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Muted demand brings spot power rates to low levels

FE Bureau
Electricity requirement on March 24 was 3,133 million units (MU), sharply down from the 3,507 MU supplied on March 16.

Lower power demand induced by coronavirus has driven down spot electricity prices with 'day ahead market' rates for March 25 delivery falling down to Rs 1.95/unit. The spot power rate was Rs 3.3/unit in the same day last year. The volume of spot power contracted for March 25 through the Indian Energy Exchange (IEX) is 77.5 million units (MU), 43% lower than last year's amount.

The average clearing price at the Indian Energy Exchange (IEX) for the last 4 days is Rs 2.15/unit. Due to dearth of demand, the volume of power offered for selling in the exchange was 2.5 times more than the bids to buy electricity.

"This situation presents a compelling opportunity for distribution utilities to optimise costs, thereby reducing their financial stress," Rohit Bajaj, business development head at IEX said.

The daily power demand in the country has fallen by 10.7% since March 16 with most parts of the country going under shutdown due to the outbreak of the coronavirus. Electricity requirement on March 24 was 3,133 million units (MU), sharply down from the 3,507 MU supplied on March 16.

As FE reported earlier, in the first 15 days of March, the country consumed 51 billion units (BU) of electricity, 3.6% lower than the demand in the same period last year. After the 10.8% rise in February, power demand was continuing to grow at a favourable rate in the first five days of March, but has been contracting each day thereafter.

Even after February's robust increase, the power demand has grown at a meagre 2.2% year-on-year in the April-February period, with electricity consumption in the country contracting for the fourth straight month in November 2019, as an aftermath of an extended monsoon and slowdown in economic activities.

The decline in power consumption is also being reflected in low utilisation levels, measured by plant load factor (PLF), at thermal power plants. PLF of coal-based power plants - many of which are anyway stressed due to lack of adequate demand and coal supply issues - touched an all-time low of 48.9% in October 2019. In April-February, the average PLF was 56.4%, down from 60.1% in the same period in FY19. To be sure, thermal PLFs are also being impacted by the consistently-rising share of renewable energy in the power generation basket.