NSE Electricity Futures Emerge as Key Benchmark in India's Power Market

The National Stock Exchange of India (NSE) has announced that its Electicity Futures contracts are gaining recognition as a key benchmark for price discovery in the country's electricity market. 
During a recent reverse auction to procure 50 million units of round-the-clock power, the price discovered in the Term-Ahead Market (TAM) was closely aligned with contract rate of the NSE Electricity Monthly Futures. This strong convergence underscores the contracts’ role as a reliable price indicator, that helps market participants in making informed procurement and risk management decisions.

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Transparency and Market Efficiency

NSE Electricity Futures reflect a unified, volume-weighted average price across all three power exchanges. It covers various segments such as conventional, renewable, and high-priced power. These contracts enhance transparency and strengthen price discovery mechanisms by bridging the physical and financial markets.
The growing use of NSE futures prices as a reference for physical TAM transactions marks a significant stride toward India’s broader goal of “One Nation, One Grid, One Price.” The convergence between futures and spot prices is also improving the alignment between short-term trades and long-term price expectations within the power sector.

Contract Structure and Market Impact

Introduced in July 2025, NSE electricity futures are standardised and exchange-traded contracts that cover 28 to 31 days of continuous electricity delivery. As they do not involve physical delivery or transmission scheduling, the contracts serve as a flexible financial tool complementing the physical power market.

Industrial users, utilities, and traders are highly relying on these contracts to hedge against price fluctuations and manage market risk. Since their launch, trading activity in electricity futures has expanded rapidly, with volumes now approaching those of the spot market — a clear indication of the segment’s growing acceptance and importance in India’s evolving power landscape.

What's Ahead?

Building on this momentum, NSE plans to introduce quarterly and yearly electricity derivatives, along with Contracts for Difference (CFDs) tailored to renewable energy. 
The rise of NSE Electricity Futures marks a major milestone in India’s journey toward a more transparent, efficient, and unified electricity market, one that supports both economic growth and the nation’s energy transition objectives.