Spot electricity prices on power exchanges fell 25% on average in May on a yearly basis , hitting zero multiple times on May 25, as unseasonal rains reduced temperature and cut demand for cooling devices .
Central agencies had projected a peak power demand of 266 giga watt (GW) in May this year, but unseasonal rains kept it much lower at 232 GW untill May 26.
Real Time Market (RTM) segment on May 25, recorded average day hour prices of Rs. 0.56/unit, and witnessed near zero prices in multiple time blocks between 9:15 AM to 2:30 PM on Indian Energy Exchange (IEX).
On the same day, the average daily price was only Rs 1.53/unit. For the month of May, the RTM prices are down by 25% YoY at an average of Rs 3.56/unit. Similar trend was also observed in the day-ahead market(DAM) prices during May 2025 wherein the average market clearing price reduced nearly 18% YoY, said Rohit Bajaj, joint managing director of IEX.
“Unseasonal rains and thunderstorms in May kept temperatures low, resulting in a 3.7% year-on-year decline in electricity consumption during May 1–26, 2025. At the same time, increased hydro, wind, and thermal generation created surplus availability, bringing down RTM prices,” Bajaj said .
In addition to capitalizing on overall lower RTM prices, participants replaced costlier thermal generation by solar hours RTM procurement to further optimize costs, driving up market volumes in the RTM segment, he said
These trends underscore the growing importance of the RTM in providing distribution companies ( DISCOMs), open access and C&I consumers with the flexibility to procure power in near real-time and optimize costs amidst dynamic supply-demand conditions, he added.
According a report by IIFL, about 18 gigawatts (20% of total solar capacity) was curtailed on May 25 due to low weekend demand.
If this trend continues, power purchase agreements (PPAs) and new solar projects could slow down, as distribution companies (DISCOMs) won’t sign deals until demand increases, it said.