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Unused thermal capacity, rising green power may cool spot energy prices

The revival in power demand spurred volumes growth in electricity trading at Indian Energy Exchange

Jayajit Dash  |  Bhubaneswar 

Thermal Power
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High spot are unlikely to sustain in the medium terms as unutilised capacity and a spike in generation from will weigh on.

A report on the outlook for the by says that high energy demand coupled with domestic coal shortages fuelled a surge in spot power tariffs in recent months.

Sabyasachi Majumdar, Group Head & Senior Vice President, Icra, said, “The increased demand for electricity coupled with the shortfall in coal supply from domestic sources, has led to higher dependence on costlier coal imports in FY18 and FY19. The higher dependence on coal imports is augmented by the rising international and depreciation of rupee against dollar. The Indonesian coal price index has increased by about 16 per cent in 11 months of calendar 2018 on a y-o-y (year-on-year) basis. This has resulted in upward pressure on the cost of power purchase for the distribution utilities. Given this, augmentation of domestic coal supplies through both higher mining activity and improved rail infrastructure remains crucial for the sector from a cost control perspective.”

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Between April and October of this financial year, the pan-India expanded by 6.5 per cent, bettering the 5.5 per cent growth recorded in the corresponding period of FY18. The rising demand is met from both thermal and sources. Notably, the Plant Load Factor (PLF) of thermal generating stations improved from 59 per cent to 61.1 per cent in the period. Also, sources generated 29.5 per cent higher power y-o-y.

If the demand growth of six per cent sustains over the next three years, the utilisation of the thermal capacity would improve to about 63 per cent in FY20 and further inch upwards to about 67 per cent by FY 22, the report noted.

Also, the revival in power demand spurred volumes growth in electricity trading at (IEX). The exchange's electricity trade volume rose 19 per cent during April-September, aided by pan-India 6.2 per cent increase in in the period.

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Between April and September, 28,584 million units (MUs) of electricity were traded both in the day ahead and term ahead market. Trade in certificates (RECs) zoomed 325 per cent year-on-year (y-o-y), growing from 1,205 MUs to 5,121 MUs. Total volume trade on IEX went up 34 per cent to 33,705 MUs in this duration.

IEX logged its highest volume trade of 306 MU in the day ahead market (DAM) on September 29, 2018. Average Market Clearing Price increased 33 per cent from Rs 3 to Rs 3.98 per unit largely due to inadequate availability of coal with the generators, the exchange noted in an investor presentation.

First Published: Tue, January 29 2019. 18:39 IST