Scanty rainfall sends spot power prices soaring

In July, spot price of power across the country was Rs 3.76 a unit, 64% more compared to a year earlier

Amid the deficit monsoon this year, spot power prices have exceeded the levels seen last year. And, it is expected the prices will rise further.

In July, the spot price, or market clearing price (MCP), of power across the country was Rs 3.76 a unit, 64 per cent more compared to a year earlier. In June, the MCP stood at Rs 3.89 a unit, against Rs 2.23 in the year-ago period. Power demand continues to be high, as governments in states headed for Assembly elections are trying to ensure adequate power. Besides, power is being drawn for kharif crop-sowing in various regions. Madhya Pradesh, which usually sells power during this season, isn’t doing so this year due to the scarcity of water in reservoirs.

“In areas such as Punjab and Haryana, power demand rises at least 60 per cent during this season, as kharif sowing needs power. So, even if the price increases, buying power is essential for them during the monsoon,” said an expert.

On Tuesday, the peak power shortage in the northern region was 4,118 Mw, the highest in the country; it stood at 393 Mw in western India. Typically, the peak power demand during monsoon months of June to September is about 115,000 Mw, but this year it stands at 129,000 Mw, according to data available with the Regional Load Despatch Centre.

In its latest forecast on Tuesday, the India Meteorological Department (IMD) scaled down its prediction of the rainfall this season to 87 per cent of the long-period average, or LPA (the average rainfall received by the country in the last 50 years), from its previous estimate of 93 per cent. Rainfall less than 90 per cent of the LPA is considered deficient.