High price power market, surplus power portal launched

Union minister of power RK Singh launched the portal at a virtual function.

Last year, the ministry of power after taking note of the fact that on some days prices on the electricity exchange had gone up to ₹20, had given directions to the Central Electricity Regulatory Commission (CERC) to cap prices at ₹12 on the exchange, so that there is no profiteering. The cap was imposed from 1 April 2022 inthe Day Ahead Market & Real Time Market, and then in all segments from 6 May 2022. According to the ministry, the 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 Rs12 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,” the statement said.

According to the ministry, it is expected that in 2023 demand will be much higher than last year therefore, gas-based plants and imported coal-based plants will need to be scheduled – and that is why a separate segment has been carved out for those generation systems where the cost of generating power, from gas, imported coal and RE plus storage, may cross ₹12. This separate segment is called HP DAM.

Speaking on the occasion, R.K. Singh, said that the HP DAM was part of the overall strategy to ensure that all available power capacity is utilised for supply of power to consumers. Explaining the operation of the HP-DAM, the minister said that nobody would be allowed to charge exorbitant rates.

The union minister said that only those generating capacities which have cost of producing power of more than ₹12 per unit would be allowed to operate in HP-DAM. If the cost of production is less than ₹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 Rs12.

He asked CEA and Grid Controller to ensure that prices are reasonable in the HP-DAM and take necessary action to ensure that no power producers charges exorbitant prices, which are much than the cost of production. The power minister added that India was a very stable power market as against the case in some developed countries where a situation of power tariff much higher than the cost of production was seen last year.

On Thursday, the ministry said that it has it has crafted a multi-pronged strategy to ensure adequate availability of power during the summer months. As part of the strategy, government would commission more coal-based power plants and run gas-based units to meet the surge in demand.