Low demand conditions in the power market seem to have raised the volume of electricity being traded on exchanges, with the country's largest power exchange, the Indian Energy Exchange (IEX), registering an 11 per cent month-on-month increase in trading volumes at 5,334 million units (MU) in July.
The increased volume in July also took the exchange at par with volume of electricity traded during the same month. The growth in volume on the exchange has come even though national peak power demand, as well as energy consumption, declined three per cent in the month over last year.
However, IEX tradable volume reflected more sell bids than buys, indicating that power generators, not finding demand in states, were shifting to exchanges for meeting short-term supplies. But, the absence of an adequate number of buyers, even on the exchanges, did not ensure contracts for all participants.
The total sell bids at 9,734 MUs were close to 1.9 times the buy bids which stood at 5,199 MUs.
With robust sell side liquidity, the average market clearing price in the day ahead market during the month, at Rs 2.47 per unit, registered a 27 per cent YoY decline over a price of Rs 3.38 in July 2019. The lower exchange price ensured significant savings to discoms and industries during this time.
The distribution utilities from western, southern as well as a few northern states such as Maharashtra, Telangana, Andhra Pradesh and Rajasthan, leveraged the exchange market to optimise their power portfolio and build on financial liquidity which is critical at this hour.
Moreover, as electricity demand and consumption rise to the pre-Covid levels, driven by the increasing industrial and economic activity, availability of ample power at affordable prices will assist economic revival and growth.
'One Nation One Price' prevailed during all 31 days of July, making the exchange the most reliable partner in power procurement as well as the cost optimisation.
According to the data published by NLDC, the national peak demand and energy consumed registered a decline of 3 per cent on a YoY basis, and an increase of 3 per cent and 7 per cent, respectively, on MoM basis. This increase in electricity consumption has mainly been due to the easing of the lockdown restrictions across the country.
Along with day ahead and term ahead market, the real time electricity market also registered a 52 per cent MoM rise with a total trade of 785 MUs during July. With 241 customers participating, RTM saw sell bids volume at about two times of buy bids, indicative of the ample liquidity in the real-time market as well. While the sell bids saw a 17 per cent MoM rise, buy bids witnessed a whopping 36 per cent MoM increase, demonstrating growth and the rising preference of market participants for RTM.
The real time electricity market saw 42.69 MUs being the highest volume being traded in a single day on July 28. The average monthly market clearing price stood at Rs 2.49 per unit for RTM alone.