Spot electricity prices remain steady despite growing demand; a series of government initiatives to increase supply

In May, spot market power prices have not changed despite the nation’s peak demand continuing to rise. On May 23, the nation had a record-breaking peak demand of 236 GW throughout the day, while the overall outage amounted to 27.71 GW.

The average price of power on the Indian Energy Exchange’s Day-Ahead Market (DAM) and Real-Time Market (RTM) for the last two weeks has been Rs 5.2 per unit and Rs 4.6 per unit, respectively, which is almost identical to the price of the same energy last year.

“This year, the nation’s electricity consumption has climbed by over 14%. According to Rohit Bajaj, Executive Director, Business Development, Strategy and Regulatory Affairs at Indian Energy Exchange, “the government and regulators undertook a string of favorable policy and regulatory measures which improved the’sell’ scenario and increased sell liquidity on the exchanges” in response to the high demand for electricity. He said, “This increased sell liquidity kept the exchange prices in check.”

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Additionally, according to IEX statistics, within the same time period, exchange rates were recorded below Rs 3.5 per unit throughout the day.

The power ministry has attempted conformity to the provision of excess energy by producing businesses to power exchanges in order to make power accessible to customers during the peak demand. The industry claims that this has contributed to the stability of power costs despite the fact that demand is still at all-time highs.

According to a recent research by ICICI Securities, the volume of power exchanges increased by two times the 8% demand print from the previous year in FY24.

According to the most recent statistics from the Central power Authority, the nation produced 4.76 billion units (BU) of power as of May 21, exceeding its goal of 4.56 BU. The nation’s power firms produced 233.28 BU of energy between April and May 21, which is 2.6% less than the goal of 239.5 BU.

The government has implemented a number of measures to guarantee that consumers will receive an adequate supply of electricity, including requiring imported coal-based plants to run at full capacity and blending six percent of domestic coal-based plants with coal. The government has estimated that peak demand for power will reach a record 260 GW this summer.

As of May 21, the nation’s thermal power plants had 47.5 million tonnes of coal on hand, which accounted for 67% of the required 70.56 million tonnes of stockpiles.

The availability of coal supplies is better this fiscal year than it was at the same time previous year, if you can observe that. According to Vikram V, vice-president and sector head of corporate ratings at Icra, “last year, the coal stocks in March were about 13 days. This year, they have increased to over 15 days at an all-India level, and even the prices of imported coal have come down from the peak we saw in FY22.” “The industry is also in a good position to use the imported coal-based plant.”

Compared to the same time last year, when the highest electricity consumption was 215.88 GW, it reached 224.18 GW in April. The month’s power usage was 144.25 BU, 10.5% more than the April FY23 average of 130.55 BU.

The Indian Meteorological Department reports that April’s temperatures were the highest in the country’s northeastern and eastern regions and the second-highest in south India since 1901. As heatwave conditions persist in several regions of the nation, the country’s peak demand for electricity is anticipated to increase even more.