India’s short-term power trading market grows 12% in FY24

Power trading in India’s short-term market rose by 12% in FY24, reaching 218.22 billion units (BU) from 194.35 BU in FY23, as reported by the Central Electricity Regulatory Commission (CERC). Short-term transactions, including deviation settlement mechanism (DSM) volumes, consist of contracts under one year, executed bilaterally or through power exchanges, representing 12.5% of the country’s total electricity generation. The remaining 87.5% was sourced through long-term contracts and intra-state transactions by distribution companies.

The CERC report highlights that power exchange trading has seen the fastest growth within the short-term market, with a compound annual growth rate (CAGR) of 22.4% from 2009-10 to 2023-24. In comparison, trading through bilateral agreements has grown at a CAGR of 3.1%. Exchange-based trading growth has been driven by competitive pricing and flexibility, making it a popular choice for meeting incremental demand, according to Rohit Bajaj, joint managing director of Indian Energy Exchange.

In FY24, 4% of power transacted through traders was priced below ₹5 per kWh, while 91% was below ₹9 per kWh, approaching the price cap of ₹10 amid high demand and low supply concerns.

Thermal power remains India’s primary source of energy, contributing 55% of the installed capacity in FY24, followed by renewable energy at 32.5%, large hydro at 10.6%, and nuclear at 1.9%. Over the past 15 years, private sector participation has significantly grown. Since 2008-09, the private sector’s share in total installed capacity has risen from 15% to 52%, while the state and central sectors’ shares have declined to 24% each.

India’s electricity generation grew from 747.07 BU in 2008-09 to 1,739.09 BU in 2023-24, with a CAGR of 5.8%. Power consumption also increased annually by 6.4%, reaching 1,543 BU in FY24, with per capita consumption rising from 734 kWh to 1,395 kWh over this period.