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Merchant power generators in a fix as renewable prices plunge
Mint Mumbai
|June 27, 2025
India's green energy companies selling so-called merchant power are caught in a bind, as prices of solar power plunge on plentiful supply and subdued demand growth.
Depressed solar energy prices are weighing on installed and upcoming merchant power totalling 3 gigawatt (GW), three people aware of the matter said. Merchant power refers to electricity that is sold on exchanges or through short-term contracts rather than long-term agreements. Companies including Adani Green Energy Ltd, ReNew Energy Global Plc, Acme Solar Holding and Statkraft AS have invested around ₹15,000 crore in such projects.
On power exchanges, green energy prices have fallen. This year, prices averaged at ₹3.78 per unit, against ₹4.24 last year, and ₹5.25 the year before. Over the past one month, it averaged ₹2 a unit, even hitting zero at the end of May. In the day-ahead market, the average market clearing price in May was ₹1.86 per unit, and in June, it has averaged ₹1.82 a unit.
The price of green power, especially solar power, has fallen in the past few years due to the rise in capacity addition and resultant higher supplies.
The chief executive of one of the renewable energy companies mentioned above said: "We have to be careful about selling our merchant solar power, because daytime prices are beginning to go down. So, we have to be careful about not having too much merchant exposure or having any merchant exposure for that matter.
You have to look at the prices, day-time prices especially in May...because demand was very soft, therefore daytime power prices were quite low." To be sure, this year's summer was less harsh, and the early monsoon cooled demand.
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