The Central Electricity Regulatory Commission (CERC) has relaxed norms for power generating companies with high variable costs, allowing them to sell electricity at a price of up to Rs 50 per unit on energy exchanges.
The order came after a petition was filed by the Indian Energy Exchange (IEX) seeking the introduction of the new segment. “We have decided to allow the upper price limit of HP-DAM at Rs 50/kWh keeping in view the emerging trend in imported gas prices and the latest data of GRID-India (national electricity grid operator),” the CERC said.
The move aims to provide relief to companies that run plants on expensive natural gas, imported coal, or use Battery Energy Storage System (BESS).
At present, there is a price ceiling of Rs 12 per unit in the Day Ahead Market (DAM) on energy exchanges, which results in stranded power generation capacity for gencos having high variable costs.
The new High Price Day Ahead Market (HP-DAM) segment will allow electricity to be sold and bought at a price as high as Rs 50 per unit, without a floor price of power for the HP-DAM market.
“We are of the considered view that keeping the floor price of ‘0’ will incentivise the eligible HP-DAM sellers as they would able to achieve the technical minimum and this would help in attracting liquidity into this new market segment. Thus, we agree with the petitioner’s proposal to keep the floor price of ‘0’ for HP-DAM,” it said.
The CERC has allowed three categories of power generators to participate in the HP-DAM market, including gas-based generating stations, imported coal-based generating stations, and BESS.
The regulator will periodically review the category of generating stations eligible to participate in the HP-DAM.
The demand for electricity is expected to touch 230 GW in April this year, and the Ministry of Power has already asked 15 imported coal-based plants to run at full capacity to avoid any shortfall in electricity supply during the summer.