Price cap to be raised to counter India’s robust power demand

India’s major power users will soon be able to access higher-priced electricity rather than being forced to scale down operations if another sweltering summer leads to a repeat of last year’s shortages.

Indian Energy Exchange Ltd will offer a new type of electricity with a price cap of 50 rupees ($0.61) a kilowatt-hour for power generated from batteries, gas and imported coal from next week, according to Rohit Bajaj, the head of business development at the nation’s largest electricity platform. That’s more than quadruple the limit on other types of power.

Unusually high temperatures for this time of year are fueling predictions that electricity demand might rise to a record this summer, overwhelming domestic coal supplies and transportation networks and resulting in a repeat of last year’s blackouts. The shortfalls last year exposed citizens to blistering heat waves and forced some industries to scale down factory output.

The high-price window could help narrow the gap by bringing back tens of gigawatts of under-utilized generation capacity. The power ministry last month invoked an emergency rule that would force some plants running on imported coal to run at capacity for three months starting March 16.

The exchange plans to start the high-price spot trade window from March 15 and has the regulator’s approval, Bajaj said in an interview. The price cap for all other trades on the exchange will remain at 12 rupees a kilowatt-hour, he said.