Renewable power trading on the exchanges grew strongly in 2022 with total volume up 60% YOY to 7,397 GWh. One clear trend in the market was increasing preference for non-solar power, which accounted for 72% of total volume and bulk of total growth. Non-solar power also enjoyed a 28% price premium over solar power – average price of INR 6.35/ kWh vs INR 4.98/ kWh respectively – on the Green Term-Ahead Market (GTAM). Overall, average prices for different instruments were up about 35-42% YOY in response to rising demand.
Share of traded power also rose to 4% of total renewable power generation, up from 3% in 2021. Green Day-Ahead Market (GDAM) contracts accounted for 70% of total renewable power traded on IEX owing to easier trading mechanism and higher output predictability.
Figure 1: Renewable power exchange trading volume and prices
Source: IEX, PXIL, HPX, BRIDGE TO INDIA research Note: Trading volume is shown for all IEX and PXIL GTAM transactions (98% of total green power traded in 2022). Pricing information is shown for IEX, which accounted for 73% share of total traded power.
Higher demand and prices for non-solar power could be explained by relatively faster increase in national evening peak power demand, which touched 216 GW in the year as against 203 GW in 2021. Average peak price on GDAM in 2022 was recorded at INR 9.30/ kWh, a delta of INR 4.68/ kWh over day-time power, explaining increasing popularity of peak power tenders.
Figure 2: Average hourly volume and prices on IEX GDAM in 2022
Source: IEX, BRIDGE TO INDIA research
As expected, trading demand has been dominated by states with low RPO compliance and/ or unfavourable renewable resource. Maharashtra was the leading buyer, followed by Punjab, Gujarat, Daman & Diu and Dadra & Nagar Haveli, Assam, DVC and Delhi. Participation of corporate consumers was limited with Railways, ArcelorMittal and Vedanta the only corporate consumers on GDAM. Exchange power remains commercially unattractive because of high total landed cost including grid charges of about INR 9.57-11.04/ kWh in key industrialised states.
Figure 3: Leading buyers and sellers on GDAM in 2022: total traded volume – 3,573 GWh
Source: POSOCO, BRIDGE TO INDIA research
Conversely, the sell side was dominated by states running ahead of their RPO targets. Karnataka, which reported renewable power penetration of 59% in FY 2022, led with 33% share of supply on GDAM. Adani (19% share), ReNew (3%), NTPC (2%) were the leading IPP sellers, but their participation came mainly from operational projects still awaiting commissioning certificates.
Growing exchange activity is a significant positive for the sector. It is providing not only a relief from rigid long-term PPAs but also vital signals about evolving shape of the sector as well as needs of market participants. While sector growth is bound to benefit market liquidity, further policy measures to improve trading volumes will be of huge help.
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