The heat wave has gripped the country and the northern states are sweating with temperatures of 44-46 degree Celsius. Due to this, the demand for electricity has reached a record high. On 23rd May, India recorded a total power demand of 170,121 Mw, which is about 8 percent higher than in May 2017. There was maximum demand from Northern and western states with Uttar Pradesh having the cumulative demand of 19,082 Mw, Maharashtra 23,609 Mw, Gujarat 16,825 Mw, Delhi 6,029 Mw and Rajasthan 10,935 Mw.

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6,000 Mw is a record high in Delhi and in order to meet the demand, the power distribution companies in Delhi have tied up with various states through power purchase agreements. Tata Power DDL had exported power up to 300 Mw to Andhra Pradesh, Jammu and Kashmir, Madhya Pradesh and Himachal Pradesh during 2017-2018 winters under banking arrangements. The power will now be returned by these states to Tata Power DDL this summer. Reliance Infra BSES has signed an agreement with Uttar Pradesh, Sikkim, Himachal Pradesh and Andhra Pradesh as well as a hydropower banking arrangement with Bhutan.

As per the Load Generation Balancing report of Central Electricity Authority, the power supply in 2018 is expected to be a surplus by 8.8% in terms of energy and 6.8% in peak terms. Since the power demand is rising, the lack of long-term power purchase agreements could be a problem. However, most states are meeting the peak demand through short-term market. The spot power prices rose to INR 11 per unit, averaging at around INR 5 per unit.

There was also a record high short-term power trading of 190 million units at the power trading platform India Energy Exchange. The demand is expected to continue through the summers. The coal stock position at power plants is at 12 days’ inventory low level. The share of hydropower in the total energy mix is coming down with each passing year. It stood at 365 Mw currently which is slightly higher than the same month last year. The highest hydropower generation was in 2017 at 550 Mw which is expected to be lower during the months of monsoon.

Majority states take a short-term route to procure power which leads to a spike in prices. The states are not willing to sign long-term PPAs and the sick state of majority thermal plants has only added to their pain.