Indian Energy Exchange (IEX) has reported a 16.8 per cent year-on-year growth in overall volumes in Q3 (October to December) of FY24.
During the quarter, IEX recorded a trading volume of 28.3 billion kwh (billion units or BU), an increase from 24.2 BU in Q3 of FY23, marking a year-on-year growth of 16.8 per cent. This volume includes 25.9 BU from the conventional power market segment and 0.4 BU from the green market segment. The Exchange also traded 20.3 lakh certificates during the quarter, an IEX release said.
Improved supply scenario
On the power sector front, October 2023 witnessed a high peak power demand of 221 GW. Electricity consumption during Q3 of FY24 increased by 10 per cent year-on-year, reaching approximately 380 BUs.
On the fuel side, during the quarter, India’s coal production increased by a robust 13.1 per cent year-on-year to reach 256 million tonnes and coal dispatch to the power sector increased nearly 11.7 per cent to 203.5 million tonnes. E-auction coal premium continued its decline since the beginning of this financial year. The coal premium under Shakti B8 action has come down to around 40 per cent . Coal inventory on December 31, 2023 stood at 13 days, the release said.
This improved supply scenario resulted in increased sell liquidity since November 2023. Sell bids in collective auctions increased by 25 per cent year-on-year in November 2023 and 18 per cent year-on-year in December 2023. This led to easing of prices on the exchange. During Q3 of FY’24, the average market clearing price in the DAM segment was Rs.5.00 per kwh, compared to Rs.5.80 per kwh in Q2 of FY’24. Increased electricity consumption coupled with easing supply side constraints led to an increase in the volumes of electricity traded on IEX, the release noted.
Positive policy developments
The regulatory and policy landscape for the power market witnessed positive developments during the quarter. Effective October 1, 2023, CERC implemented the revised Indian Electricity Grid Code; the Sharing of Inter-State Transmission Charges Regulations; and the long awaited GNA Regulations.
With this the long-standing anomaly in transmission charges between collective and bilateral transactions has been corrected. The Ministry of Power proposed Late Payment Surcharge Rules amendment, mandating generators to offer URS power in the market.
Further, the extension of Section 11 directive for ICB generators until June 30, 2024, and Shakti Policy amendment allowing power plants without PPAs to participate in market segments were noteworthy developments. All these measures will lead to a further improvement in sell liquidity on exchanges, leading to a decline in power prices.
This is expected to present an opportunity for discoms and C&I (commercial & industrial) consumers to optimize their power procurement cost, IEX said.
Also read: IEX Records 15 Per Cent Growth In December 2023 Volumes
