As India makes a caliberated withdrawal from the world’s largest lockdown, the country’s two power exchanges, the Indian Energy Exchange (IEX) and Power Exchange India Ltd (PXIL), launched their real-time market (RTM) platforms for electricity trading on June 1.
The RTM is a half-hourly market, comprising 48 auction sessions of 15-minute duration each. The auction sessions are conducted during even time blocks of the hour, with delivery commencing from one-hour after the closure of the trading session.
The RTM trading that was supposed to originally start from April 1, was delayed by the COVID-19 outbreak and the subsequent lockdown announced by the Central Government for its containment.
But as they say, better late than never. And if the initial reactions from the exchanges is anything to go by, the trends are quite encouraging.
This will also give a major push to India’s plans for developing a robust cross-border trade in electricity with Bangladesh, Bhutan, Myanmar, Nepal, Bhutan and Sri Lanka. The formation of a robust cross-border framework in the South Asia region is expected to bring down the cost of electricity and allow India to achieve the flexibility to regulate the intermittency of power generated by its wind and solar farms.
Encouraging Response from Consumers
The country’s leading power exchange, IEX said that it received an overwhelming response from distribution companies, power generators as well as commercial and industrial consumers on June 1, the first day of trading on its RTM. The new market segment was operationalised at the IEX platform at 10.45 PM on May 31 for delivery at 12.00 AM on June 01, 2020.
“This reinforces IEX’s belief that real time trading of electricity would significantly help utilities and open access consumers manage power demand-supply variation and meet 24x7 power supply aspirations in the most flexible, efficient and dynamic way. RTM will support the utilities in reducing dependence on grid deviation framework, reducing penalties and enable a safe and secure grid,” the exchange said in an official statement.
The launch witnessed the participation of more than 80 market participants, including all major distribution utilities and generating companies. It also saw participation from industrial customers through open access, indicating high interest from this segment.
The real time market traded 3.41 million units (MU) volume during auction sessions on day one of the launch.
The platform witnessed a significant sell side liquidity at about 10 times of the total buy volume leading to very attractive prices for the buyers. The average price discovered on day one was Rs 1.55 per unit. The auctions saw the price go as low as Rs 0.10 per unit on the platform.
Meanwhile, the first trade conducted on PXIL’s platform were from clients of Kreate Energy Private Ltd and PTC India Ltd. The initial auction sessions also saw participation from distribution utilities of Telangana, Meghalaya, Manipur, Sikkim and Jharkhand.
PXIL also offers a decision support system for better management of client portfolio on its trading platform PRATYAY. PRATYAY offers trading in day ahead spot, term ahead market, intra-day and day ahead contingency in physical segment and renewable energy certificate (REC) trade in the environmental segment.
This is the first exchange contract that would allow even generators with long-term power purchase agreements (PPAs) to participate on the exchange where they can sell their unrequisitioned surpluses.
“With the launch of RTM, the Indian energy markets are moving towards global standards of electricity trading and establishing the new energy order in the country. It will support the utilities in reducing dependence on grid deviation framework, of the order of 20 billion units (BU) in fiscal year 2020,” averred Rajiv Srivastava, CEO & Managing Director, IEX Ltd
Commenting on the development, Prabhajit Kumar Sarkar, Managing Director & CEO of PXIL said, “The Real Time Market is a major evolutionary change in the dynamics of the power market in our country. With RTM, both sellers and buyers now get an opportunity to continuously manage their portfolio optimally through a transparent and efficient marketplace.”
A CERC Endeavour
The real time market is an endeavor by the power sector regulator, Central Electricity Regulatory Commission (CERC), to make the power market dynamic by enabling trade in electricity through half-hourly auctions.
The market is expected to greatly aid the distribution utilities to manage power demand-supply variation and meet 24x7 power supply aspirations in the most flexible, efficient, and dynamic manner. Till now the utilities managed unplanned changes in schedule through the Deviation Settlement Mechanism and in the process, ended up paying penalties. RTM will facilitate utilities to reduce dependency on deviation framework and save on the huge penalties. It will also support the grid operators to enhance overall safety and security of the grid.
With the fast-paced shift towards renewable energy, RTM will facilitate the distribution utilities to manage the challenge of intermittency associated with renewables. The market will help the utilities and system operators to forecast and schedule green energy in an effective way thereby supporting the national green energy aspirations towards building India as a sustainable green energy economy.
RTM would also provide an opportunity to generators to sell their unrequisitioned capacity thereby enabling efficient use of generation capacity.