Spot power prices on the boil as summer heats up

The average short term prices on the IEX the countrys largest power exchange have been consistently in the double-digits for the southern region while in the rest of the country,the prices are inching up with every passing day since the beginning of April. As most electricity distribution utilities are cash-strapped,their capacity to buy power in the short-term market gets diminished as prices inch up further.

The brewing coal shortage situation is seen as one of the contributors to the consistent surge in spot electricity rates. Problems in coal supplies to the sector,manifested in terms of the fuel stocks at key coal-fired stations,are worsening as the onset of summer heralds increased fuel demand at thermal stations. According to the latest data recorded for April 22,stations with less than a weeks coal stock have risen to 33. Of these,17 key thermal power stations in the country were operating with coal stocks of less than four days,out of the 89 major thermal stations across the country being monitored for their coal stock position.

The short-term power market in India,involving trades done within a time-frame of one year,comprises around 10 per cent of the total energy generated in the country. Of the five regional grids in the country,the northern,eastern,western and the north-eastern grids are synchronised to form,what is termed as,the NEW grid while the southern region has only limited interconnectivity with the rest of the regions. Prices in the southern region have been higher due to lack of generation capacity and transmission constraints to wheel electricity from the rest of the country to the southern part of the country.