India's power market: decoding the "zero price" anomaly

On June 1, 2025, the Real-Time Market (RTM) experienced a historic dip, with market prices dropping to nearly zero (₹0.0003/kWh) during the 15-minute interval from 11:45 to 12:00 hours. The price discovered for the day was ₹2.25/kWh.

This was an extraordinary event, and we have been hearing considerable buzz from various stakeholders about the sharp crash in prices on the power exchanges. With electricity now being available virtually for free—and in some cases, suppliers even having to pay to dispatch power—it’s a clear reflection of a surplus market condition.

It is, however, important to emphasise that much speculation deprives a commodity of its true value by creating confusion amongst the stakeholders. Over the past two decades, the power sector has generated significant value by establishing a market framework that is readily accessible to all stakeholders. The framework provides liquidity to all participants by maintaining a robust yet straightforward participation mechanism. Taking a cue from this, in this article, we have attempted to analyse the market behaviour using various data points to understand why this event stands out as such an outlier.

Upon analysing the last 12 months of Green DAM (Day Ahead Market), DAM, and Real-Time Market (RTM) prices, we believe that the discovery of such ultra-low prices was merely an anomaly. The result was a temporary aberration in the merchant market, caused by weather conditions that impacted demand-supply dynamics.

To understand the anomaly, let’s have a comprehensive look at the price discoveries over the past year. The chart below shows the abnormally low market prices discovered during the entire year (8,760 hours).

The graph clearly indicates that the impact of lower tariffs is negligible in total realisation. During the period July 1, 2024, to June 30, 2025, the average MCP (Market Clearing Price) realised in GDAM was ₹4.74 per kWh, DAM was ₹4.26 per kWh, and RTM was ₹4.03 per kWh. As evident from the data, tariffs below ₹2.00/kWh occurred only around 10% of the time, while the ultra-low tariffs currently being widely discussed accounted for only 0.24% equivalent to approximately 21 hours out of 8760 hours, i.e., over an entire year.

Therefore, the concern surrounding low tariff realisation needs to be viewed through a data-driven lens. The numbers clearly show that such instances are rare anomalies and hold little significance in the context of the overall merchant market available for dispatch.

The Lower MCP was due to untimely rain, weather uncertainty, surplus availability of wind energy, discom’s energy surplus, and high hydro generation. These factors created an unexpected mismatch between demand and supply at a specific moment—something not observed at any other point during the year. This led to a temporary dip in prices, which was an anomaly rather than a trend, despite being portrayed across the sector on various platforms.

The robustness of India’s electricity merchant market has enabled it to become the most liquid electricity market over the last two decades, evolving to meet emerging market requirements. By introducing numerous products at frequent intervals, such as RTM, Term Ahead Market (TAM), GDAM, Realtime Green Market, OTC Platform, VPPA, and now Electricity Derivatives, the market has demonstrated liquidity and adaptability. These reasons strongly refute the recent claims that these anomalies are becoming long-term trends.

Furthermore, the increasing demand for electricity will support the overall supply, leading to higher electricity prices in the future. Additionally, the fuel costs for thermal power plants are rising daily due to various factors, including geopolitical instability, increased mining expenses, higher transportation costs, and higher equipment costs. Therefore, to lower overall power costs, a significant portion must come from renewable energy sources. Since RE sources like solar, wind, and hydro have zero or negligible variable costs, they are well-positioned to aid the ecosystem by providing stable pricing. By doing so, they can help stabilise market fluctuations, control prices, and play a vital role in supporting the broader development of the country’s power system.

We consider this an aberration, and its impact on the revenue realisation for suppliers will always be negligible. Furthermore, Battery or Pump Storage-based power plants will drive the market to optimal levels, where any surplus energy will be consumed as it becomes available in the open market, making the market more stable in the future. Thus, the current duck-shaped curve will flatten over time, improving price realisation for renewable energy generators in the coming years.

 (The author is Associate Vice President - Power Trading, AMPIN Energy Transition. Views are personal.)