Exchange prices of power drops amid improved supply and rainfall

New Delhi: Power prices on exchanges have eased owing to better monsoon rains and improved power supply.

Data from the Indian Energy Exchange (IEX) showed that in the day ahead market (DAM), the price of power in the first half of FY25 (April-September) have declined nearly 12% to about ₹4.87 per unit from ₹5.53/unit. 

Further, in October, prices continued to ease and averaged around ₹4.15 per unit, about 41% lower than ₹6.98 per unit in the same month last fiscal.

Interestingly, the maximum the price in the DAM segment during October 1-24 was ₹5.72 per kilowatt hour (kWh) or unit while during the same period in FY24, it touched the price cap of ₹ ₹10.

Favourable monsoons, strong hydro & wind generation strengthened fuel availability

Rohit Bajaj, joint managing director, Indian Energy Exchange said: “Proactive measures by the government and regulators have been instrumental in ensuring stable power supply throughout this fiscal year, which has contributed to higher liquidity on the exchange platform. Favourable monsoons, coupled with strong hydro and wind generation, have further strengthened fuel availability thereby leading to a significant decline in power prices throughout the current fiscal."

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"The trend of decline in prices has continued in October as well with the average market clearing price in the day ahead market falling to Rs. 4.15 per unit (Oct 1-24), 41% year-on-year decrease. The real time market saw a decline of 45%, averaging Rs. 3.57 per unit (Oct 1-24). The trend is expected to sustain in the coming months," Bajaj said.

Data from the Central Electricity Authority (CEA) showed that power generation in the country during the first six month of FY25 (April-September) increased nearly 6% to 951.10 billion units (BU) from 897.77 billion in the year ago period. 

In terms of power sources, thermal power generation rose 5.47% to 690.13 billion units during the the first half of FY25, while backed by healthy monsoon rains, power generation from large hydro projects stood at 94.50 billion units, 4.16% higher from 90.73 billion units.

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The improved monsoons have also helped restrict demand, largely in the agriculture sector. In September, the peak demand across the country was 231,076 MW, about 1.4% lower compared to 243,271 MW in September last year. Usually, power demand for irrigation is high in August and September which is largely met through pumps. Abundance of rains reduce the need to use pumps to extract ground water.

The 2024 southwest monsoon season ended on September 30, with India recording 934.8 mm rainfall, 108% of the long period average (LPA) and the highest since 2020, while in the 2023 monsoon season, the country had recorded 820 mm rainfall, which was 94.4% of LPA of 868.6 mm.

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