The average price of traded power has gone up by around Rs 5 per unit in the last four years for significant energy deficits across the country, according to an Icra finding.
The report says price of traded power has gone up to Rs 7.31 per unit in 2009-2010 from Rs 2.32 a unit in 2005-06. This increase has happened mainly due to the cap of unscheduled interchange (UI) given by the Central Electricity Regulatory Authority (CERC), which has given a fillip to power trading via power exchanges.
UI refers to buying and selling of electricity apart from planned sale and purchase of electricity through long-term power purchase agreements. CERC has put a cap of 12% or has restricted over-drawal of electricity from the grid by up to 12% of the schedule drawal. For this, there has been gradual increase in short-term trading volumes of electricity from power exchanges.
The prices of power in the short-term market (as per the figures available from the Indian Energy Exchange) have been on an upward swing since March 2010, after lying low for close to four months. Apart from the increased demand, the fall in the generation of hydro-based plants due to poor monsoons has also resulted in the upswing in merchant power rates.
?The sustainability of these merchant tariffs in the long-term would depend upon the extent of power deficits, the ability and willingness of state utilities to offtake the higher cost power at times of peak deficit and the level of regulatory intervention in the future,? Naresh Thakkar, Icra’s managing director, said. Icra estimates the peak deficit to go up to 16% by 2012 against 12% at present.
According to a report by Angel Securities, the overall merchant power capacity addition is expected to be around 10,000? 12,000 megawatt during the 11th Plan period (FY2007-12). State-run Power Finance Corp would provide the necessary assistance to merchant plant developers to accomplish timely implementation.