The evolution of power market structures: Strategic approaches for the Indian electricity market

This paper explores strategies for India’s evolving power market, focusing on the renewable energy integration and competitive dynamics introduced by the Electricity Act 2023. With India targeting 450 GW of renewable energy by 2030, it identifies a critical gap in short-term power market models vital for optimizing portfolios and managing fluctuations. The study evaluates five major investment strategies: conventional flexible Power Purchase Agreement (PPA), tariff pass-through approach, contract for difference, physical hedge, and renewable energy generator flexible PPA, using mean and standard deviation for present value and net present value. Findings reveal significant variability in flexible PPAs, underscoring the importance of short-term trading models to enhance adaptability. To address market power, the study evaluates the Herfindahl-Hirschman Index and implements improvement strategies, including adding distributed generation, regulatory oversight, and regional expansion. These approaches aim to enhance competition and diversification in the energy market. The paper proposes a hybrid approach combining long-term PPAs for base loads with short-term markets, leveraging transactive energy facilitated by blockchain-enabled smart contracts for efficient procurement and management. By reviewing policies, power exchanges, and literature, the study provides actionable insights into regulatory reforms, advanced trading mechanisms, and decentralized market architectures, emphasizing short-term markets as crucial for India’s sustainable power transition and enhanced competition.