New market segment for EXPENSIVE power

February 18, 2023

The Central Electricity Regulatory Commission recently approved a proposal to start a separate market for expensive power. These expensive power markets are usually referred to as spot power markets. What is expensive power according to the regulatory body? Electricity derived from imported gas and imported coal and also from battery storage has been put under the category of expensive power. Companies generating electricity from low-cost fuel cannot operate in this market.

Role of Indian Energy Exchange

The entire implementation of the expensive power market will be done by IEX. CERC, the regulatory body does the approval process alone.

Need for Expensive Power Market

The power demands are to increase this summer due to high temperatures. To fulfil the demands and avoid power shortage, it is essential that GoI increases its power generation. To achieve this, every possible pathway of power generation should be opened. Though the power generation from imported raw materials is expensive, it aids in fulfilling the overall power demand of the country.

What is the plan?

The CERC has fixed the price of electricity in expensive markets at Rs 50 per unit. Due to high costs, distribution companies usually do not prefer to buy electricity from generators using imported raw materials. The new market will help them find their buyers easily.

Background

In 2021, a cap was set on these spot power markets by CERC. The cap was set at Rs 12 per unit. In 2022, the expensive power was sold at Rs 20 to the states and to farmers. Due to such low rates, expensive power generation companies incurred severe losses.

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