India's power demand surged in February, but surprisingly, spot power prices on the Indian Energy Exchange remained low, unlike previous years when spot prices rose with increased demand. Spot prices averaged around Rs 4.36/KwH in January-February, as power demand touched 234 GW in February.Industry experts observed that India experienced milder winters, with temperatures staying above normal in January — the third warmest since 1991. The trend has continued in the current month as well, leading to a steady rise in power demand in most regions.On the fuel side, there has been ample availability of coal this fiscal. Besides, the government took various initiatives, including extension of Section 11 of the Electricity Act, 2003, till Feb. 28, that mandates running thermal power plants including imported coal-based power plants at full capacity in extraordinary situations to ensure sufficient fuel supply. However, increase in merchant supplies to the exchange in the last quarter has helped meet the demand without affecting the prices.“Between February 1 and 24, day ahead market (DAM) sell bids rose 30% year-on-year to 9.3 billion units, compared with 7.2 billion units in the same period last year,” Rohit Bajaj, joint managing director of IEX, told NDTV Profit.“This increase in sell liquidity helped keep the average market clearing price at Rs 4.36/unit (during Feb 1-24, 2025), as compared to Rs 5.05/unit during Feb. 1-24, 2024, a decline of 13.7% YoY,” Bajaj said.Government Mandates Two-Hour Energy Storage Integration With Solar Projects In Future TendersAccording to government estimates, peak power demand is expected to rise to 270 GW in 2025 from 256 GW in 2024. Ample measures are being taken to infuse liquidity in the system, and the government also announced it could further extend Section 11, ensuring mandatory supplies of electricity by all thermal power generating companies, especially those using imported coal.Further, with revival of additional 10-15 GW of generation capacity from total 47 GW under outage and continued additions in renewable and thermal capacity, supply should remain robust. This will provide opportunity for distribution companies to meet demand from the market, Bajaj said.The peak power demand on Feb. 23 was 218 GW, of which close to 1,000 MW was met by renewable sources such as solar, hydro power and wind. Solar contributed close to 553 MW, hydro contributed 260MW and wind contributed 160 MW to meet the maximum demand during the day.This has happened because India’s renewable generation has already crossed 300 GW, where solar alone has crossed 100 GW capacity and has started to contribute to India’s growing demand.The maximum power demand currently hovers around 230 GW. Once this crosses the 250 GW-mark, it is likely the demand on exchanges would go up, eating into the surplus supplies.Rupesh Sankhe, vice president and power sector analyst at Elara Securities said, the supplies to the exchange have risen to 22 GW, compared with demand of 12 GW at present. This has allowed prices to remain range bound. "As India's power demand continues to rise, the spot market will likely see increased activity, driving prices and trading volumes. Overall, while the current low spot power prices at IEX may seem counterintuitive, they reflect the changing dynamics of India's power market. As the country continues to evolve its energy landscape, the spot market is poised to play a vital role in meeting India's growing power demands," Sankhe said.Cairn Oil Plans Rs 5,220-Crore Investments In Shale, Oil Recoveries, Sees North East As New Rajasthan . Read more on Business by NDTV Profit.