India’s power trading segment has undergone remarkable growth in recent years, propelled by rising electricity demand, rapid technological advancements and a series of progressive policy interventions. The segment has gradually matured, offering improved liquidity, operational flexibility and a more dynamic marketplace for a diverse set of participants, including distribution companies, generators and open access consumers.
The introduction and scaling up of real-time power markets have enabled better demand-supply balancing and responsiveness to grid conditions, allowing participants to manage power procurement closer to delivery time. Simultaneously, the growing focus on green energy trading – particularly through platforms such as the green day-ahead market (GDAM) and green term-ahead market (GTAM) – has promoted the integration of renewable energy, supporting India’s clean energy goals.
Moreover, the development of ancillary services markets, such as frequency control and reserves, has played a pivotal role in enhancing grid reliability and efficiency. Together, these developments have contributed to a more competitive, transparent and responsive power trading ecosystem in India, setting the stage for deeper reforms such as market coupling, uniform pricing and enhanced cross-border electricity trade in the coming years.
Power exchange and bilateral transactions
During 2024-25, a total of 1,572 BUs of electricity was supplied in the country, of which 97.58 BUs was transacted through bilateral trade, 108.62 BUs was traded through the three power exchanges – Indian Energy Exchange Limited (IEX), Power Exchange India Limited (PXIL) and Hindustan Power Exchange (HPX) – and 32.14 BUs was transacted through deviations.
In the day-ahead market (DAM), a total volume of 61.29 BUs was transacted across the three power exchanges during 2024-25, as compared to 53.55 BUs traded during the previous year. The IEX accounted for a major share (99.9 per cent) in the DAM with a trading volume of 61.23 BUs, while PXIL accounted for 0.06 BUs and HPX accounted for the remaining volume.
The RTM saw about a 41.13 per cent increase in volume transacted in 2024-25, reaching 39.01 BUs from 27.64 BUs in 2023-24. The IEX accounted for a major share in the RTM with a trading volume of 38.01 BUs (97.43 per cent), while PXIL accounted for 0.06 BUs and HPX accounted for 0.05 BUs.
The term-ahead market (TAM) recorded a volume of 8.39 BUs in 2024-25, a decrease of 57.4 per cent compared to 19.7 BUs in 2023-24. In the GTAM, an aggregate volume of 0.31 BUs was transacted during 2024-25 across the three power exchange platforms compared to 0.33 BUs in 2023-24.
The GDAM witnessed a total transaction volume of 8.32 BUs traded on the IEX, while no transactions took place on the PXIL and HPX. The total volume of electricity transacted in power exchanges under GDAM during 2023-24 was 2.49 BUs.
Electricity traded through traders was recorded at 41.02 during 2023-24, accounting for 18.8 per cent of the total transaction volume in the short-term market. This marked arise of 21.36 per cent from the 33.8 BUs recorded in the previous financial year.
Renewable energy certificates
During 2024-25, 30.42 million renewable energy certificates (RECs), equivalent to 30.42 BUs, were traded on the three power exchanges, as compared to 7.54 million RECs transacted on the power exchanges and bilaterally through trading licensees in 2023-24. The categorisation of RECs as solar and non-solar has been eliminated with the introduction of the multiplier concept under the CERC (Terms and Conditions for Renewable Energy Certificates for Renewable Energy Generation) Regulations, 2022, effective from December 5, 2022.
The volume of RECs transacted through trading licensees increased from 0.09 million in 2022-23 to 2.19 million in 2023-24, whereas the weighted average price of these RECs declined from Rs 925 per MWh in 2022-23 to Rs 452 per MWh in 2023-24.
Cross-border update
India imports electricity from Bhutan and Nepal and exports power to Bangladesh and Myanmar. As per POSOCO’s cross-border trading data for 2024-25, India imported electricity from Bhutan and Nepal, with net imports of 4,466.45 MUs and 497.229 MUs, respectively. Conversely, India is a net exporter of electricity to Bangladesh, exporting 8,118.27 MUs. Similarly, India exports a small amount of electricity to Myanmar, totalling 9.01 MUs, with no imports.
Prices on exchange
The RTM on the IEX has recently seen frequent price crashes, even during the peak summer season. This trend is driven by unseasonal rains, cooler temperatures and surplus power generation from thermal, hydro, solar and wind sources. For instance, on May 25, 2025, prices dropped to nearly zero between 09:00 and 13:00 hours, with sell bids exceeding buy bids by five times. Prices even fell below the exchange fee of Re 0.02 per kWh, highlighting a severe supply-demand imbalance.
This recurring mismatch points to a deeper market issue – generation costs remain steady, but real-time returns are often negligible, particularly affecting solar developers. India also lacks a demand-response market that could help shift consumption based on real-time price signals.
Experts emphasise the role of battery energy storage systems (BESSs) in addressing this challenge. As per the Central Electricity Authority, India will need 74 GW/411 GWh of storage capacity by 2032 to integrate its expanding renewable base.
Regulatory updates
Recently, in June 2025, the Securities and Exchange Board of India approved the launch of electricity derivatives contracts on the Multi Commodity Exchange of India (MCX). The new contracts will enable power generators, distribution companies and large consumers to hedge against price volatility in the electricity market. The electricity derivatives will offer a transparent and regulated platform for managing power price risks, especially as market reforms and renewable energy integration increase price fluctuations.
In May 2025, the Central Electricity Regulatory Commission (CERC) issued draft guidelines for virtual power purchase agreements (VPPAs) under the CERC (Power Market Regulations), 2021. The draft aims to enable designated consumers to meet their renewable energy consumption obligation (RCO) targets through bilateral, non-tradable, and non-transferable over-the-counter contracts, classified as non-transferable specific delivery agreements. The commission emphasised that VPPAs can serve as a viable mechanism to support compliance with RCO targets under the Energy Conservation Act, 2001.
In April 2025, the CERC passed a suo motu order titled CERC (Power Market) (Revised Trading and Contract Design) Order, 2025, under the CERC (Power Market) Regulations, 2021, to standardise short-term electricity contracts and improve efficiency in power trading across exchanges. In the day-ahead contingency segment, exchanges must now use a uniform price step auction mechanism, instead of continuous matching, enhancing transparency and preventing price manipulation.
In January 2025, the CERC issued the draft CERC (Cross Border Trade of Electricity) (Second Amendment) Regulations, 2024, under the Electricity Act, 2003. The draft introduced key amendments to the 2019 regulations to streamline processes, in alignment with the general network access principles for cross-border electricity trade.
In November 2024, the CERC notified the draft CERC (Terms and Conditions for Purchase and Sale of Carbon Credit Certificates) Regulations, 2024. The objective of these regulations is to create a framework for the exchange of carbon credit certificates (CCCs) for obligated and non-obligated entities on power exchanges. As per the draft, the Grid Controller of India will act as the registry for CCC exchanges. The CCCs will be traded monthly on power exchanges, split into compliance and offset markets, with trading limits set by each entity’s CCC holdings to prevent defaults.
Outlook
India’s power trading ecosystem is undergoing significant transformation, driven by rising market volumes, green energy integration and progressive regulatory reforms. While market-based mechanisms such as DAM, RTM and GDAM are gaining traction, challenges such as price volatility and oversupply – especially in real-time markets – highlight the need for demand-side flexibility and storage solutions such as BESSs.
A key step forward is the proposed introduction of the green real-time market, which will enable real-time trading of renewable energy. This will support the better balancing of variable generation with demand, enhance grid stability and accelerate the integration of clean energy into the system.
Recent regulatory moves, including electricity derivatives, VPPAs and carbon credit trading, mark important strides toward a mature, transparent and risk-resilient market. Going forward, deeper digitalisation, grid-balancing tools and cross-border trade will be critical to building a competitive and sustainable power market, aligned with India’s clean energy goals.
Aastha Sharma
