India's power merchants

Overview

The Indian government is attempting to increase private investment in power generation by supporting “merchant” power plants, which sell power in spot and short-term forward markets, and by licensing private power exchanges and traders. The goal is to overcome low realisations from subsidised prices enjoyed by some consumers by creating a short-term market that offers better returns – with IRRs in excess of 20 per cent – albeit in tandem with higher risks.

A wholesale interstate...

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