Surge in spot power prices unlikely to sustain, says Ind-Ra

The recent spike in spot power prices on the power exchanges is unlikely to sustain over the medium term in light of significant spare capacity and inability of generators to tie up long-term power purchase agreements (PPAs), according to India Ratings and Research (Ind-Ra).

The agency expects short-term power prices to remain range bound at ` 3/kwh – `3.5/kwh. Distribution companies have been more accommodative of signing short-to-medium term PPAs with single tariff structure than long-term PPAs with a two part tariff structure.

Although plant load factor (PLF) of thermal power plants improved marginally during 5MFY17 to 59.9 per cent (58.96 per cent), it continued to be lower than the record high of 75 per cent in FY11.

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