The Central Electricity Regulatory Commission’s (CERC) “Report on the Short-Term Power Market in India for 2023-24” presents key insights into India’s electricity sector, with a focus on short-term power transactions. This segment constitutes about 12.5% of the total electricity generation in India, serving as a flexible option for meeting short-term demand. The report outlines the sources of electricity, trends in generation, and transmission expansion, while also discussing the role of renewable energy sources, regulations, and the dynamics of short-term electricity transactions.
In 2023-24, thermal energy continued to dominate India’s electricity generation capacity at 55%, though its share has gradually declined due to an increasing emphasis on renewable energy sources (RES). RES, now accounting for 32.5% of capacity, is driven largely by solar energy, which constitutes 57% of RES capacity. Solar generation has expanded significantly over recent years, reflecting the government’s goals for a greener energy mix, notably aiming for 500 GW of non-fossil fuel capacity by 2030. Hydropower and nuclear energy account for 10.6% and 1.9% of the total capacity, respectively.
The report indicates a shift in sector contributions, with the private sector’s share of total generation capacity rising from 15% in 2008-09 to 52% in 2023-24. Meanwhile, the state sector’s share has fallen from 54% to 24%. This transition is partly due to policy changes encouraging private investment, as evidenced by the liberalizing influence of the Electricity Act of 2003.
Short-term power transactions are crucial for maintaining market flexibility. These transactions are managed through multiple mechanisms, including power exchanges and bilateral trades among entities. In 2023-24, the total volume of short-term transactions increased by about 12% compared to the previous year. Power exchanges—namely, the Indian Energy Exchange (IEX), Power Exchange India Ltd. (PXIL), and Hindustan Power Exchange (HPX)—play a vital role, with the volume of transactions on exchanges growing at an average annual rate of 22.4%. Bilateral transactions, on the other hand, have grown at a modest 3.1% annually.
The report also highlights the dynamics of electricity prices across these exchanges. The average price of transactions through power exchanges was ₹5.82 per kWh, lower than the ₹7.33 per kWh average through traders. Price variability in exchanges, such as the IEX Day Ahead Market (DAM), shows most electricity traded at prices below ₹9 per kWh. Notably, prices in the Real-Time Market (RTM) and Green Day Ahead Market (G-DAM) for renewables also remain competitive.
A significant development within the short-term market is the role of ancillary services, such as Reserves Regulation Ancillary Services (RRAS) and Tertiary Reserve Ancillary Services (TRAS), which ensure system reliability by balancing supply and demand fluctuations. The system’s flexibility in handling temporary surges in demand highlights the importance of ancillary services, which are now essential for grid stability and operational reliability.
Transmission infrastructure has expanded steadily to support the growing demand and to connect remote renewable sources to the grid. Between 2008-09 and 2023-24, India’s transmission line capacity doubled to 4.85 lakh circuit kilometers, with substation capacity increasing over fourfold. Transmission charges for interstate transmission systems (ISTS) have also seen a rise, largely due to increasing system demands and the integration of renewable energy sources.
The cross-border trade of electricity has grown as well, establishing India as a net exporter of electricity to neighboring countries like Bangladesh, Nepal, and Myanmar. This trend supports regional energy cooperation and offers a buffer for managing surplus generation capacity. Additionally, the renewable energy certificate (REC) mechanism supports the government’s sustainability goals, allowing power producers to sell RECs to entities mandated to meet renewable purchase obligations.
The report underscores the importance of CERC’s regulatory role in promoting competition and transparency. By monitoring pricing trends, trading margins, and market concentration, CERC ensures that the short-term power market remains robust and responsive to India’s energy needs. The report, accessible to stakeholders and market participants, promotes an informed and competitive market environment, reinforcing trust in India’s power sector.
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