The Indian power sector is on the cusp of an energy transition, as the share of renewable energy in the country’s po­w­er generation is rising rapidly. Alig­ned with the nation’s decarbonisation and net zero targets, industrial and commercial co­n­­sumers are increasingly shifting towards renewable energy sourc­es to fulfil energy requirements. More­over, alongsi­de the increasing share of short-term trading volumes, energy markets in the country are ev­olving to facilitate gre­ater adoption of re­newable energy. This is exemplified by the emergence of innovative products su­ch as the green term-ah­ead market (GTAM), the green day-ahead market (GDAM), the real-time market (RTM) and mar­ket-based ancillary services. These developments are an­ticipated to facilitate large-scale capacity addition of renewable energy while redu­cing the costs of integration.

During 2022-23, short-term trading volumes stood at 194.35 BUs, marking a 4.1 per cent increase over the previous year. The volume accounted for 13.7 per cent of the total generation during this period. The volume of short-term transactions between 2017-18 and 2022-23 grew at a compound annual growth rate (CAGR) of 8.8 per cent, while power generation grew at a CAGR of 1.7 per cent. Power ex­chan­ges accounted for approximately 53 per cent (102.95 BUs) of the total transaction volume in the short-term market during 2022-23. The remaining portion includes volumes transacted through trading licensees, which accounted for a share of 17.4 per cent (33.8 BUs), deviation settlement mechanism transactions at 13.5 per cent (26.3 BUs), and bilateral transactions between discoms at 16.1 per cent (31.3 BUs).