Delay in buy deals hit power plants

Of the newly commissioned plants, 40 per cent of the capacity of the plants is under strain and 37 billion units of generation may be foregone annually, unless sold through short-term markets, it said.

While 70 per cent of the power is tied up through long-term/medium-term off-take agreements, about 1,300 MW of the tied-up power encounters transmission constraints. Ind-Ra estimates the annual capacity charge losses could be as high as Rs 5,100 crore (excluding return on equity) for these plants.

These losses could be partially recovered, if power is produced by these plants and sold in the power exchanges or through merchant power sale.

Power owners face a huge task of selling the untied capacity in the short-term markets.

Historically, power trading volumes highlight a gradual increase in power sales through short-term transactions. Short-term trade volumes had increased to 10.87 per cent of the electricity generated in FY14 from 8.63 per cent in FY10.

However, the total traded short-term volume dipped to about 99 bu in FY15 from 104.64 bu.

Ind-Ra expects an addition of minimum 11 per cent to the short-term energy market in FY16 from these commissioned power plants, if the plant owners decide to generate power.

Hence, the volume of short-term trade would inch up beyond 12 per cent of the total power generated going experience of the pre-FY13 rate. Given the surplus capacity hitting the short-term market, the spot market rates could slide further down.