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Lower Power Demand Drives 18% Drop in Spot Electricity Prices in February

Spot electricity prices in India declined sharply in February 2026 as subdued power demand and improved renewable energy generation increased supply in the market. The average spot price fell to Rs3.58 per unit during the month, marking an 18 percent drop compared with the same period last year.

At the same time, electricity trading volumes recorded strong growth. According to the Indian Energy Exchange (IEX), the country’s largest power trading platform, total traded electricity reached 12.5 billion units (BU) in February, reflecting a 30 percent year-on-year increase.

The surge in trading activity represents the highest monthly growth in electricity trade over the past 18 months. It also marks the strongest growth recorded for the month of February in the last five years, with the previous peak occurring in August 2024 when trading volumes rose by 36 percent.

Market activity was particularly strong in the real-time and day-ahead segments. The Real-Time Market (RTM) recorded a trading volume of 4,379 million units (MU), while the Day-Ahead Market (DAM) registered 6,588 MU during the month.

The green power segment also saw significant expansion. The IEX Green Market, which includes the Green Day-Ahead Market and Green Term-Ahead Market segments, recorded a traded volume of 808 MU in February 2026. This represents a 46.3 percent increase from 552 MU in February 2025. Meanwhile, the average price in the Green Day-Ahead Market declined to Rs3.43 per unit, down 25.3 percent year-on-year.

Commenting on the market trends, Rohit Bajaj, Joint Managing Director of IEX, noted that average power prices in the Day-Ahead Market during the first eleven months of FY26 stood at Rs3.83 per unit, reflecting a 14.4 percent decline compared with the same period in FY25. Prices in the Real-Time Market averaged Rs3.58 per unit during the same period, representing a 16.5 percent year-on-year drop due to higher supply liquidity.

He added that the lower exchange prices provide an opportunity for distribution companies as well as commercial and industrial consumers to procure electricity at competitive rates and reduce their reliance on higher-cost power sources.

The exchange also reported active trading in the Renewable Energy Certificate (REC) market. A total of 18.86 lakh RECs were traded during sessions held on February 11 and February 25, 2026. The certificates cleared at Rs333 per REC and Rs337 per REC respectively, with total REC trading volumes rising by 15.2 percent year-on-year.

Government data indicates that India’s electricity consumption grew modestly by 1.9 percent to 133 BU in February. This follows stronger growth of around 4–6 percent recorded in the previous two months. For the first ten months of FY26, overall electricity demand growth remained subdued at approximately 0.9 percent.

According to credit rating agency ICRA, prolonged southwest monsoon conditions and heavy rainfall across several regions contributed to weaker demand growth, along with a high base from the previous year. Ankit Jain, Vice President and Group Head – Corporate Ratings at ICRA, noted that electricity demand growth during this period was mainly driven by states such as Gujarat, Karnataka and Bihar, while many northern states saw a decline.

ICRA expects some seasonal recovery in demand during the winter months and projects full-year electricity demand growth of around 1.5–2 percent. The agency anticipates a stronger rebound of about 5 percent in FY27, supported by normal weather conditions, a lower base effect and steady industrial and commercial activity.