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IEX: Building Power Market for India...

IEX: Building Power Market for India. Devesh Singh – Regional Head (SR) Email: Devesh.Singh@iexindia.com Website: www.iexindia.com. In this presentation …. Power Trading in India Power Exchange - Mechanism Trading of Power Trading of REC. Promoters. Who are we ?.

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IEX: Building Power Market for India...

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  1. IEX: Building Power Market for India... Devesh Singh – Regional Head (SR) Email: Devesh.Singh@iexindia.com Website: www.iexindia.com

  2. In this presentation … • Power Trading in India • Power Exchange - Mechanism • Trading of Power • Trading of REC

  3. Promoters Who are we ? Joint Equity Partners: Technology :

  4. EA 2003 and enabling provisions on Power Market • Electricity Act 2003 • The intent and object of the EA 2003 is to develop power market through increased competition, more players and protect consumer interests • Development of Power Market – EA 2003, Section 66, “The Appropriate Commission shall endeavor to promote the development of power market…”,guided by the National Electricity Policy • Suitable safeguards to prevent adverse effect on competition • Recognize Trading as a distinct activity • Definition under section(2) (47): “Purchase of electricity for resale thereof” • Adequate and progressive provisions governing open access both : • to transmission networks (inter-state and intra-state) and • to distribution networks

  5. Introduction of New Products • Short & Medium Term transactions for peak/off-peak load balancing • Duration of Transactions (Few hours to 3 years) • Hours of Supply • Round the Clock • Evening Peak / Morning Peak • Night Off Peak / After Noon Off Peak • “As and When Available” Power for balancing Scheduled Interchanges • “Weekend / Holiday Power” • Banking of Power

  6. Indian Power Market Long Term Power Purchase Agreements Upto 25 Years OTC Licensed traders (42) Medium Term 3 months- 3years Short-Term OTC Intraday- 3 months Intraday - 3 months Exchanges 1. Intra-day 2. DAM 3. DAC 4. Daily 5. Weekly Balancing Market Unscheduled Interchange Real Time

  7. What is IEX Voluntary Delivery… On-line National • Spot • Intra-Day • Day-ahead • Forward • Weeks • Months StandardisedContracts Automated Electronic CentralCounterparty Exchange as Organized Marketplace Power-specific

  8. IEXcapabilities • Spot Auction (Closed or Open) for real time prices • Continuous Trading for Long-term contracts • Automated matching engine • Online risk management system • Online clearing & banking interface for margins & trade proceeds payment • Derivatives - for Hedging & Price Discovery • Forwards • Futures • Physical or financial settlement

  9. IEX Self Regulating Institution • Due diligence before Membership • Networth Criteria • Security deposit & Margins • Voluntary participation • IEX Counterparty • SLDC Clearance

  10. Tried & Tested Global Technology • NASDAQOMX • Six Sigma Efficiency • “Error Free” operation since inception • Capable for handling • Day Ahead Auction • Term Ahead Bilateral • Market splitting upto 30 areas • National, Regional and Statelevel Contract • RPS & Certificates Trading

  11. IEX: Market Segments… Day-Ahead Market (Since June,2008) Term-Ahead Market (Since Sep,2009) REC Market (Since February,11) • Intra Day • Day-Ahead Contingency • Daily • Matching through Continuous Trade Session • Weekly Contracts • Matching through • Open Auction • Hourly Contracts • Matching through • Close Auction* • REC Contracts • Matching through • Auction* • Market splitting feature * Without Market split feature

  12. Day-ahead Market

  13. IEX Bid Areas

  14. IEX - DAM Product Description [1/2] • Order Types: • Hourly or Portfolio Orders • Min 1 hour • Different Price-Quantity Pairs • Partial Execution Possible • Block Orders • Relational Block Bid • Consecutive hours during the same day • Customized block bid allowed • Firm commitment to purchase or sell • Order Characteristics • SLDC Clearance should be ≥ 1 MW • Minimum Order quantity can be less than 1 MW • Minimum volume step: 0.1 MW • Minimum price step: Rs 1 per MWh ( 0.1p/kWh)

  15. IEX - DAM Product Description [2/2] • Trading Availability • Every Calendar Day • Bidding • Double sided Closed Auction • Order Entry / revise /cancel • Entry of orders on D-1 from 10:00 hrs to 12:00 hrs related to Delivery Day (D day) • Contract • Clearing Price : Area Clearance Price • Cleared Volume • Total Contract Value: Cleared Volume multiplied by ACP • Final settlement adjusted for any force majeure deviations • Delivery Point • Periphery of Regional Transmission System in which the grid-connected entity, is located

  16. 17:30 10:00 12:00 13:00 14:00 15:00 18:00 RLDCs/SLDCs to incorporate Collective Transactions in the Daily Schedule NLDC to confirm acceptance. PX to send files to SLDCs for scheduling Market Participants to place their Bids NLDC to check for congestion. In case of congestion shall intimate PX regarding to the period for congestion and available margins PX to send provisional unconstrained solution to NLDC and flow on TS as informed by NLDC PX to send Scheduling Request to NLDC based on margin specified by NLDC Time Line for scheduling of Collective Transaction

  17. Portfolio A, MW 20 20 20 0 0 Portfolio B, MW 60 60 40 40 20 20 40 40 40 Portfolio C, MW 40 20 0 0 -40 -120 -120 -60 -80 -81 SUM, Purchase 120 100 80 80 60 60 60 40 40 20 20 SUM, Sale 0 0 -40 -120 -120 -60 -80 -81 Net transaction 120 20 -80 -100 100 80 80 0 -20 -21 -100 5 Price 4 4 Sale Purchase MCP: 3 2.5 Rs./kWh 3 2 2 2.5 1 MW 40 80 120 MCV (Market clearing volume): 60 Price Calculation Algorithm ….each hour Price (Rs./kWh) 0 1 1.1 2 2.1 2.5 3 3.1 4 4.1 20 Rs/kWh MW

  18. Trader Station: Single Bid

  19. Trader Station: Block Bid

  20. Treatment of Losses • Both Buyers and Sellers to absorb losses • Buyer • draw less than Contracted Power (Contracted Power – losses) • Seller • inject more than Contracted Power (Contracted Power + Losses) • Average Transmission Losses of the Region where the Entity is geographically located • Additional Losses for Wheeling, if necessary • To be notified in advance by NLDC • Only for Injection

  21. 100 MW at NR periphery 94 MW at S1 periphery 89.441 MW at Buyer End Treatment of Losses… forbuyer • NR (Regional) Loss: 6% • S1 (State) loss: 4.85 % • Buyer X bids for 100 mw at its respective regional periphery Bid Volume Scheduled Drawal <= SLDC Clearance NR Loss 6% S1 Loss 4.85% X (Buyer) Maximum Bid= Volume in standing clearance + Regional & State losses

  22. 111.14 MW Injected by seller at its end 106 MW at state periphery Treatment of Losses… for seller • SR (Regional) Loss: 6% • A1 (State) loss: 4.85% • Seller Y bids for 100 mw at its respective regional periphery Bid Volume Scheduled Generation <= SLDC Clearance SR Loss 6% A1 Loss 4.85% Y (Seller) 100 MW at regional periphery Maximum Bid= Volume in standing clearance – Regional & State losses

  23. Congestion Management

  24. Congestion Management SR WR Deficit 100 MW S3 50 MW RS 7500 Surplus 100 MW S1 50 MW RS 8000 B1 50 MW RS 8500 B2 150 MW RS 9000 S2 40 MW RS 8500 B3 30 MW RS 7000 S1 80 MW RS 9500 B1 100 MW RS 6000 S2 120 MW RS 8000 S3 100 MW RS 5500 Required Flow 100 MW B2 150 MW Rs 9/u S3 50 MW Rs 7.5/u S2 100 MW Rs 5.5/u B1 50 MW RS 8.5/u S1 50 MW Rs 8/u S2 20 MW Rs 8/u S2 40 MW Rs 8.5/u B3 30 MW Rs 7/u B1 100 MW Rs 6/u S1 80 MW Rs 9.5

  25. Congestion Management SR WR Deficit 100 MW Deficit 20 MW Surplus 100 MW Surplus 20 MW Allowed Flow 20 MW Lowest Buyers getting rejected Highest Seller getting rejected B2 150 MW RS 9000 S3 50 MW RS 7500 S2 100 MW RS 5500 B1 50 MW RS 8500 S1 50 MW RS 8000 S2 20 MW RS 8000 S2 40 MW RS 8500 B3 30 MW RS 7000 B1 100 MW RS 6000 S1 80 MW RS 9500

  26. Risk Management System Trader Member Facilitator Member • D-1 At 09:30 Hrs : Pre-trade Margin Check. • equal to the initial margins or average of last 7 days’ trading value, whichever is more. • D-1 At 12:30 Hrs : Preliminary Obligation Margin Check Preliminary Obligation =< Funds Available (incl initial margin) • Block funds. • D-1 At 15:30 Hrs : Pay-ins • At D+1 14:00 Hrs : Pay-out. • D-1 At 09:30 Hrs : Pre-trade Margin Check. • equal to the 100% of the bid value to be provided by Client directly to IEX in Client Settlement account • D-1 At 15:30 Hrs : Pay-ins • At D+1 14:00 Hrs : Pay-out.

  27. Performance so far… IEX won India Power Award for“ Best e-enabled consumer platform”17th November,2009

  28. OA status in India 17-Nov-14

  29. STATE No. of Private Generator Open Access Industrial Consumers Maharashtra       9 0 Rajasthan 10 48 Karnataka        15 0 Andhra Pradesh   10 17 Punjab            3 235 Orissa  1 2 Madhya Pradesh   10 4 Chhattisgarh  28 0 Haryana   1 28 Tamil Nadu 0 384 Gujarat 9 6 Uttarakhand 0 10 Arunachal Pradesh 0 3 Others 14 1 Total 110 738 Participation at IEX

  30. Over 2 years of Adequate Liquidity • 29 State Utility • 990+ Portfolios • 738 Direct consumer • 520+ participants on single day • Cleared Volume :19 Billion Units • DAM Volume Record • 59.98 MUs constrained(23rd September ’ 10) • 61.58 MUsunconstrained(23rd September 10)

  31. IEX monthly Average Price

  32. IEX Monthly Volume

  33. IEX Dominant Market Share (DAM+TAM)

  34. Who Can become Members of IEX ? Entities eligible for Membership: • Inter-State Generating Stations (ISGS) • Distribution Licensees • State Generating Stations • IPPs • CPPs and IPPs (with consent from SLDC) • Open Access Customers (with consent from SLDC) • Electricity Traders / Brokers

  35. Proprietary Member (right to trade and clear on its own account) Generator- Distribution licensees- IPPs - CPP- MPPs –O A consumers IEX Membership Category Professional (trade and clear on behalf of its Clients) NO CREDIT /FINANCING • Clients • Grid Connected • Generator, Distribution licensees, IPPs, CPP, MPP, OA consumers • Trader Client • With valid PPA Electricity Traders (trade and clear on behalf of its Clients) CREDIT /FINANCING

  36. Financial Requirements Membership Category: Proprietary / Professional Member The financial criteria for payment options available on IEX are:

  37. How to Move Ahead… • Become Member or Client (of a Member) • Rs 22.6 Lacs +2p/kWh transaction fee or • Rs 65.1 lacs + 1p/kWh transaction fee or • Client @ 1Lakh • Technical Requirements • Standing Clearance from UTs/State SLDC • ABT Meters • Sufficient transmission capacity • Connectivity with exchange can be done in two ways • Internet Immediate • Leased Line • Start Buying from IEX or Sell surpluses to IEX

  38. Financing by REC • Members can get finance from Rural Electrification Corporation to fulfill their trade obligations at a nominal interest rate(8.5%). • Procedure : • Member will apply to REC for sanction of credit limit. • After due verification, REC shall sanction the credit limits • Tripartite agreement between IEX – REC – Member • Member allowed to bid to exposure limit, net of utilization till date. • Each tranche of disbursements by REC to IEX on behalf of the participants shall be treated as a separate loan for the purpose of determination of loan period, payment of interest, other charges and repayment of loan.

  39. Renewable Energy Certificates

  40. Introducing an another option… REC Feed-in Tariff [State Regulated Tariff] REC Option Electricity Green Attributes Sale of electricity to DISCOMs at State regulated tariff REC [Solar & Non-Solar] Sale of Electricity at Market Price in open market Sell to DisComs at Price ≤ Pooled Cost of Power Purchase* Sale of RECs at Power Exchange * - Weighted Average Pooled Price at which distribution licensee has purchased electricity (including cost of self generation, long-term and short term purchase) in the previous year, but excluding the cost of RE power purchase

  41. Salient Features of REC Mechanism

  42. Trading at IEX Trading Day Last Wednesday of every Month Market Clearing Closed Double sided auction Trading Time 1300-1500 Hrs By 1530 Hrs Verification by Central agency for Valid REC by cleared seller at IEX By 1600 Hrs Central agency confirms REC By 1630 Hrs IEX finalizes trade By 1700 Hrs Buyer & Sellers informed to Central Agency By 1800 Hrs Invoice raised (proof of REC trade)

  43. Cleared volume : 600 RECs MCP: Rs 2200/REC 100 REC Sell @ Rs 1500 100 REC Buy @ Rs 3900 200 REC sell @ Rs 1700 300 REC Sell @ Rs 2000 2200 600 REC Buy @ Rs 2200 200 REC Buy@ Rs 1700 600

  44. REC - Fee & Charges State Nodal Agency Central Agency Central Agency IEX

  45. REC - Fee & Charges Impact Cost Impact of Fee and charges in First Year • Assumptions: • Project of Capacity = 1 MW • Capacity Utilisation Factor = 22% • No. of Units Generated = 19.27 MU • No. of REC Issued = 1927 Similarly the cost impact (in Paise / Unit) for:

  46. REC trade at IEX

  47. Benefit for RE Generators from REC Mechanism

  48. How to commence …participation on IEX • New Membership only for those interested in REC trading • Professional REC Member • Proprietary REC Member • New Clients : No Registration fees ( FY 11-12) • Buyers : Very Simple Process of filing registration with IEX • Sellers : Complete 4-step procedure before registration with IEX

  49. IEX InitiativesContinuous communication with Users IEXMonthly Bulletin IEX Daily SMS Service for Trade Details IEX hourly Trade Prices displayed on its website

  50. Thank You !!!www.iexindia.com Promoters Joint Equity Partners: Technology :

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