Crisil warns about prices for Discoms

New Delhi: The electricity spot prices are expected to flare up further in summers causing pain for state-owned power distribution companies.

“Spot prices of electricity, which have been surging of late, will continue to rise in the near term driven by both structural and seasonal reasons,” said Crisil. 

It said that these factor include unmet and suppressed demand, no new thermal capacities announced in the past two years, and inability to meet peak demand because of mismatch with renewable energy generation curve and insufficient domestic coal supplies. 

“Moreover, plants stressed owing to ongoing litigation and change in law provisions, are unable to run at full capacity, thereby adding to supply constraints,” said Crisil.

It said that the monthly market clearing price has spiked around 25 per cent from Rs 3.20 per unit in January this year to Rs 3.97 in March, taking the average cost to Rs 3.43. “That’s a huge leap from the  around Rs 2.50 average logged in the corresponding period of the past two fiscals. What’s more, monthly peak prices on power exchanges this year have averaged at Rs 7.1 which is almost twice the levels in 2017,” said Crisil. 

“We are staring at a huge problem because peak power deficit scenario is unlikely to improve anytime soon,” said Crisil’s Vivek Sharma.