Govt launches separate day ahead market for high-price electricity, surplus power portal

New Delhi: The government has launched a High Price Day Ahead Market (HP-DAM) and Surplus Power Portal (PUShP) — an initiative to ensure greater availability of power during the peak demand season, said the Ministry of Power on Friday. Union Minister for Power and New and Renewable Energy RK Singh launched the portal at a virtual function in New Delhi on March 9 in the presence of over 200 stakeholders from state governments and the power sector. Krishan Pal Gurjar, Minister of State of Power and Heavy Industries, Power Secretary Alok Kumar, CEA Chairman Ghanshyam Prasasd,  IEX CMD SN Goel, Grid India CMD SR Narsimhan, along with many senior officials of the Ministry of Power, were present on the occasion.

Market segment for high-price electricity

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 April 1, 2022 in Day Ahead Market and Real-Time Market, and further in all segments from May 6, 2022. This move rationalised the price for buyers. However, 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 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 the 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 or imported coal or RE plus storage may cross Rs 12. This separate segment is called HP DAM,” said the Ministry of Power.

Speaking on the occasion, the Union Power Minister said that the HP-DAM was part of the overall strategy to ensure that all available power capacity is utilised for the supply of power to consumers. Explaining the operation of the HP-DAM, Singh said that nobody would be allowed to charge exorbitant rates. The Union Minister said that only those generating capacities which have a 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 asked CEA and Grid Controller to ensure that prices are reasonable in the HP-DAM and take necessary action to ensure that no power producers charge exorbitant prices which are much higher than the cost of production. Singh added that 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.

Speaking on the occasion, the MoS for Power, Gurjar, said that unlike the situation earlier, nobody could now imagine life without power. He expressed confidence that the new mechanism will ensure adequate availability of power. The Power Secretary, while citing many benefits of the new market mechanism, clarified that as against some reports, Rs 50 per unit was only a technical cap and the market forces would ensure a much lower rate.

Surplus power portal

Commenting on the PUShP portal, the Ministry of Power said, “The surplus power portal is a one-of-its-kind initiative, reflecting the ingenuity of the Ministry of Power and the Regulator.   Distribution Companies have tied up long-term PPAs for power supply. They have to pay fixed charges even when they do not schedule the power. Now DISCOMs will be able to indicate their surplus power in block times/days/months on the 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 regulators. Once power is reassigned, the original beneficiary shall have no right to recall as the entire FC liability is also shifted to the new beneficiary. The financial liability of new buyer shall be limited to the 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, said the ministry.

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