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Suspense crime, Digital Desk : In a surprising twist for a typically scorching month, electricity prices on India's power exchanges have taken a nosedive, even reaching zero at times. This unusual phenomenon, especially for May, is largely thanks to unseasonably cooler weather across many parts of the country, coupled with a significant boost in renewable energy generation.

Typically, May sees power demand skyrocket due to widespread use of air conditioners, pushing electricity prices up. However, recent cooler temperatures have meant less AC usage, leading to a slump in demand. Simultaneously, there's been a strong surge in electricity generated from wind and solar power, adding more supply to the grid. Improved availability of coal for thermal power plants has also contributed to the comfortable supply situation.

As a result, on key platforms like the Indian Energy Exchange (IEX), Power Exchange India Limited (PXIL), and Hindustan Power Exchange (HPX), prices in the real-time market (RTM) and even the day-ahead market (DAM) have touched extraordinarily low levels, including the "floor price" of effectively zero (or Re 0.01 per unit). For instance, on May 18th and parts of May 19th, prices remained at or near zero for several hours. This is a stark contrast to last year when May average prices were significantly higher. This year, while the May average is lower, these dips to zero are particularly noteworthy.

This price crash is a welcome development for power distribution companies (DISCOMs) in states like Rajasthan, Gujarat, Maharashtra, Madhya Pradesh, Chhattisgarh, Tamil Nadu, Andhra Pradesh, and Karnataka. They can procure electricity at much cheaper rates from the exchanges, potentially leading to cost savings.

However, experts suggest this "zero-price" scenario is likely temporary. As summer temperatures rise as expected, or if wind and solar generation fluctuates, demand will pick up, and prices are anticipated to climb back to more normal levels. Nevertheless, this period of unexpectedly low electricity costs offers a brief respite during the peak summer season.


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