Uninterrupted power solutions: The need of the hour

In view of the fall in spot power demand by almost 40 percent due to shutdown of large-scale establishments, and the simultaneous rise in domestic peak demand all over India, industry leaders share how this will impact stakeholders in the power sector.

Demand for power to rise further
With the entire country being under lockdown due to COVID-19, there has been a significant shift in the power sector dynamics. The demand for power from the industry and commercial sector has reduced. However, it has heightened by almost 10 percent in many other areas: domestic demand due to work from home, and related healthcare infrastructure and utilities. On a net basis, peak demand has dropped by 25 percent since the lockdown was announced on 25th March 2020. The utilities are expected to see revenue shortfall of `15,000–20,000 crore due to demand contraction. With contraction for power, sell liquidity on exchange is great — almost 2.7 times the demand — which is keeping the prices in check. The average price in the day-ahead market from 24th March until 14th April is mere `2.3 per unit. This is enabling distribution companies to replace their costly generation through buy on exchange, thereby optimising their procurement cost and conserving precious cash in this difficult moment. Demand for power will also go up now as temperatures have started rising in the north too and also industries will come on-stream shortly. The Indian Energy Exchange (IEX) has been at the forefront working relentlessly to provide round-the-clock operations with seamless connectivity and security to enable availability of power to all on 24/7 basis. We continue to ensure operational excellence, transparent price discovery and support for all members and clients.

Shruti Bhatia, Head (Corporate Communications and CSR), Indian Energy Exchange (IEX)

Power demand from key sectors up due to facility upgradation

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Road to recovery is long for power sector value chain
The electricity demand has plunged due to the lockdown and closure of all non-essential services, dropping by almost 30 percent on all-India basis. As a result, the spot market prices have reduced substantially in March and April. With the reduction in demand from cross-subsidy customers, the weak DISCOMs’ finances are being stretched further. It is becoming extremely challenging for DISCOMs to carry out operations for metering, billing and collection, which in most states is being handled manually. With limited offtake requirement from DISCOMs, the supply side has also been hit hard. The grid’s offtake capability of wind and solar generation has weakened and conventional generation is operating at suboptimal levels. The under-construction projects are also facing a liquidity crunch and delay in sourcing of materials and construction activities, etc. All policy and regulatory decisions are focusing on easing the current situation. Given that the current situation is impacting the entire power sector value chain, the road to recovery might be a long one. From our side, we at PXIL are ensuring availability of the transaction platform on a 24/7 basis and ensuring that customers can transact on all products seamlessly from any location.

Prabhajit Kumar Sarkar, Managing Director and CEO, Power Exchange India Limited (PXIL)