Analysts say prices will remain low, which is likely to reduce electricity bills for some consumers.
Kolkata: Spot electricity prices have fallen to Re 1 per unit after a gap of nearly two years because of higher supply from renewable energy sources as well as conventional plants as they have adequate fuel stocks.
Analysts say prices will remain low, which is likely to reduce electricity bills for some consumers.
Kameswara Rao, leader at PWC India, said: “Lower prices offered for the lean hours of the day, such as early morning, reflect surplus base-load capacity. This conversely demonstrates the need for flexible generation capacity which can be utilised during peak hours.”
Power prices have remained subdued since April, when short-term power prices declined 19.1% year-on-year to Rs 3.22 per unit. While energy demand went up 6%, energy supply increased 6.2%.
Solar and wind generation increased 55% in recent weeks while hydropower supply went up 30%. In all, supply of renewables increased 40% in recent weeks, leading to a softening of power prices at the exchange.
“We feel electricity prices will decrease further as monsoon hits India this week. In fact, we have estimated that average power price during June will remain below Rs 3.50 per unit,” said Mediratta.
Girish Kadam, sector head (power) at ICRA, said: “Last year, short supply of coal resulted in spike in prices at the exchange. The scenario has reversed since January this year. With better coal availability at power plants generation has increased, keeping prices under control.”
Coal availability with power plants in June nearly doubled year-on-year to 28.6 million tonnes.
“Supplies from renewable sources have also helped power prices go down,” said Kadam. “However, last year between October and November, when power availability was tight, a bunch of utilities tied up with power generators to procure short-term power during this year’s summer – May and June – at prices ranging between Rs 4.5 per unit and Rs 5.5 per unit. Steady supply of power from these sources kept many utilities away from the exchanges, pulling down demand and prices.”
Source: economictimes.indiatimes
