The short-term power market in the country has surged ahead over the past decade with the gradual drying up of long-term power purchase agreements (PPAs) inked by thermal power generators with the state electricity boards.
According to data released by power regulator Central Electricity Regulatory Commission (CERC), the share of the short-term market, made up by energy exchanges, bilateral trade and unscheduled interchanges, moved up from 6.1 per cent in FY09 to 11.7 per cent in FY19. In the comparable period, the dominant grip of PPAs loosened as their share fell from 93.86 per cent to 88.3 per cent.
Energy exchanges like the Indian Energy Exchange (IEX) met four per cent of the power demand.
“Short-term power market is gaining traction since the count of stressed thermal power assets has gone up in recent years. Given the negative sentiment and the uncertainty that shrouds such thermal power stations, the state-owned power purchasing firms are hesitant to sign long-term PPAs. Moreover, short-term power trade, especially the power exchanges have come in handy to meet the sudden surges in peak demand owing to their flexibility and ready availability (of power)”, said an industry source.
The share of the short-term power market, though, is still minuscule as additions in installed power capacity has exceeded the growth in peak power demand. From 2011-12 to 2018-19, the nameplate power capacity shot up from 199,877 Mw to 356,100 Mw at a compounded annual growth rate (CAGR) of 8.7 per cent. Peak power demand in the corresponding time span has grown by only five per cent, data collated by the Central Electricity Authority (CEA) showed.
Private generators contribute 46.2 per cent to the overall power capacity; they are followed by state-owned utilities (29.5 per cent) and central power stations (24.3 per cent).
With over 6400 participants, IEX has a whopping 98 per cent share in online power transactions at exchanges, bringing together a pool of around 4000 industries, more than 50 discoms (electricity distribution companies), 500 conventional generators and 1650 renewable energy participants to trade in power.
Between FY09 and FY19, the volume of electricity transacted on IEX saw a phenomenal growth, rising to 52,241 million units (MU) from 2,616 MU at a CAGR of 38 per cent.
Textile industry is the largest power buyer at IEX with a share of 29 per cent, followed by metals (24 per cent) and manufacturing (15 per cent).
The average market clearing price at IEX fell 11 per cent year-on-year to Rs 3.32 per unit in June, mainly because of reduced demand in the short-term market. Greater generation of power from hydro, solar and coal-fired power stations tied-up by long-term contracts with discoms along with better availability of imported and domestic coal dragged trading volumes, thus trimming prices at IEX.