In April 2022, Price of GTAM-traded Power Surged By 2.5–2.7X Year-on-Year

The exchange-based renewable energy (RE) market (or green power market) of India is growing at an encouraging pace. This market can be categorized into two sub-markets – green day-ahead market (GDAM)[1] and green term ahead market (GTAM)[2]. The green power market (GDAM+GTAM) came into existence with the introduction of GTAM in August 21, 2020.

As of April 2022, the green power market traded 7,660 million units (MU) of renewable electricity. The average prices of GTAM-traded power in Indian Energy Exchange (IEX) and Power Exchange India Limited (PXIL) were Rs. 4.4/kWh and Rs. 4.9/kWh. However interestingly, the average prices of GTAM-traded power in April 2022 across IEX and PXIL crossed Rs.10/kWh mark, increasing 2.5-2.7 times higher on a year-on-year (Y-o-Y) basis.

Figure 1: GTAM Market Trend (August 2020 – April 2022)

Source: IEX, PXIL, JMK Research

Even in relation to GDAM, the average trading price in the recent months have risen sharply. The average prices for March 2022 and April 2022 have each jumped by nearly 40% month-on-month (M-o-M).

Figure 2: GDAM Market Trend (October 2021 – April 2022)

Source: IEX, PXIL, JMK Research
Note: Data represents market trend of GDAM of IEX. No green power was transacted in Integrated Day-ahead Spot (IDAS) of PXIL during the reporting period.

This price surge (as can be seen in figure 1 & 2) in the recent months is the result of demand-supply mismatch in the overall Indian electricity market. Power supply crisis, amidst soaring power demand, has upped the price of electricity significantly across various markets including the green power market.

In view of balancing consumer and investor interests, the Central Electricity Regulatory Commission (CERC), as per its order issued on April 1, 2022, directed the power exchanges to cap bid price at Rs. 12/kWh for day-ahead market (DAM) and real time market (RTM). Later, on May 6, 2022, this directive was extended to GDAM, Intra-day, Day Ahead Contingency and Term-Ahead (including GTAM) contracts. This interim order will be in effect till June 30, 2022.

The prevailing supply-side crisis has inadvertently raised the significance of renewables in the electricity market. Sufficient and assured supply of renewable power is imperative going forward. To facilitate the same, RE merchant capacity needs to be augmented substantially. And this calls for stricter enforcement of RPO compliance for distribution companies, open access and captive power consumers.

[1] GDAM was launched on IEX and PXIL on October 26, 2021 and December 20, 2021 respectively.

[2] GTAM was launched on IEX and PXIL on August 21, 2020 and March 24, 2021 respectively.