Electricity prices on the Indian Energy Exchange (IEX) have seen a significant decline in the last calendar year, with the average weighted market clearing prices (MCP) in the day ahead market (DAM) segment falling by around 17 per cent year-on-year. This drop can be attributed to higher electricity generation and availability, which has led to an increase in sell-side liquidity on power exchanges.
The DAM segment is the most traded segment on IEX, and the average weighted MCP for the 2024 calendar year decreased to around ₹4.59 per kilowatt hour (kWh) from ₹5.53 per unit (kWh) in 2023. This moderation in prices has been supported by various proactive measures implemented by the government and regulators, such as the sale of surplus un-requisitioned power on exchanges, enhanced fuel supply, and improved availability of generating units.
India’s power sector has seen significant growth in recent years, with total installed power generation capacity increasing by 83.8 per cent from 249 GW in March 2014 to 457 GW as of November 2024. This growth in capacity, coupled with a rise in energy consumption and peak demand, has helped stabilize electricity prices in the market.
Looking ahead, India Ratings and Research (Ind-Ra) expects the average merchant market prices to remain at ₹4.5-5 per unit over FY25-FY26, driven by improved power supply position led by capacity additions. The average availability of electricity in rural and urban areas has also increased, with per capita electricity consumption witnessing a significant uptick.
Overall, the moderation in electricity prices on the IEX in 2024 reflects a positive trend in India’s power sector, driven by increased generation capacity, improved supply, and rising energy consumption. This bodes well for the future of the country’s energy ecosystem and underscores the importance of continued investment in infrastructure and innovation to meet growing demand.
