Power prices hit zero for first time on 1 May as demand dips but supply climbs

Data from the Indian Energy Exchange (IEX) showed power prices were at zero in two blocks of 15 minutes each on Friday, as demand dipped due to easing temperatures and low industrial demand but power supply — especially solar power — climbed, bringing prices down.

The dip in demand came from partly cloudy skies, light rains, and gusty winds in northern India and Delhi-NCR, and heavy rainfall in parts of eastern India. Similar weather was witnessed on Saturday, 2 May.

To be sure, power prices on the real time market (RTM) platform of the IEX had dropped to near-zero twice earlier—on the afternoon of 5 April, and on 25 May last year, under similar circumstances.

In a LinkedIn post on on Friday, IEX said: “Cooler weather, record solar generation (~57.5 GW), and inflexible thermal supply are leading to ample sell-side availability on the Exchange. Today, up to 5:00 PM, the average price recorded stood at ₹1.22/kWh, with near-zero prices observed across multiple time blocks. This presents an excellent opportunity for distribution companies and open access consumers to optimize their power procurement costs.”

The development assumes significance because power traded on India’s power exchanges accounts for about 13% of total supply, with the rest coming from long-term power purchase agreements (PPAs) between power producers and distribution companies (discoms).

Experts say battery storage and negative pricing are mechanisms to curb such instances. Negative prices incentivize discoms, consumers and storage operators to increase demand or shift usage, thus balancing the grid.

Pointing out that countries like Germany have introduced negative price for specific time slots, Jayant Deo, former managing director and CEO of IEX, said in India, too, negative prices will have to be eventually introduced.

“The frequency of alternating current in India is 50 Hertz (Hz) or 50 cycles per second. To maintain this cycle, power generation and distribution companies have to match demand and supply. If demand is lower than supply, the frequency increases. And if the demand is higher than supply, the frequency declines, which may cause grid instability,” Deo said.

The spokesperson of Gurugram-based renewable energy company Sunsure Energy said that the fall in prices on 1 May also happened because industrial demand fell due to holidays on the occasion of Labour Day and during the period of 10.30 to 11 AM on that day, the sell bids on the RTM platform was about 46 GW against purchase bids of only about 6 GW.

“This pattern is not unique to India; deeper markets in South Australia, Southern California and Europe have also seen rising negative-price hours where market rules allow it, which is a clear signal for flexibility, storage and demand response rather than a reason to slow renewables,” the Sunsure spokesperson said.

Sanjeev Aggarwal, founder and chairman of renewable energy company Hexa Climate Solutions, a renewable energy company, noted that the dip in demand doesn't reflect an overall low interest for green power. Rather, the appetite for infirm power — mostly standalone solar and wind — has saturated as expected.

“When prices crash to zero, it simply indicates a severe localized oversupply of daytime solar combined with weather-dampened demand. It is a loud, clear market signal that we urgently need to shift this excess energy to the evening peak. It isn't a demand problem; it is a grid-balancing and storage problem,” he added.

Queries emailed to the Union ministry of new and renewable energy on Sunday afternoon were not immediately answered.

Too much green power?

These repeated instances of significantly low power prices during the day time gains significance as discoms have been making distress green-power sales on exchanges at prices significantly lower than their procurement costs.

Also, several states are signing coal-fuelled power purchase agreements (PPA) at a higher average tariff, with no demand from electricity discoms for conventional solar and wind power despite being available at a lower average tariff.

Also, this comes in the backdrop of curtailment of about 11.5 GW of renewable energy being curtailed in Rajasthan since January 2026, according to a recent report by Mercom India, a clean energy communications and consulting firm.

Experts noted that demand usually drops during holidays, weekends and rainy days, but the recent trend of prices touching zero calls for developers to set up more storage capacities.

Battery energy storage systems (BESS) are touted as the solution to avert such oversupply of power. The government has already set in place plans to boost BESS capacity in the country, including mandatory integration of battery capacity for all new renewable energy projects, and incentives for battery manufacturing and installation through the production linked incentive scheme and viability gap funding (VGF).

Experts noted that even if the demand is met, stopping excess supplies is not easy for thermal or nuclear plants, which need time for ramping up and down of their operations. Similarly, renewable energy projects will continue producing, which if not stored will have to be curtailed.

This drop in temperature has also led to ease in peak power demand of the country from the record highs witnessed a week ago. On 2 May, the peak power demand was at 228.9 GW, lower than the record level of 256 GW hit on 25 April.

Although the peak demand is projected to hit an all-time high of 271 this year, the demand is likely to ease in the next few days, before rising later in the week.

According to the latest forecast by the India Meteorological Department (IMD), maximum temperatures across several parts of the country are expected to witness a temporary dip before rising again later this week.

The weather department has also forecast fairly widespread to widespread rainfall accompanied by thunderstorms across parts of the country including northwest, central, south and northeastern India during the week.