India’s Power Market Is Moving Earlier — But the Grid Is Feeling the Strain
India’s wholesale electricity market is showing clear signs of stress as winter demand surged into December 2025, tightening supply margins and pushing market participants to lock in power further ahead of real time.
Fresh analysis of the Central Electricity Authority’s (CEA) Monthly Market Monitoring Reports for November and December highlights a market in transition — one where advance contracting is rising even as physical grid constraints intensify.
Total electricity transacted across the national grid expanded by more than 12% month-on-month, with inter-regional flows on the Inter-State Transmission System (ISTS) rising in parallel. Demand pressure from northern and western regions was a key driver.
At the same time, day-ahead market (DAM) prices on the Indian Energy Exchange jumped nearly 20%, reflecting tightening supply margins and growing caution among bulk buyers.
Advance Contracting Takes Centre Stage
December marked a notable behavioural shift. Market participants increasingly moved volumes away from the real-time market (RTM) and into day-ahead and term-ahead markets (TAM).
TAM volumes surged by over 50%, signalling widespread hedging to secure supply ahead of peak winter demand. While this reflects improved planning discipline, it also reduces reliance on real-time balancing — a critical flexibility tool during system stress.
RTM volumes contracted accordingly, shrinking the system’s immediate adjustment buffer just as load conditions became more challenging.
Curtailment and Congestion Surge
Despite better advance scheduling, physical limits on the grid became binding.
• Transmission congestion rose 42% month-on-month • Real-time curtailment jumped from ~40 million units to over 250 million units
The sharp spike in curtailment suggests that even improved contracting cannot fully offset network bottlenecks during peak stress periods. When constraints materialise, the system has less room to manoeuvre.
Coal Still Sets the Price
Coal remains the dominant price-setting fuel. Regression analysis within the CEA reports reinforces coal generation’s outsized influence on market prices.
That makes coal logistics, plant outages, and specific coal consumption variances commercially critical — especially as stockpile variability and transportation bottlenecks persist across eastern and central corridors.
Thermal generation margins remain vulnerable during high-load winter days.
What Comes Next
The convergence of higher prices, rising congestion, and shrinking real-time liquidity points to elevated volatility through the remainder of winter unless transmission reinforcements and flexibility measures are accelerated.
State load dispatch centres are already reassessing congestion forecasting tools and strengthening contingency planning to balance forward contracting efficiency with real-time reliability.
For policymakers, December’s data sharpen two unresolved questions:
• How to promote advance contracting without draining real-time liquidity • How to prevent transmission bottlenecks from undermining planning gains
As peak demand season deepens, the tension between contractual behaviour and physical grid realities will be a critical test of India’s power market resilience.
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