The Central Electricity Regulatory Commission (CERC) has published the Report on Short-Term Power Market in India 2023-24. This report was issued in November 2024.
The report sheds light on the evolving landscape of the country’s power sector, with a detailed exploration of short-term power transactions across various mechanisms. The report, structured into four main sections, covers an overview of the power sector, trends in short-term power markets, cross-border electricity trade, and trading of renewable energy certificates.
Overview of the Power Sector
The report outlines crucial developments in electricity generation, transmission, and distribution, highlighting several key points:
- Thermal energy, primarily from coal, remains the cornerstone of India’s power generation, accounting for 55% of the installed capacity in 2023-24. Renewable Energy Sources (RES) have grown to comprise 32.5%, hydroelectric power accounts for 10.6%, and nuclear energy contributes 1.9%.
- The total installed generation capacity experienced a Compound Annual Growth Rate (CAGR) of 7.6% between 2008-09 and 2023-24, with RES leading the surge at a CAGR of 17.2%.
- Over this period, the private sector significantly expanded its share of installed capacity from 15% to 52%, while the state and central sectors saw declines in their shares.
- Gross electricity generation increased from 747.07 billion units (BU) in 2008-09 to 1739.09 BU in 2023-24, a CAGR of 5.8%. Electricity consumption has similarly increased, with per-capita usage rising from 734 kWh to 1395 kWh.
- The energy shortage has plummeted from 11.1% in 2008-09 to just 0.3% in 2023-24, reflecting improved energy availability.
Short-term Power Market Insights
The short-term power market, which includes transactions lasting less than a year, has shown remarkable dynamism:
- Short-term transactions accounted for 12.5% of total electricity generation in 2023-24, up from previous years.
- From 2009-10 to 2023-24, the volume of short-term electricity transactions grew at a CAGR of 8.9%, outpacing the 6% CAGR of overall electricity generation.
- The segment generated a market size of ₹100,729 crore, marking a 19% increase from 2022-23.
- Power exchange transactions experienced a robust CAGR of 22.4%, contrasting with a modest 3.1% CAGR in transactions through trading licensees.
- Weighted average prices on power exchanges settled at ₹5.82/kWh, while trading licensees charged an average of ₹7.33/kWh. The Deviation Settlement Mechanism (DSM) rate also increased from ₹5.39/kWh in 2022-23 to ₹5.73/kWh in 2023-24.
Cross-border Trade and Renewable Energy Certificates
The report also touches upon India’s role in cross-border electricity trade, emphasizing:
- India transitioned from a net importer to a net exporter of electricity, engaging in cross-border trade with Nepal, Bhutan, Bangladesh, and Myanmar. Notably, real-time market trading with neighboring countries commenced in October 2023.
- The introduction of RECs under revised regulations has transformed renewable trading. Approximately 138.53 lakh RECs were traded in 2023-24, and a new, unified REC contract has been active since December 2022.
The “Report on Short-term Power Market in India: 2023-24” provides a comprehensive analysis of a rapidly changing energy sector. It reflects significant strides in renewable integration, growing private sector participation, and reduced energy shortages. Moreover, the expanding short-term market and cross-border energy trade underscore India’s evolving power landscape and its strategic focus on energy security and sustainability.
