Demand cuts short-term power price to ~2/unit

More states are coming forward to arrange short-term purchase of power, on the Centre’s prodding, leading to a reduction in price to a historic low of ~2.07 a unit.

Also, the volume of shortterm power trade rose to 20,975 million units in the current financial year till date, the highest in the past decade.

This was similar to last year. The growth last month was 74 per cent.

The short-term bilateral volume fell 44 per cent and the growth in exchange volume was 33 per cent, shows industry data.

States in the lead are West Bengal, Rajasthan, Uttar Pradesh, Tamil Nadu, Telangana and Karnataka. Along with private distribution companies (discoms) in Mumbai, they’ve moved to buy power through auctions on a sustained basis.

The latest low of ~2.07 a unit was at the auction held by Bihar for procuring 450 Mw for of January 2017.

In March 2016, the Union ministry of power issued guidelines for short-term procurement, making it mandatory for all states/discoms to procure short-term power.

It launched an e-bid portal, ‘DEEP’, for facilitating this. IDFC Securities says with mandatory auction for short-term bilateral trades, discoms have been procuring all short-term power through auction or the day ahead exchange.

“We have seen increase in exchange volume, with numerous industrial buyers moving to the exchanges to manage their volumes,” the report observed.

It said the auction prices have been ~2.07-3.3 a unit. The highest, in Telangana at a recent auction, was ~5.61-6.2 a unit.

The idea of promoting short-term power is to bring down the cost of procurement for the financially strained state-owned discoms and to bring 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 ~3.14 a unit and ~2.59 a unit for Uttarakhand.