India's Power Sector
Buying Power on an Exchange
How India's power exchanges let discoms and companies buy electricity in short-term markets, and how prices swing with demand and supply.
Most electricity in India is sold through long-term power purchase agreements (PPAs). But a growing share is traded on power exchanges.
The exchanges
The Indian Energy Exchange (IEX), launched in 2008, is the largest. Others include PXIL and HPX.
Markets
- Day-ahead market: buy power for each 15-minute block of the next day.
- Real-time market: trade power just an hour ahead.
- Green markets: trade renewable power.
Why exchanges matter
- Discoms can buy extra power when demand spikes.
- Generators with spare capacity can sell.
- Prices reveal the real-time value of electricity.
Price swings
- At midday, solar floods the market and prices can fall sharply.
- In evening peaks or heatwaves, prices can hit the regulatory price cap of 10 rupees per unit.
Market coupling
Regulators have discussed market coupling, combining bids across exchanges to find a single price.
Why it’s important
As renewables grow, flexible short-term markets help balance a variable supply.
During a May heatwave, a discom runs short of power in the evening. It buys on the exchange at 10 rupees per unit, far higher than its usual PPA price, to avoid power cuts.
Exchange prices vary every 15 minutes with supply and demand.
- Power exchanges like IEX trade electricity in short-term markets.
- Day-ahead and real-time markets help balance supply and demand.
- Prices fall at solar-rich midday and spike during evening peaks.
- Flexible markets matter more as renewables grow.
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