The Kerala State Electricity Regulatory Commission (KSERC) has approved several power banking agreements made by the Kerala State Electricity Board (KSEB) to efficiently manage surplus energy. The agreements include a transaction with Punjab State Power Corporation (PSPCL) from May 24 to June 1, 2024, with a return of 105% of the banked power by April 2025. A second agreement with PSPCL, facilitated through Arunachal Pradesh Power Corporation (APPCPL), covers the period from July 1 to July 31, 2024, with a 105.90% return of banked power between April 1 and April 15, 2025. Additionally, KSEB’s agreement with Manikaran Power from August 1 to September 30, 2024, involves returning 105% of the banked power from March 16 to May 31, 2025. These agreements were initiated to address fluctuating electricity demand, aiming to optimise hydro resource usage and ensure power availability during peak demand periods in 2025. Background In 2024, KSEB faced challenges due to highly variable electricity demand. Summer months saw unprecedented consumption, raising concerns about power availability. However, by May 2024, rainfall caused a significant drop in electricity usage, creating a power surplus, particularly from hydroelectric sources. With reservoirs nearing full capacity, KSEB sought a solution to prevent water spillage while ensuring the surplus energy was not wasted. The strategic banking agreements allowed KSEB to transfer excess electricity during periods of low demand and secure power for the anticipated peak demand in 2025. KSEB justified the agreements to avoid risks related to excess water storage in reservoirs, which could lead to spillage, resulting in the loss of valuable hydroelectric resources. Additionally, the market conditions indicated higher electricity prices during peak hours, and banking surplus power enabled KSEB to reduce financial losses while securing cost-effective energy during high-demand months. Commission’s evaluation KSERC reviewed the banking agreements, ensuring compliance with legal, financial, and operational requirements. The agreements aligned with the Electricity Act, 2003, particularly Section 86(1)(b), which mandates prior approval for power procurement by distribution licensees. The KSERC Tariff Regulations, 2021, also permit power banking as a valid procurement method. The Commission highlighted the financial advantages of the agreements, noting that banking transactions allowed KSEB to avoid immediate cash outflows while securing energy for future peak periods. This strategic approach enabled efficient resource management and guaranteed uninterrupted power supply. The agreements were also assessed for their impact on grid stability. By distributing surplus power efficiently, KSEB ensured the stability of Kerala's electricity grid and minimised potential issues in transmission systems. With high market prices during peak hours, the return of banked power in 2025 would provide KSEB with a crucial energy supply when demand is expected to surge. After reviewing these factors, KSERC ratified the agreements, recognising them as vital for effective power management and ensuring that banked power is returned as per the terms. In August 2024, the Ministry of Power clarified that energy obtained through open access arrangements, either via third-party suppliers or captive generation, will not count as part of permissible banked energy capacity. (Mercom)