Power price surges as heatwave triggers near-record demand
3 min read . Updated: 20 Apr 2023, 12:14 AM IST
PremiumDaily peak demand has been largely above 200 GW in April and on Monday, touched 215.882 GW, according to the Grid Controller of India.
New Delhi: Power prices on the exchange have been hitting the ceiling of ₹10 per kWh (kilowatt hour) in the past 10 days due to near-record power demand fuelled by soaring temperatures.
Daily peak demand has been largely above 200 GW in April and on Monday, touched 215.882 GW, according to the Grid Controller of India. The highest demand so far is 216 GW, recorded last year, according data from the power ministry. The anticipated record demand this year is 229 GW.
The rise in demand has lifted the average weighted price in the Day Ahead Market on the exchange to above ₹7 per kWh from ₹6 around 10 days ago and ₹4 in the first week of April.
“The prices have touched the ceiling price of ₹10/kWh on a daily basis starting April 10 in the Day Ahead Market. In fact the prices have consistently remained at the ceiling rate during the evening and night hours (6 pm to 6 am) indicating that for 12 out of 24 hours, the demand far outstrips the supply available in the country," said Naveen Singh, head, business development at Hindustan Power Exchange.
The CERC in an order on 31 March capped the price of all electricity contracts at ₹10/kWh, against last year’s ₹12/kWh.
Noting that the average price in the day ahead market has been over ₹7/kWh in the past 10 days, he said that it is expect to remain elevated in the coming days.
Singh said that with anticipation of increase in demand, prices are more likely to remain at the price cap level during the latter half of the day when demand is highest.
“As there is huge demand for power across the country, which is only expected to increase going forward and generation would take time to catch-up to this demand, we would not be surprised if the prices remain consistently at the capped level during the high demand hours in the coming days and weeks," he said.
The India Meteorological Department (IMD) on Wednesday said heat wave conditions likely to continue over eastern India including Bihar, Odisha and West Bengal over the next three days.
A recent CareEdge report said that peak demand is expected to increase by 6% in FY24. “Base energy demand increased by 8.1% in FY22 and is estimated to grow by 9.5% in FY23 due to the rebound of economic activities after covid-19 lockdowns eased, leading to increased consumption."
While CareEdge Ratings expects a moderation in the growth rate for FY24 and FY25 due to the base effect, it is still expected to surpass the Compound Annual Growth Rate (CAGR) witnessed in the ten-year period of FY12 to FY22, which was 3.9%," the report said.Anticipating a record power demand and to avert a crunch situation as experience last year, Centre in the past few months has come up with a slew of directives to ensure adequate coal supply to meet the peak power demand in summers. The power ministry, in January directed all power generation companies in the country to blend imported coal up to 6% of their requirement till September amid projections of a 24 million tonne deficit of coal during first half of the next fiscal.