Energy exchanges will soon allow power generating businesses to sell electricity for up to Rs 50 per unit even though they already experience significant variable costs due to fuel costs and other expenses. Three categories of electricity producing firms (gencos) will benefit from the loosening of regulations by the Central Electricity Regulatory Commission (CERC): those using battery energy storage systems, imported coal, and costly natural gas (RLNG) for their facilities (BESS).
The Day Ahead Market (DAM) price ceiling on the energy exchanges is now set at Rs 12 per unit. The ceiling causes stranded power generating capacity since gencos with high variable operating expenses for their facilities are typically reluctant to sell electricity on the energy exchanges. In light of this and the approaching summer season, the CERC approved the launch of a new High Price Day Ahead Market (HP-DAM) sector on the energy exchanges earlier this month. In this segment, electricity can be sold and purchased for up to Rs
50 per unit. The regulator declared, "The Commission hereby authorises the petitioner's plan to introduce HP-DAM. The Indian Energy Exchange (IEX) petitioned for the creation of the new section, and the court granted their request. According to the latest statistics from GRID-India (the national power grid operator), "We have decided to allow the upper pricing limit of HP-DAM at Rs 50/kWh."
The regulator also said it would undertake periodic evaluation of this maximum price restriction based on the greatest cost of generation and other relevant global and domestic circumstances, including the impact of HP-DAM on other markets. Unfortunately, the regulator has not retained floor (minimum) price of power for the HP-DAM market.
"We believe that retaining the floor price at "0" will encourage qualifying HP-DAM sellers because they will be motivated to meet the technical minimum, which will assist draw liquidity to this new market area. Hence, we concur with the petitioner's suggestion to maintain the floor price of "0" for HP-DAM "It said.
Three types of power generators have been given permission by the CERC to participate in the HP-DAM market: BESS, imported coal-based generating stations utilising just imported coal, and gas-based generating stations using imported RLNG and naphtha.
The regulator will periodically examine the category of generating stations that are qualified to take part in the HP-DAM. In April of this year, the demand for power is anticipated to reach 230 GW. To prevent any shortage in the supply of energy over the summer, the Ministry of Electricity has already instructed 15 imported coal-based plants to operate at maximum capacity from March 16 to June 15. These plants have also been given permission to use expensive imported coal to produce power.
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