Low Wind Energy Generation Brings Green Energy Trade Volume at IEX Down 45%

The hydroelectric energy prices at GTAM witnessed a massive 97.75% surge to ₹8.80/kWh


The Indian Energy Exchange (IEX) recorded the lowest renewable energy units traded in 2023 at 242.3 million units (MU) in August 2023, a 44.6% year-over-year (YoY) decline from 437 MU and an 11.9% drop from the 275 MU traded in July.

The renewable energy trade at the IEX has witnessed a downward trend throughout 2023 as compared to the previous year, with the highest green energy units traded in March 2023 at 391 MU.

The Green Day-Ahead Market (GDAM) and Green Term-Ahead Market (GTAM) segments witnessed an unprecedented surge in weighted average prices during the month, leading to lower trading volumes.

The GDAM achieved 159.7 MU volume during the month, a 50% YoY drop. The weighted average price discovered on the segment was ₹7.16 (~$0.086)/kWh, a 37.6% YoY and 44.6% MoM surge. There were 193 participants in the segment during the month.

The GTAM achieved 82.6 MU volume, a 29.4% YoY decline. The average monthly price of solar was at ₹5.26 (~$0.063)/kWh, non-solar at ₹6.96 (~$0.084)/kWh, and hydroelectric at ₹8.80 (~$0.11)/kWh.

The solar and non-solar energy prices increased by 69.7% and 39.48%, respectively, compared to the last month. The hydroelectric energy prices at GTAM witnessed a massive 97.75% surge from  ₹4.99 (~$0.060)/kWh last month.

According to Mercom sources, the decline in renewable energy trading was due to the drastic drop in wind generation during the month. Also, the unprecedented demand during the month, clubbed with the low supply of renewable energy, led to distressed buying conditions, which in turn led to high weighted average and monthly average prices.

The surge in hydropower could be attributed to the lowest August rainfall this year recorded since 1901.

The total traded volume during the month improved by 13% YoY, reaching 8,865 MU. The total volume comprised green energy trade, ancillary market trade (40 MU), renewable energy certificates (253 MU), and energy saving certificates (103 MU).

According to IEX, the month saw an unprecedented surge in electricity demand due to the hot weather conditions resulting from the low rainfall during the month.

According to the Grid India data, the country’s electricity consumption was recorded at 152 BU in August 2023, an increase of 16% YoY. It also noted that on August 31, 2023, the demand reached its all-time high peak of 236 GW, along with the highest-ever single-day energy consumption of 5,126 MU.

Electricity Market: Day-Ahead, Term-Ahead, and Real-Time Market

The Day-Ahead Market (DAM) volume increased to 3,810 MU in August, a 7.3% YoY increase from 3,551 MU. The high demand combined with supply constraints led to a 33% YoY surge in the prices, reaching ₹6.89 (~$0.083)/kWh. Last month, the trading price was recorded at ₹4.55 (~$0.055)/kWh.

The Real-Time Electricity Market (RTM) trading volume was up 21% YoY at 2,738 MU. The Exchange achieved the highest-ever single-day volume of 135.28 MU in the RTM segment on August 24, 2023.

The Term-Ahead Market and Day-Ahead Contingency Market (DAC), comprising intra-day, contingency, daily, and weekly contracts and contracts up to three months, traded 1,673 MU, a 131.5% YoY increase.

Renewable Energy Certificate (REC) Market

A total of 253,000 RECs, equivalent to 253 MU, were traded at a price of ₹575 (~$6.93)/REC. The trading volume dropped 70% YoY from 851,000.

The REC clearing prices have seen a considerable decline since May this year, with the prices dropping from ₹1,000 (~$12.06) in April to ₹899 (~$10.84) in May, ₹745 (~$8.98) in June and 650 (~$7.83) in July.

According to the Mercom sources, the higher sell-side liquidity from the renewable energy-rich states led to excess supply, and with the floor price being removed, the prices are expected to drop further during the year.

The next REC trading session is scheduled for Wednesday, September 27, 2023.

Energy Saving Certificate (ESCert) Market

A total of 103,000 ESCerts, corresponding to 103 MU, were traded at the IEX at a floor price of ₹1,840 (~$22.19)/ESCert. The trading was up by 46.68% compared to the last month.

Mercom recently reported on how the hot weather in August this year sparked an unprecedented power demand, raising the scepter of blackouts in a few states.

Recently, IEX reported a profit after tax of ₹758.2 million (~$9.14 million), an increase of 10% YoY in the first quarter of the financial year 2024.