India Power Demand Hits Record High; Solar Industry Flags Price Cap Issue

The National Solar Energy Federation of India (NSEFI) has approached the Central Electricity Regulatory Commission (CERC) seeking a revision in the existing electricity price cap on power exchanges, as per a Reuters report.  

In its filing, the industry body said the current ceiling of ₹10 per unit is affecting the financial viability of several market participants, including energy storage companies. 

The federation stated that the present cap does not allow companies to recover costs during periods of high demand. It added that the issue has become more visible as electricity consumption in the country continues to rise during the summer season. 

Peak Power Demand Crosses 260 GW 

India’s peak power demand reached 260.45 gigawatts (GW) on Tuesday, according to data released by the power ministry. The figure was higher than Monday’s previous record of 257.37 GW. 

The rise in electricity demand has been linked to heatwave conditions in several parts of the country, leading to higher cooling requirements. Demand levels have remained elevated over the past few days as temperatures increased across multiple states. 

Industry Flags Pressure on Investments 

In the petition, NSEFI said power producers are often forced to sell electricity at lower prices during periods of weak demand. However, when demand rises sharply, the regulated cap prevents companies from earning higher returns that could offset earlier losses. 

The federation also said the current pricing structure may affect future investments in areas such as battery storage and grid-balancing systems. These segments are to become more important as renewable energy generation increases in the country. 

Separate Market Mechanism Yet to Gain Traction 

The filing also referred to a separate market segment that was introduced to allow electricity trading at higher prices. According to NSEFI, the mechanism has seen limited activity because there are few buyers willing to purchase electricity at those rates. 

As a result, most electricity trades continue to take place within the existing capped market structure on exchanges. 

Read More: India May Extend Semiconductor Mission 2.0 with Higher Outlay, Longer Tenure! 

Conclusion 

The matter has been heard by the power market regulator, with the order currently awaited. The outcome could impact electricity trading and investment activity in the renewable energy sector. 

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