India's Power Procurement Faces Challenges Amidst Market Volatility
Power distribution licensees in India are encountering difficulties in power procurement, as day-ahead markets on power exchanges have repeatedly reached the ₹10-per-unit ceiling for extended periods. This market volatility has led to utilities paying significantly higher prices for emergency supplies, with some purchases exceeding ₹30 per unit. The reliance on day-ahead markets for covering demand gaps, particularly during non-solar hours, has resulted in only about 51% of total buy bids being cleared, according to a Central Electricity Regulatory Commission (CERC) order from October 2025.
The current procurement practices persist despite the Resource Adequacy Guidelines of June 2023, which mandate every distribution licensee to maintain a ten-year rolling plan, vetted by the CEA. However, some states are not consistently submitting the required resource adequacy data. Challenges also include outdated load forecasting methods and fragmented data systems within utilities, hindering effective planning. While CERC's draft Power Market (First Amendment) Regulations, 2025, aim to broaden contract options for over-the-counter platforms, the fundamental issue remains the lack of proactive, long-term power purchasing strategies among many utilities in India.
