Six states seek short-term power tenders as evening electricity shortages grow

At least six states have turned to short-term tenders to secure extra electricity for the coming months to guard against potential shortages, especially during the evening hours. Gujarat, Rajasthan, Maharashtra, Madhya Pradesh, Tamil Nadu and Keralam sought additional supplies for November and December at prices ranging from Rs 8.99 to Rs 41.50 per unit, based on data from the Ministry of Power's DEEP portal. Some states also floated tenders for January, February, March and April-May next year. However, most states were unable to procure the full quantum of power they wanted, despite willingness to pay higher prices. These procurements are over and above the power states get under existing long-term agreements. The surge comes as the country struggles to meet demand during evening peak hours when solar generation drops and limited battery storage restricts daytime power availability. The evening power shortfall reached 5.8 GW in October. Industry insiders noted that unusual weather linked to El Niño, higher irrigation demand and increased industrial activity drove up demand. Tamil Nadu is procuring power at the highest prices, reaching Rs 41.50 per unit, and only secured a fraction of its requested 1,000 MW for November and December. Keralam, Rajasthan, Gujarat and Maharashtra also faced similar shortfalls in securing their full tender amounts, while Madhya Pradesh managed to allot its entire 800 MW request for a longer period.

Context

Distribution utilities normally rely on long-term power purchase agreements spanning up to 25 years, using short-term contracts and power exchanges to manage unexpected spikes in demand. Evening shortfalls typically happen because solar energy systems stop producing electricity after sunset while consumer and industrial demand remains high.