The Union Government has launched a High Price Day-Ahead Market (HP-DAM) and surplus power portal (PUShP), aiming to ensure greater power availability during the peak demand season.

In August last year, the Ministry of Power had proposed the introduction of HP-DAM.

The ministry had implemented a price cap of ₹12 (~$0.15)/kWh on electricity exchanges last year after noticing that prices on some days had reached up to ₹20 (~$0.24)/kWh. The cap was enforced from April 1, 2022, in both the Day-Ahead Market and Real-Time Market, and later across all segments from May 6, 2022 to prevent profiteering.

The cap helped to rationalize prices for buyers, especially since the cost of producing electricity using gas was high, at more than ₹12 (~$0.15)/kWh. This led to a situation where gas-based electricity generation could not be sold on the market.

Also, imported coal-based plants and renewable energy stored in battery-energy storage systems could not be called into action as the generation cost was high.

Due to an anticipated increase in demand this year, the scheduling of gas-based and imported coal-based plants will be necessary. As a result, a new segment called HP-DAM has been established to accommodate these generation systems, where the cost of generating power from gas, imported coal, and renewable energy with storage could exceed ₹12 (~$0.15)/kWh.

At the launch event, Union Power Minister R.K. Singh stated that the creation of HP-DAM was a crucial part of the overall strategy to maximize power capacity and provide power to consumers. Singh emphasized that electricity pricing within the HP-DAM would be closely monitored to prevent excessive charging.

He clarified that only those generating capacities whose cost of producing power exceeds ₹12 (~$0.15)/kWh would be permitted to operate within HP-DAM. Capacities whose production costs fall below ₹12 (~$0.15)/kWh  would be required to offer their power within the power exchange’s Integrated Day Ahead Market (I-DAM) with a price ceiling of ₹12 (~$0.15)/kWh.

The minister instructed the CEA and Grid Controller to ensure that HP-DAM prices are reasonable and to take appropriate action against any power producer charging exorbitant prices that surpass the production cost.

Distribution companies (DISCOMs) are obligated to pay fixed charges for long-term power purchase agreements, regardless of whether they schedule the power or not. The surplus power portal will allow DISCOMs to display their excess energy during specific block times, days, or months on the portal.

The new buyer will pay both the variable charge and the fixed cost determined by regulators. Once the power is reassigned, the original beneficiary loses the right to recall it, and the entire fixed-cost liability will be transferred to the new beneficiary.

The financial responsibility of the new buyer is limited to the quantity of temporarily allocated or transferred power. This will reduce the fixed cost burden on DISCOMs and ensure that all available generation capacity is utilized.

Recently, the Ministry of Power announced a comprehensive strategy to ensure power availability during the summer.