September 21, 2025

Hold onto your electricity bills because there’s a fascinating story behind why you’re paying more to keep your power steady! A study by the Goa Institute of Management and the UK’s Kingston University shines a bright light on India’s rising electricity prices. It turns out that the prices you see a day before—called day-ahead prices—are often much higher than the prices at the actual time you use electricity, known as real-time prices. This gap is called the ‘risk premium’ and tells something interesting: consumers are willing to pay extra just to avoid uncertainties and power cuts. Global troubles like the Russia-Ukraine war and wild swings in coal prices have shaken India’s power markets hard. According to Prakash Singh, Associate Professor at the Goa Institute of Management, "The Russia-Ukraine war significantly increased risk premiums and market volatility." He explains, "The increases in coal prices drove risk premiums higher by exacerbating supply-side uncertainty, while subsequent price corrections significantly reduced them." He adds that this risk premium is even bigger during busy hours, especially between 6 p.m. and 11 p.m., and on weekends, it can jump up to a stunning 13%! This shows how severe supply shortages force people to pay more just to keep lights on. Geopolitical tensions and uncertain government policies also push these risk premiums higher. Mr. Singh warns, "India's electricity markets stand at the crossroads of global turbulence and domestic supply constraints. Without rapid diversification and smarter market design; Indian consumers and businesses will bear the brunt of volatility triggered by distant geopolitical and commodity shocks." His call is clear: "Addressing these vulnerabilities now is key to ensuring energy security and affordability for the future." Adding to this, Jalal Siddiki, senior lecturer from Kingston University and co-author of the study, points out solutions. He urges India to "diversify its energy mix away from coal and invest in renewable energy with storage solutions." The study offers regulators fresh insights to redesign electricity markets, cut inefficiencies, and better handle price swings. It also guides utilities, producers, and traders to create smarter plans to fight global uncertainties. This first-of-its-kind research dug deep into hourly and 15-minute electricity price data from June 2020 to April 2024, gathered from the Indian Energy Exchange. It clearly links the Russia-Ukraine war with growing risk premiums in India’s electricity spot market. In summary, the study shines a spotlight on India's power sector vulnerabilities and urges swift action to build energy resilience for a stable and affordable power future. So next time you see that electricity bill, remember—you’re paying a bit extra to keep your world bright, thanks to faraway wars and coal chaos!

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Tags: India electricity prices, Russia-ukraine war, Coal price fluctuations, Risk premium, Energy security, Renewable energy,