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Utilities
The spot power market in India experienced a notable decrease in prices during the fiscal year 2025 (FY25), with spot power prices falling by 15% compared to the previous fiscal year. This decline to ₹4.47 per unit reflects improved supply conditions despite a rise in power demand, which increased by 4.4% over the same period[1][2]. The Indian Energy Exchange (IEX) played a pivotal role in this development, as it facilitated increased sell liquidity in the Day Ahead Market segment, leading to more competitive pricing on the exchange[2].
Several strategic measures implemented by the power ministry contributed significantly to the enhanced supply liquidity:
The integration of renewable energy sources, such as solar and wind power, has become increasingly important in diversifying India's energy mix and reducing reliance on fossil fuels. This shift towards clean energy not only supports environmental goals but also helps stabilize power prices by providing additional capacity during periods of high demand.
Despite the 15% decrease in spot power prices, power demand continued to rise, registering a 4.4% increase in FY25. The peak demand reached 235 GW in March 2025, surpassing the previous peak of 222 GW in March 2024[2]. This trend suggests that while supply improvements are crucial for maintaining competitive pricing, ongoing demand growth presents challenges for maintaining supply-demand balance.
The government has projected peak power demand to increase at a compound annual growth rate (CAGR) of 7%, with expectations that it will surpass 270 GW this year[2]. To meet this anticipated surge, plans are underway to revive around 10–15 GW of generation capacity currently under outage[2].
In FY25, the Indian Energy Exchange achieved a record-breaking trade of 178 lakh Renewable Energy Certificates (RECs), marking a 136% year-on-year increase[2]. This significant growth highlights the increasing importance of renewable energy sources in India's energy landscape and demonstrates a strong commitment to transitioning towards cleaner energy.
Coal stocks at power plants have significantly improved due to efficient logistical arrangements by the government, ensuring adequate coal availability to meet rising power demand[2]. As of early April, coal stocks at thermal power plants stood at 81% of the normative level, totaling 58.02 million tonnes[2].
The Day Ahead Market segment saw a notable increase in sell liquidity, rising by 36% year-on-year, which effectively kept power prices competitive[2]. The overall electricity traded volume on the IEX reached a historic high of 121 billion units in FY25, representing a 19% increase from the previous fiscal[2].
As the energy sector continues to evolve, India's focus on enhancing supply through diversified energy sources and improving logistical efficiencies will remain critical in managing power prices and meeting growing demand.
Looking ahead, the government's efforts to revive additional generation capacity and expand renewable energy infrastructure will be vital in maintaining supply stability. However, challenges such as managing peak demand fluctuations and ensuring consistent coal availability will persist.
In conclusion, the drop in spot power prices in FY25 is a positive indicator of India's improving energy landscape, driven by enhanced supply conditions and a growing emphasis on renewable energy. As the country continues to navigate the complexities of rising demand and evolving energy market dynamics, strategic planning and continued investments in clean energy will be essential for sustainable growth.
For consumers, the decrease in spot power prices is a positive development, as it may lead to more affordable electricity rates. However, ongoing demand growth and potential supply constraints highlight the need for continued investment in renewable energy and logistical improvements. For businesses, especially those in the energy sector, these trends offer opportunities to invest in renewable capacities and explore innovative supply chain management strategies.
In summary, the 15% decline in spot power prices in India during FY25 reflects significant progress in improving supply dynamics and integrating renewable energy sources into the national grid. As the energy market continues to evolve, these trends will remain crucial in shaping India's energy future and meeting the country's increasing power demands sustainably.
