Solar glut sinks power prices to near zero on exchanges, exposes structural gaps

Subscribe to enjoy similar stories.Even as India’s electricity demand hit record highs in April, power prices crashed to near-zero during peak solar hours during the month—a paradox driven by too much renewable energy chasing too little flexible demand.For the second time in two years, rates on the Real Time Market (RTM) of the Indian Energy Exchange (IEX) dropped to near-zero— ₹0.0003 per unit on the afternoon of 5 April—as excess solar power flooded the market even as demand dipped due to rains and thunderstorms in Delhi and other parts of northern India. The first such instance was on 25 May last year.Prices have since remained volatile, falling to as low as 40 paise per unit on 12 April even as they recently hit the ₹10 per unit cap amid a heatwave-driven surge in demand.

Experts say such price swings reflect repeated bouts of oversupply on exchanges, even during periods of record consumption.While weather-related demand fluctuations have contributed, industry stakeholders and analysts say the core issue lies in a structural mismatch: surging daytime renewable generation combined with limited storage and grid flexibility is pushing excess power onto exchanges, dragging prices down.The trend is significant because power traded on India’s power exchanges accounts for about 12-13% of total supply, with the rest coming from long-term power purchase agreements (PPAs) between power producers and distribution companies (discoms).A state discom official, speaking on condition of anonymity, said that even during peak solar hours and record demand, supply remains adequate due to the PPAs with both solar and thermal generators. As a result, discoms have little need to purchase additional power from exchanges during the