The short-term power purchasing agreements (PPAs) in the country have surged ahead over the last 10 years with a gradual drying up of long-term power purchase agreements (PPAs) inked by thermal power generators with the state electricity boards.
The share of the short-term market, made up by energy exchanges, bilateral trade and unscheduled interchanges, moved up from 6.1 percent in FY09 to 11.7 percent in FY19. In the same period, the dominant grip of PPAs loosened as their share fell from 93.86 percent to 88.3 percent. The short-term power market is gaining traction since the count of stressed thermal power assets has gone up in recent years.
The short-term power trade, especially the power exchanges, has come in handy to meet the sudden surges in peak demand owing to their flexibility and ready availability (of power).
The share of the short-term power market, though, is still minuscule as additions in installed power capacity has exceeded the growth in peak power demand. From 2011-12 to 2018-19, the nameplate power capacity grew from 1,99,877 MW to 3,56,100 MW at a compounded annual growth rate (CAGR) of 8.7 percent.