Prices of Power/Electricity being traded on the Power Exchanges have been reduced significantly on account of increased power generation, grid congestion and poor financial health of distribution companies.
The Power Trading accounts for nearly 2.5% of the power being transacted in the Country.
In the year 2008, the average Power Trading prices were around Rs. 7 per unit which has been reduced to around Rs. 2 per unit currently.
Further, as per the data on the Power Exchanges such as Indian Electricity Exchange (IEX) & Power Exchange of India (PXI), the power trading price has never crossed Rs. 3 per unit during the current financial year. Since April 2010, average price of electricity on Indian Energy Exchange ( IEX), which dominates market with over 90% share, crossed mark of Rs 5 per unit only once.
Average electricity price on IEX came down by 10% to Rs 2.05 per unit in August from Rs 2.28 in July. It attracted sellers for 5200 million units (MUs) in August, substantially higher than buyers for 2899 MUs during the same month.
The similar trend was witnessed on both IEX and Power Exchange of India Limited (PXIL) during July when they witnessed demand for 3040.32 MUs, which was 60% of available 5,111.02 MUs of electricity in the market.
As per the Power Exchanges, the reasons behind this trend are:
- Over supply of electricity in the system
- Inability of some of the buyer to draw power on account of congestion in the network. According to estimates, at least 10% of the electricity trade is not happening due to lack of adequate transmission network.
- Inability of the Distribution Companies, on account of poor financial health, to buy power from the exchanges as they have to pay money in advance unlike other sources
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