Q4 FY25: Power Exchange Liquidity Rises 36%, Electricity Vol to Grow 19%

IN an analyst call after its Q4 results , the Indian Energy Exchange (IEX) shared that on the power sector front, electricity consumption during Q4 FY ’24 recorded 415 billion units, which is an increase of 3.7% on a year-on-year basis. States such as UP, Maharashtra, Gujarat, MP, Rajasthan, Karnataka, and Tamil Nadu remained drivers of demand during this quarter, said Rohit Bajaj, Joint Managing Director – Indian Energy Exchange (IEX).

He further hoped that, “policy measures undertaken by the government and regulators to ease supply-side liquidity is expected to further rationalize power prices on the exchanges. We concluded FY ’25 with almost 19% growth in electricity volume and remain optimistic about what lies ahead to be able to grow further in the coming year.

FY ’25

On the Earnings Conference call, he said, “In FY ’25, India added a record 34 GW power capacity, led by 29.5 GW of renewable energy. India’s total installed renewable capacity now stands at nearly 220 gigawatts. The government’s target is to achieve 500 gigawatts of renewable capacity by 2030. This energy transition would also require efficient integration with the grid. IEX expects 40 GW of renewable power to be added in Fy26. 

Rise In Sell-Side Liquidity 

Further sharing the latest numbers in the energy exchange growth, he said, “On the exchange front, sell-side liquidity increased by 23.5% on a year-on-year basis in Q4 FY ’25 and by nearly 36% throughout FY ’25 compared with FY ’24. The average market clearing price in the DAM segment during the Q4 FY ’25 period was INR4.43 per unit as compared to INR 4.88 per unit in Q4 FY ’24. This is a decline of 9% on a year-on-year basis. During the year, DAM prices declined from INR5.25 per unit in FY ’24 to INR4.47 per unit in FY ’25. That is a fall of nearly 15% over the year. 

Giving a holistic picture he said, “The overall short-term market in India remains stable. According to data from CERC up till December 2024, the short-term market accounted for 15% of the country’s generation in FY ’25, similar to the number in FY ’24. However, within the short-term market, the share of power exchanges has grown to 9% of overall generation from 7% in FY ’24. This is an encouraging trend and points towards the crucial role exchanges are playing in the power market.” 

BESS

On the battery energy storage side he shared, “To develop Battery Energy Storage System, BESS, the government has implemented the viability gap funding mechanism, which provides up to 30% of the capital cost for various BESS projects. Under this proposed model, BESS-based storage of 9 gigawatts is to be made available by 2027 and eventually scaled to 47 gigawatts by FY ’32.”

Business Performance 

In terms of business performance, IEX traded 31.7 billion units of electricity volume during Q4 FY ’25, the highest ever electricity volume traded on a quarterly basis, recording a growth of 18% on a year-on-year basis.

Whereas, for FY ’25, he said, “IEX traded electricity volume of 121 billion units, a growth of 18.7% over FY ’24. In Q4, a total of 68 lakh renewable energy certificates were traded, the highest ever in a quarter, recording a growth of 108% over the same quarter last fiscal. The highest recorded REC of nearly 178 lakhs were traded for FY ’25, up by 136% over FY ’24.”  For context, total electricity generation in India in 2024-25 was at 1694 billion units.

Sharing the latest trend in the power sector, he said, “The power sector is undergoing changes with the development of new market models in the form of battery storage arbitrage, Firm, and Dispatchable Renewable Energy, FDRE, the virtual power purchase agreements, VPPAs. These market models are slated to be future drivers to deepen India’s power market and eventually ensure a successful energy transition. As India marches towards achieving its net zero targets, there is bound to be a much larger role of our exchanges in the country’s energy landscape.”

Challenge To Bring distribution companies on the exchange platform

Sharing the key challenges faced by Satyanarayan Goel, Managing Director of the Indian Energy Exchange said, ” (One challenge on the business side is) Participation of distribution companies on the exchange platform because their reliance is mostly on the power purchase agreements. 85% of the demand they have is met through the power purchase agreements, so that is definitely one big challenge and how to bring them on the exchange platform. And in future also, how to ensure that distribution companies don’t get into the PPA, they buy more power from the market.

He added, “So I’m sure with this new additional capacity, there is not going to be any shortage of power. And that basic assumption that there’s going to be a shortage and demand is going to shift from DAM to Total Addressable Market (TAM). I don’t think that is going to happen. And in any case, the shortages also which you see, invariably happen only for 2 months, which is the month of April and May. But from June, the monsoon starts and the wind generation starts, so thereafter, the spread is not that critical. So I don’t think that there’s going to be any impact on the business as far as the demand and supply is concerned.”

He elaborated on the future increase in Liquidity, “In the renewable sector, the capacity addition was about 29 GW and next year, we are expecting about 40 GW of renewable capacity addition 5 gigawatts of battery storage is going to be commissioned. So it is going to increase and so the liquidity in the green market.”

Coupling Update

While the management indicated that no further updates had come on the plans for power coupling, which seeks to pool all power demand in categories at a single price across exchanges, the IEX management remained sanguine about their prospects. “It is because of the kind of services which we provide and the robust technology platform which we have, on which there has been no problem in the last 17 years and the financial reconciliation settlement, everything we do on time. And in addition to that, we also provide a lot of data analytics to them. So I think because of all that only the customers are staying with us. Even today also, the customers are staying because of that only. And in future also, I’m sure we will be able to retain a large part of the customer base”.