Drop in spot power purchase rates helps State discoms, utilities

The drop in electricity purchase rates in the spot market through energy exchanges is helping some State utilities and distribution companies meet their power requirement during the coronavirus lockdown situation.

Prabhajit Kumar Sarkar, MD & CEO, Power Exchange India Ltd (PXIL), said “they (discoms) are able to purchase power at the lower rates ruling now and supply during this troubled times and lockdown period.”

In a detailed conversation with BusinessLine, Sarkar said: “the discoms are able to buy power at lower prices ruling at the exchanges due to slackened demand and a fair price discovery. And some of the States are also sellers on the exchanges.”

Reduced demand

The all-India demand data related to spot market prices shows the average price between March 15-April 10, 2020 has gone down to ₹2.40 per kwh versus ₹3.18 per kwh in 2019. This price drop has attracted some of the State utilities to up their purchases.

Referring to the Union Power Ministry’s move to extend certain facilities to discoms, he hoped that a part of the trade they take up will be mandated on the energy exchanges, which will enable in right price discovery.

Earlier, Sarkar said: “With Central and State governments issuing directives for closure of all non-essential workplaces — offices, commercial establishments, and industrial units except units serving the essential services, the demand for electricity from such consumers has reduced over the past fortnight.”

The demand today is due to household consumption, critical healthcare facilities, municipal services in cities and towns, cold storage and warehousing services, among other key areas for seamless essential services to all the people of the country.

the hindu businessline
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