Merchant Power Firms in a Fix as Prices Plunge

Merchant power accounts for a smaller share of sales than long-term power purchase agreements

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chant exposure for that matter. You have to look at the prices, day-time prices especially in May...because demand was very soft, therefore daytime power prices were quite low.

To be sure, this year's summer was less harsh, and the early monsoon cooled demand. Now is not a favorable time to venture into merchant solar capacity, the chief executive cited above said on the condition of anonymity. "I think building a solar merchant plant now in the context of all the solar capacity that is going to come up -- I don't think that's a very smart decision to take."

Last year saw higher capacity addition and subdued demand growth, an industry executive said, "This supply-demand imbalance has led to a softening of market clearing prices across power exchanges."

Experts said the price of around Rs 2 is not sustainable, and prices staying subdued for long would hurt.