The average price of spot energy falls 54% to a minimum of two years in IEX

New Delhi, November 5 () The average price of spot energy on the Indian Energy Exchange (IEX) fell 54 percent to a two-year low of Rs 2.71 per unit in October, compared to Rs 5.94 per unit in the same month last year mainly due to lower demand for electricity, better coal supplies and greater hydroelectric generation.

The daily market (DAM) traded 3.391 million units with an average market compensation price of only Rs 2.71 per unit, the lowest in the last two years, an IEX statement said.

The average market compensation price fell 54 percent against the price of Rs 5.94. per unit in October 2018 and 2 percent monthly, he said.

The price decline was mainly due to low energy demand, improved coal supply and hydroelectric power generation. The market continued to be attractive to both distribution companies and open-access consumers in terms of price competitiveness and flexibility in energy acquisition, the IEX added.

All of India's maximum demand at 164 GW in October 2019 decreased 4% above the demand of 171 GW in October 2018 and the energy (supply) satisfied in 99 billion units decreased 13% YoY (year after year ) according to the NLDC (national cargo dispatch center) data.

The extended monsoon was also one of the key reasons for the decrease in energy demand, he said.

In the DAM market, the total monthly sales offers were 9,771 million units (MU), while the purchase offers were 3,923 MU. With the liquidity of the sales side at three times the purchase offers along with lower compensation prices, the market helped save on the high cost of energy for Discoms, as well as for commercial and industrial consumers, he said.

This trend is expected to continue also in the coming months. One Nation One Price prevailed throughout the month, IEX said.

The forward market (TAM) traded 439 MU in October 2019 almost on par with the volume traded in the previous month. Distribution companies take advantage of the market segment to manage the variability of supply and demand near real time. The acceptance of TAM contracts, especially intraday, daily and weekly contracts, has been growing among distribution companies.

On October 30, the REC market in IEX experienced a total trade of 4.48,765 (4.49 lakh) of Renewable Energy Certificates (REC) comprising 3,88,821 non-solar RECs and 59,944 solar RECs.

The price of non-solar RECs (issued after April 1, 2017) at Rs 1,650 increased by 10 percent from Rs 1,500 in September 2019 and the price of solar RECs at Rs 2,400 increased by 7 percent in October. 2019 from Rs 2,250 in September 2019. The increase in REC prices is mainly due to the deficit in the REC inventory and has continued since March 2019, he added. KKS MKJ