Fi­nally a reprieve for power pro­duc­ers

Mint Asia ST - - Otherviews - R. SREE RAM

The

Au­gust data should pro­vide some reprieve for power pro­duc­ers who are oth­er­wise strug­gling with sub­dued de­mand and low tar­iffs. Power gen­er­a­tion was up 7.9% against a 6.6% rise in July and 2% in June.

Im­por­tantly, ther­mal power gen­er­a­tion jumped 14.9% and uti­liza­tion lev­els also im­proved in Au­gust, pos­si­bly to make up for the short­fall in nu­clear and hy­dropower gen­er­a­tion. Fur­ther, gen­er­a­tion in July and Au­gust was aided by a favourable base. But de­mand in gen­eral was also strong.

Vol­umes in the spot elec­tric­ity mar­ket at the In­dian En­ergy Ex­change (IEX) rose 15.5% last month. En­cour­ag­ingly, the growth is ac­com­pa­nied by a rise in tar­iffs. Prices jumped 44% from a year ago to Rs3.13 per unit in Au­gust, the high­est in al­most two years. For Mon­day de­liv­ery, the av­er­age mar­ket price stood at Rs5.08 per unit, dou­ble the rate in the pre­vi­ous fis­cal year.

Ac­cord­ing to IEX, de­mand in­creased from the south­ern re­gion which is fac­ing the dou­ble whammy of lower-than-nor­mal rains and higher tem­per­a­tures. So much so that in­ter­state trans­mis­sion (im­port of elec­tric­ity) re­mained con­gested in the south. “Over­all 102 MU (mil­lion units) were lost due to con­ges­tion and daily av­er­age vol­ume loss was 3 MU vis-à-vis over­all vol­ume loss of 51 MU and daily av­er­age loss of 2 MU in July,” IEX said.

Ac­cord­ing to an an­a­lyst with a do­mes­tic broking firm, lo­cal events like main­te­nance of power plants or change in fes­tive dates (Ganesh Chaturthi came in Septem­ber last year) could also have led to the de­mand spurt.

Even then there is no deny­ing that vol­umes were strong in Au­gust. This should bode well for pro­duc­ers, es­pe­cially for those de­pen­dent on spot elec­tric­ity mar­kets.

It has to be seen, though, how long the cur­rent trends hold. De­mand and price spurts ear­lier proved to be sea­sonal or ac­com­pa­nied by sow­ing sea­son or high us­age by farm­ers (greater us­age of pumpsets to draw ground­wa­ter in rain-deficit years). Will this time prove dif­fer­ent? The com­ing months will pro­vide clar­ity.

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