Volatility Shockwaves: How Global Crises Spike India's Electricity Prices

A recent study jointly conducted by the Goa Institute of Management and Kingston University has highlighted a direct impact of global crises, such as the Russia-Ukraine war and fluctuating coal markets, on India's electricity prices. The research, published in 'Energy Economics,' underscores the higher premiums Indian consumers pay to ensure uninterrupted power supply.

Prakash Singh, Associate Professor at Goa Institute, explained how geopolitical tensions and coal price hikes have led to increased risk premiums, reflecting a willingness among consumers to pay extra amid supply uncertainties. He stressed the need for market diversification and smarter design to mitigate these impacts and ensure future affordability.

The study calls for a significant shift in India's energy mix, away from coal towards renewables, to better manage external shocks and enhance the power sector's resilience. Drawing on detailed data, it offers regulators and market participants critical insights into minimizing inefficiencies and hedging against global volatility.

(With inputs from agencies.)