Electricity Markets: Electricity prices are declining in power exchanges

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There has been about 54GW of new capacity additions during the 12th five year plan and this has made electricity market in surplus in short term. There is about 10-15GW of electricity capacity which remain stranded. The impact of this recent capacity addition can be seen on the electricity prices transacted in power exchanges. The  price of electricity transacted through trading licensees and Power Exchanges has declined from Rs 7.29/kWh and Rs 7.49/kWh respectively in 2008-09 to Rs 4.33/kWh and Rs 3.67/kWh respectively in 2012-13.

The decreasing trend in weighted average prices affected the market size of this segment in monetary terms. However, there was change in this trend after 2011-12. In physical terms (BU terms) the size of this segment increased by about 16 % in the year 2012-13 compared to 2011-12, whereas in monetary terms the growth has been about 18% ( about Rs 3740 crore). The power exchange sub-segment registered a low growth of about 51% in physical terms and a high growth of about 56% (or Rs 3094 crore) in monetary terms. The bilateral trader segment also registered a low growth of 0.78% in physical terms and a high growth of about 4% in monetary terms (or Rs 646 crore).

Graph of the DayT

Source: CERC

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