Real-time electricity prices on India’s Indian Energy Exchange fell to 9 paise per unit on 28 July 2026 — part of 31 sub-₹0.05 events in Q1 FY2026–27. Despite record peak demand of 270.8 GW on 21 May and projected growth to 300 GW by FY28, solar and wind generation (90.09 GW at 1 p.m.) now meets 39% of demand, flooding the grid midday and driving prices toward zero. Discoms are offloading surplus green power well below procurement costs (₹2–₹3+/unit), threatening returns for merchant-exposed projects. Experts cite storage as critical: on 21 May, 1 p.m. power cleared at ₹1.56 versus ₹10.00 at 6:30 p.m. Government and discom BESS tenders are scaling in response.
According to www.livemint.com, real-time electricity prices on the Indian Energy Exchange (IEX) plunged to 9 paise per unit on 28 July 2026 — extending a trend of near-zero pricing that occurred 31 times in the April–June 2026–27 quarter.
Renewable Oversupply Drives Price Collapse
Heavy monsoon rains across north India, combined with surging solar and wind generation, created acute oversupply during daytime hours. At around 1 p.m. on Tuesday, real-time prices fell to ₹0.09 per unit, well below the ₹2+ per unit procurement cost for most renewable power and the ₹3+ per unit rate for firm and dispatchable renewable energy (FDRE) and hybrid projects. Distribution companies (discoms) are increasingly offloading surplus green power on exchanges at these deeply discounted rates — a structural shift undermining revenue predictability for project developers.
The IEX data shows prices dropped below ₹0.05 per unit on 8 days in April, 14 days in May, and 9 days in June — totaling 31 occurrences. On 1 May 2026, prices hit zero outright. That compares with just six sub-₹0.05 events in the same quarter a year earlier.
Demand Surges Amid Price Volatility
Despite collapsing midday prices, national electricity demand is rising sharply. India’s peak power demand hit a record 270.8 GW on 21 May 2026, and the power ministry projects it will reach 272 GW this fiscal year and climb further to 300 GW in FY28. The volatility is extreme: on 21 May, demand surged from 224.1 GW at 8 a.m. to 270.8 GW at 3:45 p.m. — an increase of 46.7 GW in under eight hours, exceeding the entire UK grid’s 2025 peak load.
This dichotomy is mirrored in pricing. On that same day, a unit scheduled for delivery at 1 p.m. cleared at just ₹1.56; the identical unit scheduled for 6:30 p.m. cleared at ₹10.00 — the market’s price ceiling. As Sanjeev Sanyal, member of the Economic Advisory Council to the Prime Minister (EAC-PM), observed in his working paper The Duck and The Camel: Tracing the Net Load on the Indian Power Grid:
“Peak demand and peak price often fall at different hours of the day, and the gap between them has become an important feature of the modern Indian grid.” — Sanjeev Sanyal, member, Economic Advisory Council to the Prime Minister (EAC-PM)
Investor Risks and Grid Response
The structural mismatch — abundant solar/wind supply colliding with inflexible demand curves and limited storage — threatens project economics. Solar and wind generation reached 90.09 GW at 1 p.m. on 28 July, meeting nearly 39% of India’s total demand of 230.63 GW. Yet only about 13% of national electricity is traded on power exchanges; the remainder flows via long-term power purchase agreements (PPAs). Still, merchant exposure is growing — especially among newer FDRE and hybrid projects.
Ratul Puri, chairman of Hindustan Power Ltd., emphasized the financial vulnerability:
“Renewable energy projects involve significant upfront investment and relatively low operating costs. Any reduction in the ability to evacuate power due to transmission constraints, grid requirements or periods of very low market prices can impact project revenues and returns, particularly for projects with greater exposure to merchant markets.” — Ratul Puri, chairman, Hindustan Power Ltd.
Anujesh Dwivedi, partner at Deloitte India, noted that solar FDRE tenders have risen markedly in recent years to address grid instability — a direct response to the “duck curve” effect. He cited IEX Day-Ahead Market data showing midday prices falling to ₹0–₹0.30/kWh on multiple days in late May and early June 2025.
Storage as Strategic Imperative
Sanyal and co-author Satvik Dev, joint director at EAC-PM, argue that electricity storage is the most viable tool to smooth net-load volatility. Their analysis confirms that price spikes occur not at peak demand — when solar output is still high — but later in the evening, once solar generation fades. To bridge this gap, the government is accelerating battery adoption, and discoms nationwide are issuing tenders for battery energy storage systems (BESS). While average quarterly market-clearing prices remain elevated — ₹4.82, ₹4.16, and ₹4.36 per unit in April, May, and June 2026 — the frequency and depth of near-zero intraday episodes signal mounting stress on the current infrastructure and commercial model.
Source: livemint.com
Compiled from international media by the SCI.AI editorial team.
