Higher demand pushes power prices up

Source: The Hitavada      Date: 07 Nov 2018 09:15:54


Business Bureau

AFTER three months of decline, short-term power prices increased in September, mainly driven by higher demand and lower generation from renewables, said India Ratings and Research in its report on Tuesday.
India Ratings and Research (Ind-Ra) in its October edition of credit news digest on India’s power sector highlighted the trends in the sector, with a focus on capacity addition, generation, transmission, merchant power, deficit, regulatory changes and recent rating actions.

According to the report in September 2018, short-term power prices rallied upwards to Rs 4.69/unit (over September 2017 rate of Rs 4.09/unit), post three months of decline, driven by a higher power demand, lower generation from wind capacities, and scanty rainfall and dry weather in some states in the second half of September 2018.

To meet the short-term power requirement, 5,725 MUs (million units) were traded on the Indian Energy Exchange in September 2018, up 44 per cent m-o-m (month-on-month) and 40 per cent Y-o-Y (year-on-year). In September 2018, all-India energy requirements increased 7 per cent Y-o-Y and available energy increased 7.4 per cent, leaving a power deficit of 0.5 per cent (September 2017: 0.9%).

The power supply in September 2018 was met through higher hydro (up 23.5% y-o-y) and thermal generation (up 2.7 per cent). Although generation from renewables also increased 53.6 per cent y-o-y on account of an increase in installed capacity (20 per cent); generation declined 29.5 per cent m-o-m, driven by lower generation from wind energy.

Overall, the total power generation increased 8.7 per cent y-o-y in September 2018, it added. The lower renewables generation coupled with no new capacity addition in the thermal space led to higher reliance on thermal power, which resulted in an increase in all-India PLF (plant load factor or capacity utilisation) to 61.1 per cent in September 2018, compared to 60.7 per cent in the same month of the previous financial year.