Electricity prices in the spot market declined by over 40% on year in August owing to favourable monsoon which led to high hydro and wind generation this year. Additionally, the average market clearing price in the Real Time Market (RTM) segment of the Indian Energy Exchange declined by as much as 15% in the current financial year so far compared to the previous year.
According to the data provided by the exchange, the market clearing price for the RTM segment in the first fifteen days of September declined by 51% to Rs 3.18 per unit against Rs 6.44 per unit discovered in the same period last year. The decline in prices comes amid the increasing volumes of electricity traded on the exchange, up by 30% on year in the first half of this month.
“The Real-Time Electricity Market (RTM) achieved its highest ever monthly volume of 3,485 million units (MU) in August 2024, up from 2,738 MU in August 2023, registering an increase of 27.3%,” the exchange said. “On September 13, the RTM segment achieved its highest-ever single-day trade of 173.4 MU.”
As per the data, the volumes traded on the exchange rose at an average of 29% in the current financial year so far.
“This year, RTM volumes have seen a notable increase of around 29% compared to the previous year, alongside a 15% drop in prices. The favourable monsoon has led to high hydro and wind generation this year,” said Rohit Bajaj, Joint Managing Director at IEX.
Moreover, the industry projects the lower electricity prices to sustain for the near to short term period which presents an opportunity for distribution companies and industrial consumers to optimise their power procurement costs.
“In August, RTM prices dropped by over 40% year-on-year, and this downward trend has continued into September. With an average RTM price of Rs 3.18 per unit in the first half of September, there is a strategic opportunity for DISCOMs and Open Access Consumers to optimize their power procurement costs,” Bajaj said.
Prices also edged lower at a time when power generation decelerated 4.7% on year to 155 billion units (BU) in August 2024. This was the first time in two years when power generation hit the negative trajectory.
“Lower generation in August 2024 was on a high base of last year. Generation had increased 19% on year to 163 BU in August 2023. The dip in demand can be attributed to excess rainfall across India, which pared both demand from the cooling space and the need for power for irrigation,” said Elara Capital in its report. Power demand last month declined by 4.9% to 144 BU from the corresponding period of last year.
Peak power demand too is estimated to have declined to 217 GW in August compared with 238 GW a year earlier, which was the second-highest level recorded in fiscal 2024, as per Crisil Ratings.
From: financialexpress
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