NEW DELHI, Feb 17 (Reuters) - India's power regulator has approved a proposal to start a separate spot market segment for 'expensive' power, according to an order handed down to the Indian Energy Exchange (IEX), with record demand levels expected this summer.

The approval from the Central Electricity Regulatory Commission (CERC), given to the country's largest spot power market, is for electricity derived from costlier sources of imported coal and gas, as well as battery storage.

Other power plants operating on low-cost fuel will not be allowed to sell electricity on the new market segment, according to the order, a move seen as ensuring increased electricity availability.

IEX expects to start the market segment by mid-March, a spokesperson said, before high temperatures begin to push power consumption higher.

The power regulator fixed a ceiling of 50 rupees ($0.6042) per unit of electricity (kWh), according to the order.

Most of the plants based on costlier fuel operate at low capacity for lack of buyers. However, until last year states purchased electricity at 20 rupees per unit to meet high demand during summer months and crop sowing seasons.

The CERC had in April 2021 lowered the cap on the ceiling for all spot power market segments to 12 rupees per unit of electricity.

($1 = 82.7600 Indian rupees) (Reporting by Sarita Singh in New Delhi; Editing by Nivedita Bhattacharjee and Kenneth Maxwell)