Renewable Energy Trading at IEX Down 11% in October, Weighted Average Price Drops

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The Indian Energy Exchange (IEX) traded 403 million units (MU) of renewable energy in October 2022, an 11% decrease month-over-month (MoM) compared to 454 MU traded in the previous month.

The exchange traded 7,972 MU of energy during the month. The total volume on the exchange in October was lower by 13% on a year-over-year (YoY) basis due to the high volume base of last year and lower by 2% on an MoM basis due to reduced REC trading.

Improved domestic coal supply led to easing supply-side constraints, resulting in lower prices on IEX. The average clearing price in the Day-Ahead Market was ₹3.83 (~$0.046)/kWh in October, which was lower by 32% on a MoM basis and 52% on a YoY basis.

The exchange suggests that a further correction in prices due to improvement in coal availability and reduction in demand due to the onset of winter is expected to provide an opportunity for cost optimization by distribution companies and open-access consumers, resulting in increased volumes on the exchange in the future.

According to the power demand data published by the National Load Dispatch Center, the energy consumption at 115 BU during October 2022 increased by 1% on a YoY basis, and on an MoM basis, it declined by 10%.

Green Market: Day-Ahead and Term-Ahead

The Green Market comprising the Green Day-Ahead Market (GDAM) and Green Term-Ahead Market (GTAM), traded 403 MU volume during the month, a YoY increase of 10%.

The GDAM traded 293 MU with a weighted average price of ₹4.02 (~$0.048)/kWh. The weighted average price was ₹5.42 (~$0.065)/kWh in the preceding month. The market saw participation from 721 market participants during the month, with the highest number of participants in a single day at 621 on October 9, 2022.

The GTAM traded 110 MU volume during the month. The average monthly price for solar was ₹3.77 (~$0.045)/kWh compared to ₹5.05 (~$0.061)/kWh in the previous month, and for non-solar, it was ₹5.45 (~$0.065)/kWh.

Electricity Market: Day-Ahead, Term-Ahead, and Real-Time Market

In October 2022, the Day-Ahead Market (DAM) traded 4,325 MU of energy, registering a 7% growth on an MoM basis. The market volume was lower by 34% on a YoY basis due to the high volume base of last year. The market clearing price was ₹3.83 (~$0.046)/kWh.

The Real-Time Electricity Market achieved 2,265 MU volume during the month, registering 13% YoY growth with 630 participants. The highest single-day volume of 124 MU was reached on October 6, 2022. According to IEX, the consistent growth of the real-time electricity market indicates the growing reliance on distribution utilities and industries to achieve the power demand-supply balancing in real-time most efficiently.

The Term-Ahead Market comprising intra-day, contingency, daily and weekly contracts and long-duration contracts traded 621 MU during the month, a decrease of 29% on an MoM basis. The segment grew by 176% on a YoY basis.

Renewable Energy Certificate Market

October saw 358,000 RECs cleared, registering a decline of 39% MoM. The volume comprised 176,000 non-solar RECs with a clearing price of ₹1,000 (~$12.08)/REC. Increased inventory of solar RECs saw the clearing price reaching a floor-level of ₹1,000 (~$12.08)/REC with 182,000 solar RECs traded. The next REC trading session is scheduled for November 30, 2022.

IEX recently reported an 8% YoY decrease in profit after tax from ₹774 million (~$9.34 million) to ₹712 million (~$8.6 million) in the second quarter of the financial year 2022-23.

In June this year, IEX added new products to the existing longer-duration contracts portfolio, such as daily contracts for up to 90 days, weekly contracts for up to 12 weeks, and monthly contracts for up to three months.