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Power Trading

Power Trading. The Indian electricity sector has grown manifold since independence making India the third largest producer of electricity in Asia. The installed capacity has increased from 1362 MW in 1947 to about 134000 MW as at end March 2007.

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Power Trading

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  1. Power Trading • The Indian electricity sector has grown manifold since independence making India the third largest producer of electricity in Asia. The installed capacity has increased from 1362 MW in 1947 to about 134000 MW as at end March 2007. • While there are pockets of surplus power due to projected load growth not taking place commensurate with addition in generation capacity, there still exists a gap between supply and demand of power in large parts of the country. Inherent diversity in demand of various States in the country also results in periods of seasonal surplus in one State or Region coinciding with periods of deficit in another.

  2. Power Trading • Inter-regional power transfer capacity of around 13500 MW is currently available, which is expected to increase further to about 37000 MW in the coming few years. With transmission capacity being put in place for large size inter-State projects, the inter-regional transfer capacity is likely to get further enhanced. Substantial opportunities therefore exist to improve the economic efficiency and security of supply through trading of power. • In order to meet the growing demand for power, potential for large-sized private projects has been recognised. Alongside this the Govt. of India also developed the Mega Power Policy through which, the development of large private power projects was foreseen. These projects are to supply power to multiple states and this usually leads to difficulties in reaching agreement on risk sharing as well as on payment security mechanisms, reducing the credit-worthiness of the project. Therefore, a single credit-enhancing agency, which could buy power from these private power stations and sell to the State Utilities and other buyers, was felt inevitable. Such an entity could manage the risks effectively to provide adequate comfort to investors and lenders.

  3. Power Trading Corporation of India Limited • Power Trading Corporation of India Limited, incorporated in 1999, under the Companies Act was setup to achieve the aforementioned objective and also to act as an entity, which could undertake trading of power to achieve economic efficiency and security of supply. • One of the mandates for PTC is to develop a full fledged, efficient and competitive market mechanism for trading in power, resulting in reliable, economic and quality power in the long term. Essentially an integrated national power market needs to be developed in the long term, and this is what PTC has taken as the core of its statement of purpose. • The increase in the volumes calls for a higher capitalized venture (started with an authorized capital of Rs 1500 Million and paid up capital of Rs. 60 Million and presently at Rs. 915 Million) and PTC has made plans to increase its paid up capital base to Rs 1 billion in the current financial year and eventually to Rs 7.5 billion in the next few years. It is a reflection of the market confidence in the PTC concept that leading FIs (IDBI, IDFC, IFCI, GIC and LIC) and Power Sector Majors viz. DVC, Tata Power & NHPC (presently one of the promoters) have picked up equity in PTC in addition to the original promoters (NTPC, POWERGRID & PFC). • Set up in year 1999 • Nodal agency for exchange of power with neighbouring countries. • Mandated for power trading to optimally utilise the existing resources in the country

  4. Functions of the Power Exchange To provide an equitable and transparent platform for trading of electricity for physical delivery. To provide specialized, advanced, automated and modern facilities for nation-wide trading in electrical power with access to all eligible players in the electrical power market. To act neutrally and ensure that the participants have nondiscriminatory access to information relevant to the price formation. To contribute to an efficient price discovery by providing effective, appropriate and confidence-inspiring trade systems, and also rules for trading. To simultaneously handle energy contracts and transmission clearance through a single window including congestion management. To address financial risk and to provide the participants with sufficient guarantees for settlement of the trades. To organize trading and scheduling aligned with Grid Code. Real-time deviations from schedules shall be settled under UI mechanism as per Grid Code. To generally promote trading and competition in supply of electricity.

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