DAM, GDAM, RTM: how India's power exchanges actually work

The large majority of electricity in India is sold under long-term power purchase agreements between generators and distribution companies (DISCOMs), signed years before the power flows. The short-term market — power exchanges, bilateral trades through licensed traders, and the deviation settlement mechanism — accounts for a modest share of total generation. But it prices the marginal unit, and the marginal unit sets the reference for everything else: PPA negotiations, open access economics, storage business cases, and DISCOM procurement strategy.

India has three power exchanges — the Indian Energy Exchange (IEX), Power Exchange India Limited (PXIL), and Hindustan Power Exchange (HPX) — with IEX handling the overwhelming majority of traded volume. Exchange trades are "collective transactions" regulated by the Central Electricity Regulatory Commission (CERC) and scheduled through the national and regional load despatch centres like any other interstate flow. Delivery is physical: this is a market for electricity, not a financial derivative of it.

A Double-Sided Auction, 96 Blocks at a Time

The DAM is the anchor segment. Every day, buyers and sellers submit bids between 10:00 and 12:00 for delivery across the following day, which is divided into 96 blocks of 15 minutes each. Bids are price–quantity pairs per block; participants can also place block bids that span multiple consecutive blocks on an all-or-nothing basis.

Because both sides bid — it is a double-sided closed auction — the exchange constructs an aggregate demand curve and an aggregate supply curve for every 15-minute block. The Market Clearing Price (MCP) is discovered where the two intersect. It is a uniform-price auction: every cleared buyer pays the MCP and every cleared seller receives it, regardless of what they bid. Bidding your true willingness to pay is therefore the rational strategy, which is what makes the discovered price a credible signal.

When the interregional transmission corridors cannot carry all the cleared trades, the market splits: congested regions clear at their own Area Clearing Price (ACP), with surplus regions clearing lower and deficit regions higher. Results are published in the early afternoon, giving every participant — and every observer — a forward curve of 96 prices for tomorrow. That curve is one of the most-watched datasets in the Indian power sector: it moves DISCOM procurement decisions, storage dispatch plans, and the internal benchmarks against which PPAs are negotiated.

Launched in October 2021, the GDAM runs alongside the conventional DAM in the same bidding window, but the power traded carries its renewable attribute with it. Sellers are renewable generators; buyers — typically DISCOMs and open access consumers — can count purchased green power toward Renewable Purchase Obligation (RPO) compliance.

Price discovery works the same way: double-sided auction, uniform clearing, 15-minute blocks. GDAM prices track conventional DAM prices closely but can diverge when compliance demand is strong — the spread between the two is effectively the market's price on the green attribute itself. For a renewable generator with uncontracted capacity, the GDAM offers a route to monetise both the energy and its greenness in a single trade.

The RTM, launched in June 2020, is the segment closest to delivery. It runs 48 auction sessions a day — one every half hour, around the clock. Each session is a double-sided closed auction, exactly like the DAM in miniature, clearing power for a half-hour delivery period (two 15-minute blocks) that begins after a gate closure roughly an hour ahead of despatch.

The RTM exists because forecasts are wrong. A DISCOM whose demand came in above its day-ahead estimate, a wind generator whose output is falling short of schedule, an industrial consumer whose process tripped — all of them can correct their position in the RTM instead of deviating from schedule and paying deviation charges. As renewable penetration grows, the RTM increasingly carries the system's intermittency, and its prices are correspondingly more volatile than the DAM's.

Between the day-ahead auction and bilateral PPAs sits the Term-Ahead Market (TAM): intraday contracts, day-ahead contingency, and daily, weekly, and monthly contracts stretching from the same day out to several months ahead. These are matched continuously or in periodic sessions rather than cleared in a single uniform auction, and volumes are thinner than the DAM's. For buyers, the TAM is chiefly a hedging instrument — locking in a known price for a known period when the day-ahead outlook is uncomfortable.

Exchange prices are shaped by a handful of recurring structural patterns:

• Solar hours: as solar capacity has grown, midday blocks routinely clear at very low prices — the supply curve is flooded with must-run generation bidding near zero. The cheapest power of the day is now typically found between late morning and mid-afternoon
• The evening ramp: when solar output collapses into the evening demand peak, the system leans on coal, hydro, gas, and storage. The evening blocks are persistently the day's most expensive, and the morning pickup shows a smaller twin of the same effect
• Seasonality: summer heat and agricultural loads push demand and prices up through the hot months; a good monsoon brings wind and hydro onto the system and softens prices; winter evening peaks tighten the market again in northern India
• Supply shocks: coal stock positions, plant outages, transmission constraints, and heatwaves can push prices to the regulatory ceiling for sustained stretches — the price cap exists precisely because scarcity has tested it

• Open access consumers: buying from the exchange through short-term open access is a real alternative — or complement — to a PPA. But exposure to block-wise prices means the consumption shape, not the annual volume, decides whether it is a good one
• IPPs with merchant exposure: any generator with untied capacity, expiring PPAs, or surplus beyond contracted volumes is selling into these markets — and the difference between selling into depressed midday blocks and high-value evening blocks is the difference between thin and healthy returns
• Traders and DISCOMs: portfolio managers arbitrage between segments daily — buying day-ahead against real-time expectations, and using the TAM to hedge known deficits
• Anyone signing a PPA: the exchange price curve is the opportunity cost behind every PPA negotiation. A fixed tariff is cheap or expensive only relative to what the market clears at, block by block

The three segments are best read as one price signal sampled at different distances from delivery. The DAM tells you what the market expects, the RTM tells you what actually happened, and the spread between them tells you what forecast errors cost. Any serious analysis of open access purchase, merchant sale, or storage arbitrage has to engage with that signal at its native resolution: 15 minutes.