Unusually high February heat generates demand for Indian Energy Exchange

According to a regulatory filing, The Indian Energy Exchange has hit 8200 MU total volume in February 2023, including Green Power trade of 341 MU, 3.74 lac RECs (equivalent to 374 MU) and 1.54 ESCerts (equivalent to 154 MU). While the average daily volume traded on the Exchange increased in February '23 by 5% MoM, the overall volume declined 5% MoM due to lesser trading days vis-à-vis the previous month.

Higher costs affect cash flow

The electricity volume on the Exchange in February ’23 at 7673 MU, registered 6% decline on YoY basis and 7% MoM basis. The overall volume on the Exchange during the month was 8200 MU, degrowth of 7% on YoY basis. Sell side liquidity continued to be affected due to high input costs. Demand for power increased due to unusually warm temperature witnessed in February across several parts of the country, and sustained momentum in economic activities.

Supply lines expected to open up

The energy met in the country during February ’23 stood at 118 BU, 9% higher on YoY basis, as per data published by the National Load Dispatch Center. Supply constraints are expected to ease in the coming months due to the conducive policy and regulatory initiatives. These initiatives will lead to increase in coal and gas based generation, resulting in higher liquidity on the Exchange in the coming months.

This will provide cost optimisation opportunities to Discoms and Open Access consumers. IEX resumed trading of Energy Saving Certificates (ESCerts) on 14th February 2023, after a gap of 14 months. During the month, nearly 1.54 Lac ESCerts (equivalent to 154 MU) were traded on IEX, with 97% market share.