Power prices plunge near zero on exchanges as rains ease demand

The sudden softening in prices comes as demand eased with cooler weather and the completion of much of the kharif sowing season.

New Delhi: Heavy rains and a late-month drop in electricity demand pushed power prices on exchanges to near-zero levels in several trading blocks in the last week of September, according to data from the India Energy Exchange.

On 26 and 27 September, prices on the real-time platform were at or below 10 paise a unit for 26 and 18 trading blocks, respectively. Each trading block on the platform ranges for 15 minutes. On 24 September, prices fell below 10 paise in 34 trading blocks.

The sudden softening in prices comes as demand eased with cooler weather and the completion of much of the kharif sowing season. The average price in the real-time market fell 13.3% to ₹2.75 a unit in September from ₹3.17 a unit in the same month last year, IEX data showed.

Lower prices are also a concern for power producers and distribution companies that sell surplus renewable electricity on exchanges, as market prices can fall well below their procurement costs. Renewable power typically costs more than ₹2 a unit, while firm and dispatchable renewable energy (FDRE) and hybrid projects can cost more than ₹3 a unit.

Demand slips

On 28 September, peak power demand fell below the 220 GW mark, with electricity shortages falling below 1 million units in a day compared with about 20 million units in the later part of August and early September.

"There has been very high liquidity because of rains, decline in demand due to weather changes RTM hitting near-zero prices for multiple time blocks from September 24 onwards," said an executive at a renewable energy developer, requesting anonymity.

The late-month easing came after a month of strong electricity demand and supply stress. Peak power demand in September reached 269.06 GW, just below the record 270.8 GW recorded in May. Daily power shortages had touched 22 million units and were around 20 million units on several days during the month.

The surge in demand last month and the supply shortages can be linked to weather-related disruption. Coal production and transportation were impacted amid rains, limiting thermal power generation, while below normal rains weighed on hydropower generation. Hydropower generation was around 10% lower than in 2025.

Availability up

With coal production and transportation improving, fuel availability has also picked up. State-run Coal India Ltd on Thursday said it increased coal supplies by 12.5% to 61.20 million tonnes in September 2026 from 54.40 million tonnes in the same month last year.

Supplies to the power sector rose 10.63% to 48.90 million tonnes from 44.20 million tonnes a year earlier, the company said.

"With the sustained operational momentum demonstrated during September and Q2 FY 2026-27, CIL remains well positioned to pursue its assigned coal production and supply targets and continue contributing to the energy security of the country on a sustained basis. With the monsoon season over, coal production is expected to further pick up, along with supplies," the company said in a statement.

About the Author

Rituraj Baruah is a special correspondent covering energy, housing, urban affairs, heavy industries and small businesses at Mint. He has reported on diverse sectors over the last eight years including, commodities and stocks market, insolvency and real estate; with previous stints at Cogencis Information Services, Indo-Asian News Service (IANS) and Inc42.

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