Karnataka, Tamil Nadu allow power generators to sell outside

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Karnataka and Tamil Nadu have withdrawn restrictions on power generators from supplying to other states, thanks to surplus power. Tamil Nadu had invoked Section 11 of the Electricity Act in October 2014 and Karnataka in September 2015, directing all power generators to supply surplus power to the state grid for this purpose.

Karnataka government, in its order issued on May 30, said the daily consumption has reduced to 20 MUs from 50 MUs. Correspondingly, the peak demand, which was 9,000-9,300 Mw during the first week of May, has also dropped to 7,200 Mw from 600 MW.

“Further, May 18 onwards, infirm wind energy during morning and evening peak hours has raised considerably. Injected power is in the range of 650 Mw to 1,000 MW and average wind injection per day in ranging from 19 MUs to 26 MUs. The extraordinary situation warranting exercise of power under Section 11 of the Electricity Act, 2003 has since ceased,” Karnataka government said.

On its part, Tamil Nadu said total power generation, excluding wind and solar, is now in the range of 12,500 Mw to 15,000 Mw. Anticipating forced outage of 1,400 Mw, the net availability is between 11,100 Mw and 13,600 Mw. This apart, wind power generation will be 2,000-3,600 Mw and solar will be 700 Mw. “'The anticipated demand during May and October will be in the range of 14,000 and 15,300 Mw against the availability of 14,000 to 15,600 Mw. There will be 300 Mw of surplus power. Besides, 500 Mw will be available from long term open access, 430 Mw from independent power producers and eligible share from Kudankulam stage-II,” the TN government said in its order.

Indian Energy Exchange director (business development) Rajesh Mediratta said, “Such withdrawal is win-win for generators and discoms. In oversupply situation, market prices will slide due to competitive pressure. At the same time, generators will be free to look for buyers elsewhere. Sometimes, generators prefer to sell at lower prices when they expect to get payments immediately.” He further said, discoms also prefer to pay upfront when they get 20-30 per cent cheaper power.

It is unlikely to help the generators as demand drops all over the country during monsoon, leading to excess generation capacity in major states like Maharashtra and Gujarat. As a result, power generators miss vital opportunity to sell electricity during summer. “Further, purchasers of power are uncertain about ability of Tamil Nadu and Karnataka generators to provide reliable power due to usage of Section 11. This would have long-term impact on power investments in the state,” said Balwant Joshi, managing director, policy and regulatory consulting, Idam Infrastructure Advisory.

Maharashtra Electricity Regulatory Commission’s former member Jayant Deo said, “It will be prudent now to carry out an independent economic study for the benefit of administration and to learn from the experience for all the states, to avoid wrong application. Free electricity market across the country will benefit all the consumers and economy.”