Mint - Delhi

Summer yet to set in, but spot electricity rates already on the boil

Date: 07/03/2018 | Edition: Delhi | Page: 4 | Source: R Sree Ram | Clip size (cm): W: 12 H: 16

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Extracted Text data: On an upswing Spot electricity prices crossed Rs4/unit for delivery on Monday. Average market clearing price (in Rs/unit) 4 3 2_ Oct 2016 5 Mar 2018 Source: Indian Energy Exchange Chart 2: Tight supplies Coal inventory levels remain low making power companies vulnerable to fuel supply shocks. ? Coal stock On number of days) • Non-pithead plants with critical+super critical levels of coal stock Source: Central Electricity Authority 31 J.': )17 28 Feb 2018 SUBRATA JANA/MINT R. Sree Ram Summer is yet to fully set in, but spot power prices are already going through the roof. The average market clearing price on the Indian Energy Exchange for Monday delivery crossed Rs4 per unit. A yearago, on 5 March 2017, it averaged Rs2.35 per unit. The price rise isn't a one-day wonder. Rates have remained firm through the winter season, as shown in Chart]. For instance, the average market clearing price dur-ing the last three months (Decem-ber. January and February) was higher by 27-29% from a year ago. This comes on the back ofa spike in spot power market rates in August-October 2017. which was largely attributed to an unexpected slow-down in wind power generation and shortage of thermal power capacities due to maintenance shutdowns and fuel supply issues. The situation was expected to normalize by now. But that hasn't happe lied. As Chart 2 shows, non-pithead plants mitts critical levels of coal stock totalled 25 by end-Feb-ruary. This is not only significantly higher than a year ago but also more than in October 2017, when the total numberofplants with crit-ical coal stock rose to 23, driving up spot electricity prices. Critical stock for non-pithead plants amounts to less than seven days of coal. Super critical stock amounts to less than four days of fuel. The data shows continuing tight-ness in coal inventory levels. In total, plants with coal linkages monitored by the Central Electric-ity Authority on an average had stock for l0 days by end-February, compared to l7 days a year ago. High coal prices and the result-ant rise in costs are driving up spot electricity rates. Also as Emkay Global Financial Services Ltd points out, poor availability of rail-wayrakes is affecting coal supplies. Moreover, more structural masons, such as firms being unable to secure fuel supply agreements or a slow pace ofevansion in non-ther-mal power generation may also be a factor. If unaddressed, spot electricity rates could rise further, increasing the bill for state electricity boards that are tapping spot markets for short-term needs. Deepak Agrawala, senior vice president (utilities and industrials research) at Elara Securities (India) Pvt. Ltd, expects some of the demand to be met by solar and hydropower, which is expected to see a seasonal rise from April and May onwards. But if hydropower generation lags and the coal situa-tion does not ease, then spot power prices can remain firm, he says. Who benefits from the current situation? Captive power plants with a low-cost base can benefit the most. Also, utilities such as NTPC Ltd, which are seeing increased generation. On the other hand, this puts firms wills high exposure to mer-chant power capacities and dependent on imported coal (such as JSW Energy Ltd) in a precarious position, as high prices will push up tariffs, snaking them unpalatable for utilities.