Union Power Minister R K Singh has launched a portal to ensure greater availability of power during the peak demand season at a price higher than the ceiling of Rs 12 per unit by certain category of sellers. The central government has launched a High Price Day Ahead Market (HP-DAM) and Surplus Power Portal (PUShP), a power ministry statement said.
Earlier in February, power regulator CERC had approved the HP-DAM segment where power can be sold at a price as high as Rs 50 per unit.HP-DAM will aid stranded gas and imported coal-based power plants to generate and sell expensive power to meet the high peak demand in summers which is expected to touch 239 GW this season.
Besides, the new segment will also ensure availability of electricity through an expensive battery energy storage system.The Union Minister said that only those generating capacities which have a cost of producing power of more than Rs 12 per unit would be allowed to operate in HP-DAM.
If the cost of production is less than Rs 12, the generators will have to offer power in the Power Exchange’s Integrated Day Ahead Market (I-DAM) only with a ceiling price of Rs 12, he stated. He asked the Central Electricity Authority and the Grid Controller to ensure that prices are reasonable in the HP-DAM and take necessary action to ensure that no Power Producers charge exorbitant prices, which are much more than the cost of production.
Singh launched the portal at a virtual function in New Delhi on Thursday in presence of over 200 stakeholders from state governments and the power sector, the ministry said. Last year the Ministry of Power, after taking note of the fact that on some days the prices in the electricity exchange had gone up to Rs 20, had given directions to the CERC to put a price cap of Rs 12 on the exchange, so that there is no profiteering, it explained.
The cap was imposed from April 1, 2022 in Day Ahead Market & Real Time Market, and further in all segments from May 6, 2022.This move rationalized the price for buyers. Because of the high prices of gas in the international market; the electricity made by using gas was expensive — more than Rs 12 per unit — and this capacity could not be sold on the market.
Similarly, the imported coal-based plants and the Renewable Energy stored in battery-energy storage systems could not be brought into operation, as their generation cost was high, it explained. Singh, said in the statement that the HP-DAM was part of the overall strategy to ensure that all available power capacity is utilized for supply to consumers.
Krishan Pal Gurjar, Minister of State of Power and Heavy Industries expressed confidence that the new mechanism will ensure adequate availability of power. Power Secretary Alok Kumar, while citing many benefits of the new market mechanism, clarified that as against some reports, Rs 50 per unit was only a technical cap and the market forces would ensure a much lower rate. The surplus power portal is a one-of-its-kind initiative, reflecting the ingenuity of the Ministry of Power and the Regulator. Distribution Companies have tied up long-term PPAs for power supply.
They have to pay fixed charges even when they do not schedule the power. Now the DISCOMs will be able to indicate their surplus power in block times/days/months on the portal. Those DISCOMs who need power will be able to requisition the surplus power.
The new buyer will pay both variable charge (VC) and fixed cost (FC) as determined by Regulators. Once power is reassigned, the original beneficiary shall have no right to recall as entire FC liability is also shifted to the new beneficiary.