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Published: October 8, 2024
Updated: October 8, 2024

Indian Energy Exchange Reports Impressive Growth in September Volumes Amid Stable Monsoon

The Indian Energy Exchange (IEX) has garnered attention recently as it reported robust trading volumes for September 2024, reflecting a significant uptick in both electricity and renewable energy certificate (REC) trading. The exchange's total monthly volume, including certificates, reached 11,370 million units (MU), marking a notable 24% increase year-on-year (YoY).

Surge in Hydro and Wind Power Generation

The steady monsoon in September contributed to a substantial rise in hydro and wind power generation, which subsequently led to a decline in prices in both the Day Ahead Market (DAM) and Real Time Market (RTM). This drop in prices created favorable conditions for higher trading volumes, with the total electricity volume—including green energy—recording 10,332 MU, a 21% YoY increase.

Growth in Renewable Energy Certificates

In a significant development, the IEX reported that renewable energy certificates traded reached 1,031 MU, doubling compared to the same period last year. On September 25, 2024, the REC market witnessed an all-time low price of Rs 110 per certificate. This pricing structure offers an advantageous opportunity for obligated entities, such as Distribution Companies (DISCOMs) and captive power producers, to fulfill their Renewable Purchase Obligations (RPOs) while also aiding voluntary customers in achieving sustainability goals.

Declining Market Clearing Prices

The IEX reported a significant decrease in market clearing prices. The average price in the DAM dropped to Rs 4.18 per unit in September, reflecting a 33% decrease YoY. Similarly, the RTM clearing price fell to Rs 3.98 per unit, a 28% decline from the previous year. These lower prices allow DISCOMs and open-access consumers to optimize their power procurement costs through power exchanges.

Segment Performance Highlights

The Day-Ahead Market volume rose to 4,610 MU in September from 3,467 MU in the same month last year, indicating a 33% increase YoY. Overall, the DAM segment achieved total volumes of 14,332 MU during Q2 FY25, a 27% rise compared to the prior year. The Real-Time Electricity Market also experienced substantial growth, reaching a record monthly volume of 3,913 MU, an increase of 34% from September 2023. During Q2 FY25, the RTM reported a total volume of 10,732 MU, up 31% YoY.

In contrast, the Day Ahead Contingency and Term-Ahead Market (TAM) saw a decline of 43% YoY in September, trading 1,086 MU, with total volumes for the quarter down 42% at 2,684 MU.

Green Market Expansion

The IEX Green Market, which includes the Green Day-Ahead Market (G-DAM) and the Green Term-Ahead Market (G-TAM), achieved impressive growth with a total volume of 723 MU in September, up 214% YoY. In particular, the G-DAM segment recorded a volume of 712.5 MU, a staggering increase of 408% YoY, with a weighted average price of Rs 4.59 per unit. The G-TAM, on the other hand, contributed a volume of 10.4 MU at an average monthly price of Rs 8.28 per unit.

The Indian Energy Exchange's latest performance highlights its vital role in India's electricity market, showcasing significant growth across various trading segments. With favorable weather conditions bolstering renewable energy generation and reduced market prices creating attractive opportunities for power procurement, IEX is well-positioned to continue its upward trajectory. As the demand for renewable energy solutions grows, IEX's strategic initiatives and market responsiveness will be crucial in shaping the future of India's energy landscape.