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Power Prices fall by 22% in 2015, demand remains stagnant

Power Prices fall by 22% in 2015, demand remains stagnant

With 2015 being an epoch making year for improvement in fuel availability, the power supply position and prices eased considerably. The power prices fell as much by 22% in the spot market as compared to year ago. The average power price in 2015 was Rs 2.81 per unit as against Rs 3.59 per unit in 2014.

The power market witnessed a healthy reduction in prices in 2015 with increase in supply of power due to capacity addition and increased generation during the year, said market analysts. The peak demand summer months of June, July and August witnessed prices reducing by 34%, 27% and 37%, respectively.

According to monthly report of Central Electricity Authority (CEA), power generation during April to October 2015 was 646 billion units with energy deficit of 2.4%. The power generation during the same period last year was 617 billion units while energy deficit was 4.1%.

The fuel constraints which prevailed in 2014, especially coal shortage, eased significantly in 2015. The average coal stock position has also increased to 21 days as on 30th Nov 2015 from 7 days as on 30th Nov 2014, said India Energy Exchange (IEX), one of the country’s leading power exchange platform.

“The power demand was not very high during the peak summer months as well. Only in September, the market saw peak demand of 153GW. More coal availability and 24GW capacity addition last year, resulted in surplus capacity,” said Rajesh K Mediratta, VP- Business Development, IEX.

However, tepid demand from the beleaguered state power distribution companies dampened the demand. Power market trackers said the country’s power situation is an ironical state.

According to CEA’s October report, coal production in the current year (Apr-Nov 15) has been 321 MT an increase of more than 8% over previous year when it was 295 MT, but there was no change in demand pattern.

“Three years back in 2012, when the peak demand was around 130GW the cumulative installed capacity was 200GW. But when in the last 3.5 years, the country added 80 GW capacity, demand increased by 33GW only during the same period, offsetting the increase in power production,” said a Delhi based expert.

The central government offered coal blocks to state and private sector power plants of around 28,000 Mw. Cheap domestic gas was also made available to gas based power plants totaling 14,000 Mw.

IEX said that inter-state transmission system congestion was eased significantly, especially towards the North, however southern states continue to witness power deficit.

“The exchange lost 3,887 million units in 2014 as compared to 2,445 million units being lost to congestion in 2015 (as on 16 Dec’15),” said Mediratta.

Month 2014 2015 % change**
January 3.14 2.82 -10
February 3.29 2.85 -13
March 3.03 2.82 -7
April 3.61 2.68 -26
May 3.28 2.62 -20
June 3.89 2.56 -34
July 3.76 2.74 -27
August 4.49 2.82 -37
September 4.18 3.68 -12
October 4.17 3.03 -27
November 3.01 2.67 -11
December 3.21 2.45* -24
Year’s average 3.59 2.81 -22