Short-term power sale prices plunge to record low, volume at decade high
With the Central government mandating short-term purchase of power, more states are coming forward to tie up for the same. This has increased the volume of short-term power trade and has also led to reduction in prices to a historic Rs 2.07 per unit.
The volume of short-term power trade has increased to 20,975 million units during FY16 till yet, the highest ever in the past decade.
Among the states that are leading the pack are West Bengal, Rajasthan, Uttar Pradesh, Tamil Nadu, Telangana and Karnataka. The private discoms in Mumbai have moved to buy power through auction on sustained basis. The latest low price of Rs 2.07 per unit was discovered in the auction held by Bihar for procuring 450 Mw for the month of January 2017.
In March 2016, the Ministry of Power issued guidelines for short-term procurement making it mandatory for all the states/discoms to procure short-term power. The government launched a new e-bidding portal – ‘DEEP’ for facilitating the same.
In an analysis done by IDFC Securities, the report observed that with start of mandatory auction for short-term bilateral trades, the discoms have been procuring all the short-term power through auction or day ahead at exchange. “We have seen increase in exchange volume with numerous Industrial buyers moving to exchanges to manage their volumes,” the report observed.
IDFC said generally, the prices at auction have hovered between Rs 2.07-3.3 per unit. However, the highest price in Telangana at a recent auction was between Rs 5.61-6.2 per unit,” said the report.
The idea to promote short term power is to bring down the cost of power procurement for financially beleaguered state-owned discoms and bring in transparency in the auction process benefiting the consumers. During the first auction for short-term power on the DEEP portal, the price discovered for the state of Kerala was Rs 3.14 per unit and Rs 2.59 per unit for Uttarakhand.
