Stock Market

Spot power prices halve in 10 days

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After touching decade highs, power prices have more than halved in the spot market in early October in anticipation of better coal production and supply post monsoon.

Average daily price in the spot market on Thursday fell to Rs 4.25 per unit from an average daily price of Rs 8.95 on October 9, IEX data showed. In early October the price peaked to Rs 18.2 per unit beating an earlier high of Rs 17 per unit recorded in August 2009, a drought year. There is a seasonal spike in spot power prices this time of the year as wind energy generation dips suddenly and hydro power is also on the decline.

However, analysts cited the sharp rise in the demand for domestic coal as the main reason for such sharp spikes this time around. Demand for domestic coal has shot up on a steep fall of the rupee and higher international coal prices.

Further, a sharp drop in India’s coal production in August led to very low coal stocks at power plants.

India’s coal production since July 17 has risen 7 per cent, while the supply of domestic coal to the power plants rose by 11 per cent. Analysts claim that such high prices are not sustainable and the coal production must catch up with the demand.




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