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Source: The post is based on the article “Central Government launches High Price Day Ahead Market and Surplus Power Portal (PUShP)” published in PIB on 10th March 2023.
What is the News?
The Central Government has launched a High Price Day Ahead Market and Surplus Power Portal (PUShP) – an initiative to ensure greater availability of power during the peak demand season.
What is Day-Ahead-Market(DAM)?
Day-Ahead-Market (DAM) is the electricity trading market for delivery on the following day. The prices and quantum of electricity to be transacted are determined through a double-sided closed auction bidding process.
Why was the High Price Day Ahead Market(HP-DAM) launched?
In 2022, the Ministry of Power observed that the prices in the electricity exchange had gone up to Rs.20 on some days.
As a result, the ministry directed the Central Electricity Regulatory Commission (CERC) to cap the price at Rs.12 to prevent profiteering. This move rationalized the price for buyers and prevented power producers from charging exorbitant rates.
However, because of the high prices of gas in the international market; the electricity made by using gas was expensive – more than Rs.12 per unit – and this capacity could not be sold on the market.
This year too, the demand for power is expected to be much higher which is why the government has introduced a separate segment called HP DAM for gas-based plants and imported coal-based plants.
These segments may have a cost of generating power higher than Rs.12 and the HP DAM will ensure that these plants can be scheduled and utilized to meet the power demand.
What is a Surplus Power Portal(PUShP)?
The surplus power portal aims to reduce the fixed cost burden on Distribution Companies (DISCOMs).
DISCOMs can now indicate surplus power in block times/days/months on the portal, which can be requisitioned by other DISCOMs in need.
The new buyer will pay both the variable charge (VC) and fixed cost (FC) as determined by regulators. Once power is reassigned, the original beneficiary cannot recall it, and the entire FC liability is shifted to the new beneficiary.
The financial liability of the new buyer is limited to the temporary allocated/transferred power. This will optimize available generation capacity utilization.