Tamil Nadu Sets ₹3.97/kWh as Pooled Cost of Power for Renewables

Spot power price witnessed an unprecedented spike in September 2018, reversing the trend from the previous months. In September 2018, the recorded spot power price was ₹4.69 (~$0.063)/kWh. This is 41 percent more than the spot power price of ₹3.34 (~$0.044)/kWh recorded in August 2018.

Compared to September 2017, spot power price had a 40 percent increase year-on- year (YoY). According to the Indian Energy Exchange (IEX), “The all India peak demand touched 176 GW in September 18, 2018, registering a three percent increase over August 2018 and 11 percent increase over September 2017, per the national load dispatch center (NLDC) statistics.”

Together, the electricity market at IEX, the Day Ahead- Market (DAM), and the Term Ahead-Market (TAM) traded the highest ever monthly volume of 5,829 million units (MUs) in September 2018. This is 1,768 MUs more than the 4,061 MUs traded on DAM and TAM in August 2018, and 1,590 MUs more than the 4,239 MUs traded in September 2017.

The market achieved an all-time high record daily volume of 306 MUs for delivery on September 29, 2018, crossing the 300 mark for the first time. On a daily average basis, about 191 MUs were traded, the highest during any month.

One Nation, One Price was realized for 28 days. On a daily average basis, 645 participants traded in the market during the month. The TAM traded 103 MUs in September 2018, registering a 19 percent increase month-over-month and a 32 percent decline YoY.

The key reasons for increase in the volume as well as prices in the day-ahead market included an increase in demand for power in Eastern, Western and Southern states, low availability of coal with thermal power plants; reduced generation from wind and hydro based capacity, and scant rainfall and dry weather in Southern states in second half of the month.

When contacted, a market insider said, “This was bound to happen, we knew there will be seasonal changes and still did nothing to cope. And if you notice, each year around the same time spot prices go high.”

Elaborating further, the source said, “This is a seasonal transition, there is high demand from all sides, plus due to monsoon coal mining could not go smoothly and led to a shortage due to which we could not realize our entire generating capacity. For the next year we need to be prepared.”

When asked how long this trend will continue, the source replied, “Coal will become good again as monsoon eases out, demand in North India will go down due to winter, even in some southern states demand goes down at around this time, so spot power prices will go down.”

The source also made an observation that the sellers weren’t the ones pushing the prices continuously upward, it was the buyers. For some 15-minute time slots, the spot power price reached ₹18 (~$0.24)/kWh, an all time high, but then later receded, added the source.

Saumy Prateek Saumy is a senior staff reporter with MercomIndia.com covering business and energy news since 2016. Prior to Mercom, Saumy was a copy editor at Thomson Reuters. Saumy earned his Bachelors Degree in Journalism & Mass Communication from the Manipal Institute of Communication at Manipal University. More articles from Saumy Prateek.