Tariff spikes reach new high in India

02 October 2018 Week 39 Issue 477

Indian spot tariffs touched a decade high of 17.61 rupees (US$0.24) per kWh on September 30 as demand grew stronger because of low hydro and wind output and coal shortages at thermal plants.

The Indian Energy Exchange’s (IEX) previous high was 17 rupees (US$0.23) in August 2009.

Indian Power Secretary AK Bhalla said such price spikes were typical for the time of the year, as wind output suddenly drops and hydro also starts declining. 

“We were not able to build coal stocks in power plants, especially in northern states,” he added.

Central Electricity Authority figures show that as many as 19 thermal power plants (TPPs) had less than seven days of coal stocks consumption on September 27.

Last week, Indian Power Minister RK Singh asked state-owned generators such as NTPC and DVC to strengthen their mining activities as coal supplies to power plants were a major concern.

In order to address the issue of sudden price spikes, the government is likely to lift a nearly decade-old restriction on coal allotments to so-called merchant power plants that supply electricity to short-term markets, including the power exchanges, the Economic Times reported last week.

This move will be a relief to power projects that do now have long-term power purchase agreements (PPAs). Currently, domestic coal is offered only to plants that have signed long-and medium term PPAs.

Short-term power contracts refer to agreements for less than a year. The proposal on flexible PPAs is based on official analysis that short-term power market is useful in meeting immediate needs of the consumers, suppliers and the sector as a whole

Edited by

Richard Lockhart

Editor

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