Rising heat in India raises the alarm on another energy crunch

The April month signals the onset of summer in large parts of the country, experts manning load dispatch have forecasted the peak demand to touch nearly 230 MW. Like previous year, the electricity grid would require injection from 100% imported Coal based plants to ensure zero supply shortfall. The generation from imported Coal based plants will abate power shortage during peak time block, however, it may drain fiscal resources of financially distressed Discoms. Long term demand forecast, adequate capacity planning and timely investments in cheaper generation resources can avert reliance on expensive generation. In the previous year, extreme heat and post COVID-19 rebound in commercial and industrial segment led to unprecedented electricity demand, we need to invest in new capacities considering changing electricity load curve patterns, i.e. Renewable + Storage.

The “Report on 12th Electric Power Survey of India” published by Central Electricity Authority (CEA) in November 2022, the all-India peak electricity demand for the year 2023-24 is projected to be around 230 GW, and if peak time blocks is during 18:00 to 23:00 Hrs, it would be prudent to install cleaner renewable capacities with storage to address demand during the period.

Demand assessment in Advance

In anticipation of summer heat, MOP diligently initiated steps last November to ensure all generation capacity is made available by implementing various measure e.g. scheduling maintenance shutdown, informing generators to undertake planned import of coal for blending up to 6% of their requirement with domestic coal, arrangement made with GAIL to supply 248 MMBtu of gas to NTPC to operate 5 GW of gas based capacity for month’s duration beginning 15th April 2023. Further, NVVN has issued NIT to secure an additional 4 GW of gas-based capacity from other IPPs by ensuring minimum off-take from such plants.

Last year prior to onset of summer season the price of electricity transacted on power exchange had reached up to Rs. 20/kWh, CERC (Central Electricity Regulatory Commission) had then directed power exchange to exercise a cap of Rs. 12/kWh from 1st April 2022 in Day Ahead Market (DAM) and Real Time Market (RTM), this was later extended to all types of Contract from 6th May 2022. This led to a situation, wherein 100% imported coal based power plants, gas based power plants and Battery Energy Storage System (BESS) plants could not be bought into operation, as their variable charge was more than he ceiling price of Rs. 12/kWh.

Market based mitigation measure

CERC has now approved a new segment High Price Day Ahead Market (HP-DAM) segment, wherein, such high variable cost plants would be eligible to sell power exclusively to meet anticipated increase in demand from Buyers. CERC in Order dated 31.03.2023 has issued a price band of Rs. 0 to Rs. 20/kWh for transaction in such HPDAM segment.

The new HPDAM segment would play a significant role in meeting peak power demand during the forthcoming summer months. However, as a long term measure installing more renewable energy capacity with storage element could provide long-term solution to meet demand patterns that may shift on ‘time of day’ basis when solar energy output may not be adequate, also since renewable energy is perennial source of energy unlike fossil fuel, both domestic and imported, it doesn’t burden the power purchase cost recovered from consumers.

Views of the author are personal and do not necessarily represent the website’s views.

Mr. Anil V Kale is a Mechanical Engineer from Osmania University, Hyderabad and has completed his MBA (Power Management) from NPTI, Faridabad. He brings with him 21 years of experience across various facets of the power sector like Regulatory Policy, Assistance in Tariff-based Competitive Bidding, Investments, Project Control, and Manufacturing. He has worked extensively in the services and manufacturing sectors with organizations like ICRA Management Consulting Services Limited, CRISIL Risk and Infrastructure Solutions limited, Gujarat Mineral Development Corporation Limited, and DLF Power Limited. Mr. Kale is responsible for formulating and implementing strategy for PXIL, helping to devise products that both meet and anticipate the needs of the market participants.