Power trading may touch Rs 40,000 cr
Electricity trading volume on the New Delhi-based Indian Energy Exchange (IEX), is expected to cross the Rs 40,000-crore mark in the next five-year period from the present physical market volume of Rs 4,500 crore, a top industry official said.
By PTI |
MUMBAI: Electricity trading volume on the New Delhi-based Indian Energy Exchange (IEX), is expected to cross the Rs 40,000-crore mark in the next five-year period from the present physical market volume of Rs 4,500 crore, a top industry official said.
For the first time, power will be traded like a share or a commodity on the Indian Energy Exchange, India's first ever online electricity trading platform expected to commence operations soon. The capital outlay for the IEX in the first phase is estimated at Rs 25 crore.
"The power trading Indian Energy Exchange is expected to witness a 20-25 per cent short term market in the next five year period valued at Rs 40,000 crore. Today, the physical market of power trading is estimated at 3 per cent (Rs 4,500- crore) of the total volume of Rs 1,50,000 crore, which is dominated by Power Trading Corporation," MCX's Deputy Managing Director, Joseph Massey, told reporters here on Wednesday.
Indian Energy Exchange (IEX) is co-promoted by Power Trading Corporation (PTC) and Financial Technologies Group (FTIL), will have a 26 and 49 per cent stake respectively. The balance 25 per cent will be equally held by Tata Power, Reliance Energy, Lanco, Adani Enterprise and Rural Electrification Company (REC).
"IEX is India's first power exchange and it is one of the key policy initiatives of the government for removing the imbalance of power in various parts of the country. This will unlock untapped potential power and also encourage generators to produce at peak level. It is a positive and futuristic step in power sector reforms," PTC's Chairman and Managing Director, Tantra Narayan said in a statement here.
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"With the exchange in place, the capacity utilisation of various power plants will improve. There is a lot of underutilised captive capacity at present which will get unlocked," Massey said.Price signals from the exchange will encourage producers to sell surplus power or produce it specifically for selling it on the exchange. Besides, the power exchange will make investors and financial institutions more comfortable in funding new projects, Massey added.
Explaining as to how the exchange will function, Massey said, "IEX will collect the available transfer capability on all inter-regional links from Regional Load Dispatch Centres (RLDC). It will then collect bids and offers from potential buyers and sellers during the bill-call period. Members may place their orders during the bill-call period between 10-12 hours of the auction day."
The bids and offers will be processed to determine market clearing price (MCP) and market clearing volume (MCV). All successful bidders will pay or receive common uniform prices arrived at. RLDC will allocate appropriate transmission capacities for the trades settled through the exchange depending on the capacities requisitioned.
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"IEX will offer Day Ahead Market (DAM) with double-sided closed, hourly and block order, scheduling and transmission capacity reservation support, daily settlement and secured payment. It also proposes to offer other forward products on a week-ahead and month-ahead basis in the near future," IEX's Vice President, Rajesh Mediratta said. IEX trading terminals will display all prices and quantities, which will encourage participants to use the exchange mechanism, Mediratta said, adding that IEX would unlock a deep and liquid market that will promote competition among stakeholders and lead to better capacity utilisation and smoothening of prices for consumers.
The exchange has launched its membership drive scheduled to take place at Mumbai, Delhi, Hyderabad, Guwahati and Kolkata respectively. The exchange and its membership will be governed by the regulatory framework of the Central Electricity Regulatory Commission (CERC).
"The prospective members includes captive power producers (CPPs), independent power producers (IPPs), inter-state generating stations (ISGSs), electricity traders and large capitalised corporate traders, who may trade for other large clients and top brokers," Massey said.
The exchange has already tied up with OMX Technology of Sweden, the technology provider of the world's leading power exchange Nordpool. Financial Technologies and OMX will together provide technology support to IEX.
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