"Driving India's Renewable Energy Transition: Trends in Power Trading and Market Developments"

Guy Spier

Hatched by Guy Spier

Feb 10, 2024

4 min read


"Driving India's Renewable Energy Transition: Trends in Power Trading and Market Developments"


India's power sector is undergoing a significant transformation as the country embraces renewable energy sources to meet its decarbonization and net-zero targets. This shift is driven by the rising share of renewable energy in power generation and the growing demand from industrial and commercial consumers for clean energy. Alongside this, energy markets in India are evolving to facilitate the greater adoption of renewables, leading to the emergence of innovative products and services. In this article, we will explore the recent trends in India's power trading sector and the market developments that are expected to accelerate the integration of renewable energy.

Increasing Short-Term Trading Volumes:

One key trend in India's power trading sector is the steady growth of short-term trading volumes. During the period of 2022-23, these volumes reached 194.35 billion units (BUs), marking a 4.1% increase from the previous year. Notably, short-term trading volumes accounted for 13.7% of the total power generation during this period. This upward trajectory reflects the growing flexibility and demand for short-term power transactions, enabling consumers to adapt their energy consumption patterns according to renewable energy availability.

Power Exchanges and Transaction Volumes:

Analysis of the short-term market reveals that power exchanges played a significant role, accounting for approximately 53% (102.95 BUs) of the total transaction volume in 2022-23. These exchanges provide a platform for buyers and sellers to trade electricity, fostering competition and price discovery. The remaining portion of short-term transactions includes volumes transacted through trading licensees (17.4% or 33.8 BUs), deviation settlement mechanism transactions (13.5% or 26.3 BUs), and bilateral transactions between discoms (16.1% or 31.3 BUs). This diverse mix of transaction types highlights the evolving nature of India's power trading landscape.

Market-Based Ancillary Services:

In addition to the growth in short-term trading volumes, the Indian power sector has witnessed the emergence of market-based ancillary services. These services play a crucial role in maintaining grid stability and reliability while integrating a higher share of renewable energy. By leveraging market mechanisms, such as the real-time market (RTM), market participants can provide or procure ancillary services, such as frequency regulation and reactive power support, in response to real-time grid conditions. This market-driven approach encourages efficiency and cost-effectiveness in the management of ancillary services while facilitating the seamless integration of renewable resources.

Innovative Products Driving Renewable Adoption:

The Indian power sector's transition towards renewables is further supported by the introduction of innovative products. The green term-ahead market (GTAM) and green day-ahead market (GDAM) are two such products that enable market participants to trade renewable energy in advance. These markets provide a platform for buyers and sellers to enter into long-term contracts for renewable energy, ensuring a stable revenue stream and promoting investments in renewable infrastructure. The GTAM and GDAM have the potential to unlock large-scale capacity additions of renewable energy and reduce integration costs, ultimately accelerating India's clean energy transition.

Actionable Advice:

  • 1. Embrace Short-Term Trading: Industrial and commercial consumers can leverage short-term power trading to optimize their energy consumption and take advantage of renewable energy availability. By actively participating in power exchanges and exploring trading opportunities, businesses can contribute to a more sustainable and flexible energy system.
  • 2. Explore Market-Based Ancillary Services: Grid stability is crucial for the successful integration of renewable energy. By exploring market-based ancillary services like the real-time market (RTM), market participants can play an active role in maintaining grid reliability while benefiting from the cost-efficient management of ancillary services. Consider engaging with these services to support the transition to a cleaner energy system.
  • 3. Invest in Innovative Products: Businesses and investors should explore opportunities in innovative products like the green term-ahead market (GTAM) and green day-ahead market (GDAM). By investing in renewable energy contracts through these markets, stakeholders can contribute to large-scale capacity additions of clean energy and drive down the costs of renewable integration.


India's power trading sector is witnessing dynamic changes driven by the rising share of renewable energy and the need for a more flexible and sustainable energy system. The increasing short-term trading volumes, the role of power exchanges, market-based ancillary services, and the introduction of innovative products are all contributing to the country's renewable energy transition. By embracing short-term trading, exploring market-based ancillary services, and investing in innovative products, stakeholders can actively contribute to India's clean energy future. As the power sector continues to evolve, these trends and developments will play a crucial role in achieving India's decarbonization goals and creating a more resilient and sustainable energy landscape.

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