Indian Energy Exchange Ltd Q2 FY2026 Concall Summary

Key Takeaways

• Volume growth defies flat power demand: Electricity volumes rose 16.1% YoY even as H1 power demand was largely flat, driven by market share gains and exchange penetration.
• RTM overtakes DAM for the first time: Real-time market volumes surged 39% YoY to become the largest segment at 36% share, as DISCOMs exploited lower RTM prices and growing supply liquidity.
• Market coupling looms, details absent: CERC ordered DAM coupling by January 2026, but management says no implementation discussions, procedures, or drafts exist yet; IEX has appealed the order.
• Regulatory tailwinds are stacking up: Draft Electricity Act amendments, VPPA guidelines, carbon credit trading regulations, and RCO notification all advanced this quarter, expanding the addressable market.
• What to watch next quarter: The APTEL hearing on market coupling (November 28), any CERC movement on coupling implementation, and whether the 15-20% volume growth guidance holds through H2.

Volume & Segment Performance

• Electricity volume growth: 16.1% YoY increase despite H1 power demand being largely flat, driven by increased market share and exchange penetration.
• RTM segment surge: Volumes grew 39% YoY, surpassing DAM share for the first time at 36%, driven by DISCOMs and open access consumers managing short-term needs and integrating renewables.
• RTM vs DAM dynamics: RTM overtook DAM because sell-side availability was much higher, liquidity was higher, clearing prices were 10-12% lower than DAM, and distribution companies took advantage of those lower prices.
• RTM growth outlook: Renewable capacity addition creates large generation variation that DISCOMs must balance in real time; the government mandate for thermal generators to sell un-requisitioned power in DAM and RTM adds further supply, and generators can assess surplus more accurately in RTM.
• Green market growth: Volume rose 17.7% YoY to 300 crore units, supported by obligated entities meeting RPOs.
• TAM market stability: Term Ahead Market transactions are bilateral and happen mainly during power shortages; this year had good rains, so no growth in TAM.
• Price decline: DAM price fell 12.5% YoY to Rs. 3.93/unit and RTM price fell 16% to Rs. 3.51/unit due to increased supply liquidity from hydro, wind and coal-based generation, with sell bids up 39.3% YoY.
• Revenue divergence from volume: Electricity volume grew 16% YoY but revenue grew only 10.42% because REC certificate volume was lower and the transaction fee on certificates was reduced from Rs. 40 to Rs. 20 in August of the previous year.

Market Coupling & Competitive Landscape

• CERC order on market coupling: On July 23, CERC decided to initiate DAM coupling by January 2026, with RTM coupling to be considered later; a shadow pilot for TAM coupling and stakeholder consultation for RTM and SCED coupling were also directed.
• Implementation vacuum: Management stated they are not aware of any developments that have taken place so far; no discussions with exchanges or Grid India, no procedures worked out, no drafts issued for public consultation, and no program for how or when implementation will occur.
• IEX appeal filed: The company has appealed the market coupling order in APTEL, with the next hearing scheduled for November 28.
• No price war expectation: In the Term Ahead Market where all three exchanges are active, management says a price war is not happening and does not see one in DAM after coupling.
• Customer retention strategy: Management declined to elaborate on technology changes planned to retain customers if coupling happens, citing call constraints, but emphasized 17 years of hard work building connectivity, customer understanding, and market development activities as its USP.

Goel: "Why should we talk about war? Let us talk about peace."

Regulatory & Policy Developments

• Draft Electricity Act Amendment 2025: Key proposals include SERCs empowered to determine tariff suo moto, cross subsidies progressively eliminated within 5 years for manufacturing/railways/metro, DISCOMs may be exempted from supplying C&I users with 1 MW and above load, penalty of Rs. 0.35-0.45/unit for RCO non-fulfillment, and contract for difference products allowed.
• CERC streamlined TAM trade slots: Predefined time slots for TAM contracts across exchanges; public consultation done, final order reserved.
• CERC proposed modification in DAC price discovery: Moving from continuous matching to uniform price step auction via draft amendments in Power Market Regulation 2021; stakeholder comments completed.
• CERC draft guidelines for VPPAs: Power exchanges recognized as authorized platforms for sale of electricity by RE generators under VPPA; consultation and proceedings completed.
• CERC draft regulations for carbon credit trading: For obligated and non-obligated entities through power exchanges; stakeholder consultations completed, final regulations likely in due course.
• Greenhouse emission intensity targets notified: For 271 obligated entities across aluminum, chlor-alkali, cement, pulp and paper; final notification published by MoEFCC.
• CERC amendments to GNA regulation: Introduced network access for solar and non-solar hours for all RE-based projects; time block-based restrictive access to ISTS system.
• MOP final notification on RCO: Defined RCO fulfillment method to include RECs acquired under VPPAs; fungibility of obligation under wind, hydro and other components.
• Electricity Act amendment intent: Government of India proposed the amendment aimed at bringing viability in the power sector and improving distribution company performance.

New Market Opportunities

• IGX gas performance: Gas volume grew 37% YoY led by domestic gas producers and heightened power demand in August and September; PAT up 57%.
• IGX stake reduction extension: IEX has applied to PNGRB for extension of the deadline to reduce equity stake to 25% from 47.5%; the regulator has assured a time extension will be given.
• Coal exchange development: Ministry of Coal is exploring market development with enabling provisions under the MMDR Act; draft rules issued for appointing Coal Controller as regulator; IEX is working with stakeholders to explore setting up the first coal exchange.
• Carbon credit trading timeline: Likely to commence on power exchanges in the near future after final regulations, though management estimates it will need another one to one and a half years before it happens.
• Carbon market size potential: Could be as big as the REC market, but depends on industry compliance with GHG norms.
• ICX I-REC issuance: 38 lakhs I-RECs in Q2 FY26; cumulative 82 lakh in H1 FY26, surpassing full FY25's 59 lakh.
• Battery storage progress: BESS cost reduction and VGF tenders accelerating; RUVNL discovered the lowest-ever BESS price of Rs. 1.78 lakhs/MW/month under VGF; battery storage expected to increase liquidity and volume on exchanges during daytime and evening hours.
• Capacity market discussions: Discussions are happening about developing a capacity market so distribution companies can buy capacity if they don't have adequate capacity to meet demand.

Goel: "As and when regulations are notified, we will apply for this also."

Power Demand & Supply Dynamics

• Muted power demand due to weather: Surplus rainfall from April to October crashed agricultural demand and lowered summer domestic demand; Grid India's 277 GW peak estimate versus actual ~250 GW.
• Daytime demand shifting: Lower daytime exchange prices are shifting demand to daytime hours; peak hour has moved from evening to daytime.
• Thermal capacity addition: MoP is monitoring a road map of 80 GW by 2032; leading power producers plan over 50 GW addition by 2032.
• Market development initiatives: Government and regulator are continuously working on developing the market; initiatives like Late Payment Surcharge, URS power sale mandate, Electricity Act amendment, VPPA provisions, and GNA implementation are all streamlining the sector.

Guidance & Commitments

Key Metrics