.

Mediratta told BusinessLine that the average market clearing price was ₹3.52 per unit during 2014-15, an increase of about 25 per cent in 2013-14. However, the current trends thus far show that the prices are ruling much lower this year, including in AP and Telangana.

However, in Tamil Nadu and Kerala, prices are still high at about ₹8.50 per unit.

For IEX, he explained, the day ahead market continued to be one of the most vibrant market segments and traded over 28 billion units of electricity, on par with the previous financial year.

The average daily volume was at 77 million units during fiscal 2015. The installed capacity has gone up across the country and there is enough supply to meet the current requirements across various parts in the country.

However, due to constraints in evacuation to some parts, the prices rule higher there, he said.

Even if the demand goes up during the summer months, there is increased generation capacity to meet the demand.

However, the overall purchase rates could be lower than last year trends suggest, he explained.