In the last few months, the IEX share price has done nothing. It has underperformed greatly in 2023 as compared to other stocks in the power sector. But the increased August electricity trading volume on its exchange has shown a ray of hope. So, in the upcoming days, the Indian Energy Exchange share price can do better than the previous months.
| Stock | 52-Week High(13-Sep-2022) | 52-Week Low(09-Jun-2023) |
|---|---|---|
| IEX SHARES PRICE | 165.45 | 116 |
Unusual Heat Wave Cheered IEX
August 2023 brought unusual weather conditions to India, with the lowest August rainfall since 1901. The hot weather resulted in an unprecedented surge in electricity demand as people sought relief from the scorching heat. Grid-India reported a 16% year-on-year increase in electricity consumption. It was with a record peak demand of 236 GW and a historic single-day energy consumption of 5126 MU on August 31st.
IEX’s Remarkable Volume Increase
In August 2023, the Indian Energy Exchange recorded a total amount of electricity volume of 8,865 million units (MU). When compared to the same time last year, this represented a 21% rise. An important factor in this accomplishment was the spike in electricity demand.
Pricing Surge
Prices on IEX increased to Rs 6.89 per unit in August 2023 as a result of a combination of increased demand and supply constraints. This was a significant 33% growth year over year. In August 2022, the Day-Ahead Market (DAM) volume was 3,810 MU; in August 2023, it was 3,810 MU. The average market clearing price, which increased by 33% from the prior year to Rs 6.89 per unit, reflected this rise.
Real-Time Electricity Market (RTM) Success
In August 2023, the Real-Time Electricity Market (RTM) reached 2,738 MU, a remarkable 21% year-over-year gain. The highest-ever single-day volume on IEX of 135.28 MUs in RTM on August 24, 2023, was a notable accomplishment. By balancing power demand and supply in real-time, the RTM segment enables distribution utilities and industries to optimize their portfolios.
Term-Ahead Market (TAM) and Day-Ahead Contingency Market (DAC)
The TAM and DAC, consisting of intra-day, contingency, daily, and weekly contracts, and contracts up to 3 months, saw a substantial increase in trading volume. With 1,673 MU traded in August 2023, this segment recorded a remarkable 131.5% year-on-year growth.
Green Market Success
IEX excelled in the Green Market in addition to experiencing general growth. August saw 159.7 MU in volume on the Green Day-Ahead Market (G-DAM), with a weighted average price of Rs 7.16 per unit. The Green Term-Ahead Market (G-TAM), which offers varied rates for solar, non-solar, and hydro sources, reached 82.6 MU volume in August ’23.
IEX played a crucial role in promoting renewable energy and energy efficiency. A total of 2.53 million RECs (~253 MU) were cleared in the trading session at IEX. Furthermore, 1.03 lac ESCerts (~103 MU) were traded in August ’23.
*ESCerts (Energy Savings Certificates)
Frequently Asked Question(FAQ)
What is IEX?
IEX is the Indian Energy Exchange. It is an electricity trading exchange.
Is it good to invest in IEX shares?
IEX’s monopoly-based business strategy may benefit investors tremendously in the future.
Is IEX a govt company?
Yes, the Central Electricity Regulatory Commission (CERC) approved and regulated IEX. CERC is a statutory body established under the Electricity Act 2003.
Bottom Line
A few weeks ago, IEX’s shares took a big hit, dropping by more than 23% in just two days. Why? Well, it all started when the Ministry of Power told the Central Electricity Regulatory Commission (CERC) to do something called “market coupling.” That means they wanted to make sure that electricity prices would be the same on all the different electricity trading platforms.
So, here’s the big question: Can IEX’s share price recover from the bad news and make investors happy? The answer is still unclear, but it’s getting interesting.
As the energy market keeps growing, one thing’s for sure: how well IEX can provide the electricity people need will be really important for investors.
