Power exchanges account for 51% of short-term trade | Economic Times

New Delhi: Power exchanges accounted for 51% of the total short-term trade in 2020, marking the beginning of a significant transformation in the Indian power market that has so far been dominated by bilateral deals.Increased share of electricity trade on exchanges is desired world over for deep, competitive market structure.The pandemic-struck 2020 witnessed an interesting shift in the short-term power market of the country. While the competitive exchange market expanded to 51% of the total short-term electricity deals in the country against 37% in 2019, the bilateral trade shrunk to 32% from 46%, data available with the Central Electricity Regulatory Commission (CERC) and exchanges showed.Experts and state governments said the trend was not specific to 2020, though it being an exceptional year, and they expect the share of exchanges in electricity trade to rise further as they offer good discounts over other deals.During the calendar year, the average spot price of electricity in the day-ahead market of power bourses was 16% lower than that in 2019.However, data available with CERC for January-October 2020 showed that the overall short-term purchase of electricity by discoms declined by 10% over the same period a year ago. 80321590The share of the two power bourses—Indian Energy Exchange (IEX) and Power Exchange of India (PXIL)—in total energy consumed increased to 5.2% in January-October 2020 from 4.1% in the corresponding period a year ago. Some of the developed countries like the UK and Germany meet half of their electricity demand through power bourses.IEX chairman SN Goel said 2020 witnessed introduction of two new market segments — the real time market or RTM (for short notice, round the clock power purchase) and the green-term ahead market (for trade in renewable energy). He said ample availability of power during the year resulted in competitive prices.“On a year to date basis, our average price of electricity at 2₹.76 per unit has contributed significantly to the 30% YoY growth in electricity volumes on the exchange. We are now preparing towards introduction of longer duration electricity delivery contracts up to 365 days as well as the green day ahead market,” he said. Uttar Pradesh additional chief secretary for energy Arvind Kumar said due to low prices, procuring power from the exchange during different times of the year turns out to be a better proposition for reducing power purchase cost.A top official in Andhra Pradesh said the state saved ₹1,024 crore or ₹1.43 per unit of electricity purchased during April-December 2020 by purchasing power from exchanges.India proposes to move to global practice of selling entire power generation through exchanges to enable deepening of the markets. Also, the power ministry in July last year approved trade of electricity derivatives and forward contracts.