New Delhi: Electricity spot prices surged to a nine-year high, with a record volume of electricity traded on the exchange, on Thursday due to higher demand from states such as Tamil Nadu, Telangana, Bihar, West Bengal, Gujarat and Maharashtra.

Prices touched 15.37 per unit for Friday on the India Energy Exchange (IEX). Spot prices rose to 14.25 per unit on 27 September. The all-time high price for electricity in the spot market was 17 per unit in April 2009, according to IEX.

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IEX also registered an all-time high volume of 293.15 million units (MUs) of electricity traded in the spot market on Thursday for Friday delivery. The previously registered record in the day-ahead market was 290 MUs on 27 September.

Of the 293.15 MUs of electricity traded, state power distribution companies accounted for 274 MUs of electricity bought. Power distributors have been the weakest link in the electricity value chain, given their poor payment history.

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According to IEX, the average price for Thursday’s trade for Friday delivery is 6.763 per unit with 328.39 MUs of electricity being offered to be supplied on the exchange as compared with a demand for 357.19 MUs.

“Tamil Nadu is buying heavily because wind-power generation has come down. Also, because of a fuel shortage at some plants, the eastern states are buying," said a person aware of the development.

According to India Meteorological Department (IMD), south peninsular India is very likely to experience fairly widespread to widespread rainfall with heavy and very heavy rainfall at isolated places over Karnataka, Kerala and Tamil Nadu during next four days starting 27 September.

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A power exchange functions on the lines of commodity exchanges and provides a platform for buyers, sellers and traders of electricity to enter into spot contracts for the same day, coming day, and on a weekly basis. Of about 1,200 billion units (BU) of electricity generated in India, the short-term market comprises about 130-150BU. This trade volume has grown by about 10% annually, and is currently valued at about 22,124 crore.

India’s power demand is expected to grow with the government’s focus of providing “24x7 clean and affordable power for all" by March 2019. Also, the government is working on an ambitious plan to provide induction stoves to poor households. Also, the 16,320 crore Pradhan Mantri Sahaj Bijli Har Ghar Yojana (Saubhagya), launched last year to provide electricity connections to more than 40 million families by December 2018, will require an additional 28,000MW of power, considering an average load of 1 kilowatt (kW) per household for eight hours in a day.

Srishti Choudhary contributed to the story.