Short-term power sales grow 90% in five years

With short-term or day-ahead buying catching on in power trading, entities dealing in these have asked the government to unclog the transmission constraints and look at reforming the process, in accordance with the Electricity Act.

In the past five years, there has been a 26 per cent fall in power rates in the day-ahead market and sales volume has grown 90 per cent.

Seasonal variations, uncompetitive price of electricity and inability of distribution companies (discoms) to accurately forecast their demand are among the reasons why states succumb to short-term purchase of power.

In a note to the Central Electricity Regulatory Commission, the India Energy Exchange (IEX), a leading entity in the segment, has asked for a regulation to provide dedicated transmission capacity for short-term needs.

“The lack of transmission capacity has left most consumers and discoms without any option for balancing in case of contingencies arising close to the time of delivery. The crippling effect of transmission congestion has created a double whammy for discoms and industry, with no power availability from within the state or from outside it,” said the note.

The evacuation system in the country is driven by long-term transmission. As the short-term market is witnessing growth, there is transmission congestion for the flow of power from surplus to deficit areas, such as the southern regions.
 

Congestion implies insufficient power to meet the demands of all customers. So, while generation in the country as a whole is in surplus, it remains unsold at the power trading platforms. IEX said 5,300 million units remained unsold in 2013-14 owing to congestion in the system.

The exchange has also suggested devising a method for booking transmission capacity under the long term, medium term and short term, so that at least 20-30 per cent is available for short-term transactions. Currently, the capacity so traded is only nine per cent of the total power generation.