Across the globe, the energy consumption scenario is changing. Both power generating companies and distribution companies are shifting their focus from fossil fuels to renewable and more sustainable sources of energy. The situation is the same in the Indian power landscape. Though coal still dominates the Indian power generating scenario, now the gears are shifting towards renewable sources of energy like wind solar and hydroelectric power. Companies offering power trading solutions are leading this shift and changing the way contracts are made and power is distributed in India.
Predominantly, the power landscape has seen long-term power purchase agreements (PPA) which span for 25 years. Increasingly, buyers are now looking for spot trading real-time auctions so that not only energy can be purchased at a cheaper rate but also distributed efficiently and in a much more effective manner. Power traders in India are at the helm of this change and are doing a great job at it.
A real-time platform (RTM) allows close to 50 options or 15 minutes each during which buyers can opt for renewable energy like wind and solar bringing these sources of energy into the National Grid and thus popularizing and leading the shift. The entire basis of this activity lies in the fact that India has one of the largest clean energy programs generating close to 35 gigawatts of solar energy and 34 gigawatts of wind power.
When renewable energy can be purchased and distributed at a cheaper rate Power Distribution companies will offer the same and it is expected that in the coming decade the bilateral contracts that run for long terms will reduce by 50% to 60%. What it also means is that power trading will be free from political influences, rising cost of inflation and a lot of distribution equity or power equity can be generated by short-term contracts. This would also push the consumers, the distributors, and the entire ecosystem along with all the stakeholders towards adopting renewable sources of energy.
The spot markets and the short-term trading are not just concepts but realities that even are supported by the government. The central government has spurred the national energy Commission plan of 2021 and has increased the spot market percentage share to almost 25% with plans to achieve this by 2023 – 24. This is an indication that the power trading companies in India aided by the government and the power generation companies are leading the shift towards renewable sources of energy.
India has power trade relations with foreign nations within the neighboring countries like Sri Lanka Nepal Bhutan and Bangladesh. The concept of spot trading and a real-time market would not only help power trading companies in India but also help in strengthening bilateral relationships between India and the neighboring countries.
The idea of short-term contracts comes at a very ideal time because right now the distribution companies are also averse to going into long term contracts. Therefore, it would not be an exaggeration to say that the entire ecosystem is in favor of short-term contracts and the power trading companies in India are at the forefront of this change and we are going to experience power equity soon.
Altilium is a leading power trading company in India. With an overall team experience of 45 years in the Indian power sector, our array of services includes bespoke Electricity Regulatory advisory, energy portfolio management, Renewable Energy offtake & trade, open access services, and Renewable Energy Projects management, to name a few. Being one of the leading CERC (Central Electricity Regulatory Commission) approved power trading companies in India, we are managing a trading volume of 5 Mus (million units) every quarter for our clients PAN India through spot market transactions and other open access modes (short-term/medium-term power supply). Let’s explore the future of renewable energy together! Do connect with us at hello@altilium.co.in
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