Renewable power making more space in Energy market

Long term wind and solar prices are going down all the time – solar prices dipped to a wonder ₹1.99 a kWhr last month – but there is another market where the generators get a much higher price: the energy markets. If you are a wind or solar generator you could get even ₹4 a kWhr on a good day.

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In December, 90 million units of electricity were sold in what is called the G-TAM (or green term-ahead market) of India’s bigger energy exchange, the IEX. In G-TAM, a buyer or seller of electricity can offer to buy or sell bids for any day in the following 11 days.IEX introduced G-TAM in August 2020; 549 million wind and solar electricity units have been sold and bought up till December. But here is the meat: December prices ranged between ₹3.60 and ₹4 a kWhr.

In future energy companies could be putting up merchant power plants, where the electricity could be sold on daily or short-term contracts instead of long-term power purchase agreements. Asked about this possibility, Rohit Bajaj, who heads Business Development at IEX, said, “that is 100 per cent on the cards.” Though for starters, generators who build wind and solar power plants under a long term PPA would first over-size their capacities, to be able to sell power from the extra capacity through the markets. For example, if a developer wins a project through a tender for, say, 200 MW, he could build a 225 MW plant, aiming to sell power from the additional 25 MW through the exchange at better prices.

Bajaj said that energy companies were waiting for battery prices to come down. Then, they could store the energy and sell it only when the prices are reasonable. That is when many merchant power plants could crop up.