Govt launches High Price-power trading market and Surplus Power Portal

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The Central government launched a High Price Day Ahead Market (HP-DAM) and Surplus Power Portal (PUShP) on March 9 to ensure greater availability of power during the peak demand season.

Union Power and renewable energy minister R.K. Singh launched the portal at a virtual function in New Delhi in presence of over 200 stakeholders from state governments and the power sector.

Singh said HP-DAM was part of the overall strategy to ensure that all available power capacity is utilised for supply the power to consumers. The minister, however, said nobody would be allowed to charge exorbitant rates. “Only those generating capacities which have cost of producing power of more than Rs. 12 per unit would be allowed to operate in HP-DAM. If the cost of production is less than Rs.12, the generators will have to offer power in the power exchange’s Integrated Day Ahead Market (I-DAM) only with a ceiling price of Rs.12,” he said.

Singh further asked the Central Electricity Authority (CEA) and Grid Controller to ensure that prices are reasonable in the HP-DAM and take necessary action to ensure that no power producers charges exorbitant prices, which are much higher than the cost of production. “India has a very stable power market as against the case in some developed countries where a situation of power tariff much higher than the cost of production was seen last year,” the minister said.

Secretary for power, Alok Kumar, clarified that Rs. 50 unit was only a technical cap and the market forces would ensure a much lower rate.

The surplus power portal is a one-of-its-kind initiative, Kumar said. “Distribution Companies have tied up long term power purchase agreements (PPAs) for power supply. They have to pay fixed charges even when they do not schedule the power.  Now the discoms will be able to indicate their surplus power in block times/days/months on portal. Those discoms who need power will be able to requisition the surplus power.  The new buyer will pay both variable charge (VC) and fixed cost (FC) as determined by the regulators. Once the power is reassigned, the original beneficiary shall have no right to recall as the entire FC liability will also be shifted to the new beneficiary. Financial liability of a new buyer shall be limited to quantum of temporary allocated/transferred power. This will reduce the fixed cost burden on the discoms, and will also enable all the available generation capacity to be utilised,” he said.

Last year the ministry of power, after taking note of the fact that on some days the prices in the electricity exchange had gone upto Rs.20, had given directions to the CERC to put a price cap of Rs.12 on the exchange, so that there is no profiteering.  The cap was imposed from 01.04.2022 in Day Ahead Market and Real Time Market, and further in all segments from 06.05.2022.  This move rationalised the price for buyers.

But because of the high prices of gas in the international market; the electricity made by using gas was expensive – more than Rs.12 per unit – and this capacity could not be sold on the market. Similarly, the imported coal-based plants and the renewable energy stored in battery-energy storage systems could not be brought into operation, as their generation cost was high.

This year it is expected that the demand will be much higher than last year therefore, the gas-based plants and the imported coal-based plants will need to be scheduled – and that is why a separate segment has been carved out for those generation systems where the cost of generating power – from gas / imported coal / RE plus storage – may cross Rs.12.  This separate segment is called HP DAM.