In a noteworthy development for India’s energy market, electricity prices in the spot market experienced a 15% year-on-year decline, settling at Rs 4.47 per unit for the fiscal year 2025. This drop occurred despite a surge in demand, attributed to increased sell liquidity in the marketplace, as reported by the Indian Energy Exchange (IEX).
Increase in Demand and Government Initiatives
To tackle the growing demand for electricity, the Ministry of Power implemented several strategies throughout the year. These included:
- Extending operational capacity for imported coal-based power plants
- Facilitating the sale of surplus electricity on power exchanges
- Ensuring the availability of gas-powered plants
- Enhancing the operational readiness of energy-generating units to cater to peak demand
As a result, sell liquidity in the Day Ahead Market surged by 36% compared to the previous fiscal year, contributing to competitive power prices on the exchange.
Record-Breaking Trading Volumes
The Indian Energy Exchange revealed that FY25 marked a historic milestone, with an astounding 121 billion units of electricity traded, reflecting a 19% increase from FY24. Additionally, the exchange set a record for Renewable Energy Certificate (REC) trading, with 178 lakh RECs exchanged—a remarkable 136% surge year-on-year.
During this fiscal period, power demand rose by 4.4%, and energy consumption saw a 7% increase, according to official statistics. Notably, on March 11, peak demand hit 235 GW, outpacing the previous year’s record of 222 GW. Yet, despite this uptick in demand, the average market clearing price in March remained stable at Rs 4.47 per unit due to increased supply.
Future Projections and Market Trends
Looking ahead, the government anticipates that peak demand will grow at a compound annual growth rate of 7%, expecting it to surpass 270 GW within the year. In the fourth quarter of FY25, the market clearing price in the Day Ahead Market was Rs 4.43 per unit, down 9% from the same quarter in the prior fiscal year.
For Q4FY25, the IEX achieved its highest quarterly electricity trading volume of 31,747 million units, marking an 18% increase year-on-year. March alone saw a record monthly trading volume of 11,215 million units, a 29% year-on-year rise.
Government Strategies and Coal Stock Management
Rohit Bajaj, Joint Managing Director of the Indian Energy Exchange, highlighted ongoing government measures to bolster supply, including:
- Extending the operational directive for imported coal-based power plants until April 30
- Ensuring the availability of gas-based plants to meet peak demands
- Reviving 10-15 GW of generation capacity from the 45 GW currently offline
Additionally, coal-based power plants are ramping up their coal inventories in anticipation of increased demand. As of April 2, coal stocks at thermal power plants were reported at 58.02 million tonnes, representing 81% of the normative level, thanks to effective logistical strategies implemented by the government.
With these proactive measures and a focus on both traditional and renewable energy sources, India is poised to meet the growing energy demands of its population while maintaining competitive pricing in the power market.
