States go on pre-election power shopping spree

Brimming hydroreservoirs, coal stocks brighten power prospects coming summer

Indian states are indulging in increasing power purchases as general elections draw nearer. The buying spree could have been heavier had the power deficit not come down. The slump in power demand had seen the deficit falling to 4.3% till January-end against 8.8% last year.

Higher power buys by state discoms to tide over summers would translate into lesser load-shedding in coming months.

Though power demand increases during summer, consumers have a reason to breathe easy as hydro reservoirs are brimming with water, owing to recent rains, and improved coal stocks at power plants pointing to better power availability.

Spot market volumes and prices

Data on spot power market suggests the total volume of buy bids at India's largest power exchange India Energy Exchange (IEX) has grown consistently from 2,578 MUs in June 2013 to 2,899 MUs in August, 3,596 MUs in October and 3,848 MUs in January.

Haryana purchased 162 MUs of power in January this year against 47 in the same month last year, Maharashtra bought 218 MUs in January against 12 MUS in January 2013, Gujarat bought 717 MUs against 500 MUs, West Bengal bought 224 MUs against 51 MUs last year and Chhattisgarh purchased 26 MUs against 8 MUs last year.

The states are being helped in their pre-election purchases by subdued power prices in the spot market. Power exchanges registered an average price of Rs 2.9 per unit in the quarter ended December and Rs 2.8 per unit in the ten months ended January -lowest in five years. The slump in prices is due to a near stagnation in power demand that has grown by less than 1% in the current fiscal.

Comfortable reservoir level

According to the latest data released by Central Water Commission (CWC), 85 key reservoirs of the country currently have water storage of 77.8 billion cubic metre (bcm), around 50% of total capacity. This is compared to 41% storage at the same time last year and an average 39% storage in the last ten years.

India's largest dam, Indira Sagar in Madhya Pradesh with a capacity of 9.7 bcm, is running on 40% storage as against the last ten years average of 22%. Among the other large dams, Hirakud in Odisha has 65% storage against last year's 62%; Ukai in Gujarat has 73% against last year's 56%; and Gandhi Sagar in Madhya Pradesh with 73% against 62% last year.

The prospects are particularly bright for the Northern region with its largest dam, Bhakra in Himachal with a mega capacity of 6.2 bcm, registering storage of 47% against the last 10 years average of 34%. The second largest dam in India meets the power and irrigation needs of Himachal, Punjab, Haryana, Rajasthan and Gujarat.

Overall, storage position is better than last year in Himachal, Rajasthan, Odisha, West Bengal, Gujarat, Maharashtra, UP, Uttarakhand, MP, Andhra, Karnataka, Kerala and Tamil Nadu.

Only two states, Jharkhand and Punjab, have relatively less storage this year. India Meteorological Department (IMD) data shows post-monsoon rainfall in October 2013 -- that was 61% above normal against 27% below normal in the same month in 2012 - is a key reason for the improved storage.

India's hydro power generation grew 17.5% to 7.5 billion units (BUs) in January this year as compared to 6.4 BUs in the same month last year. Overall, between April and January in the current financial year (2013-14), hydro generation increased 19.4% to 118 BUs against 99 BUs in the corresponding period last fiscal. Hydro power accounts for over 17% of India's installed power capacity.

Coal

The brimming reservoirs are being supplemented with improved coal availability for power generation. Higher output by state-owned miner Coal India Ltd (CIL), only 23 of the country's 100 power stations are running on critical coal stocks (sufficient to meet less than seven days requirement). This is a significant improvement over 34 stations with critical stocks a year ago.

Some of the large-sized plants with better coal stocks availability include 1,360 Mw Panipat power station in Haryana, 1,278 Mw Obra plant in UP, 500 Mw Bhilai in Chhattisgarh, 870 Mw Gandhinagar power plant in Gujarat and 4,260 Mw Vindhyachal project in Madhya Pradesh.

Coal-fired plants account for around 70% of the total 936 BUs electricity generated in India annually. The 100 coal-based stations consume around 360 million tonne (MT) coal annually. Coal India's output, after remaining stagnant for two years, grew 3% to 409 MT between April and February current fiscal.