Transcript Slide 1

Session 3
Advance Metering Infrastructure, Power Trading and Cloud Computing
Transmission, Distribution and Metering India
(Enabling Smart Grid & Smart Metering)
Nov 10, 2010
Mrs. Rupa Devi Singh, MD & CEO
Power Exchange India Limited
www.powerexindia.com
Power Exchange India Limited
- Voluntary but Institutionally promoted
PROMOTERS
National Stock Exchange
(NSE )
National Commodity and Derivatives Exchange
(NCDEX)
EQUITY PARTNERS
Central Government Entities
State Government Entities
Private power producers
Power Finance Corporation
Limited
GUVNL
JSW Energy Limited
MPPTCL
Tata Power
WBSEDCL
GMR Energy Limited
The foremost power sector organizations in India, partnering for a vibrant power market
PXIL leverages on promoter and shareholder experience :
- NSE -largest stock exchange in India and 3rd largest in the world
- Govt entities discharging the Universal service obligation
- Leading Private producers in the country
www.powerexindia.com
Indian Power Sector
One of the largest interconnected power
systems in the world
Generation Capacity of 164,836 MW(Sep
2010)-800,000 GW by 2030
Energy deficit of about -9.6% and peak
demand deficit of -10.5% (Sep 2010)
Predominant focus on fossil fuels,
especially coal
Types of Transactions (Sep 2010)
2.00%
6.00%
Source: CEA, NLDC
*Deficit numbers for Jan 2010
4.00%
Long Term
PPAs
Bilateral
Short Term
Balancing
PXs
88.00%
www.powerexindia.com
Indian Power Sector -Installed Capacity
Installed Capacity as on September
2010
Installed Capacity
Coal
Gas
Diesel
Nuclear
Hydro
RES
Total
Installed Capacity-Fuel Mix
MW
87944
17374
1199
4560
37329
16429
164835
Source- CEA
www.powerexindia.com
Indian Power Sector
Demand – Supply Summary Forecasts
Energy Requirements (in BU)
Peak Load (in GW)
Energy Availability* (in BU)
Peak Served* (in GW)
969
690 624
Xth Plan
2006-07
Source: CEA
1392
218
1098
XIth Plan
2011-12
154
153
821
XIIth Plan
2016-17
100 96
115
Xth Plan
2006-07
XIth Plan
2011-12
XIIth Plan
2016-17
*Extrapolated by PXIL
Even with higher rates (6% y-o-y) of capacity addition and energy
generation, India would continue to remain a power deficit country
www.powerexindia.com
India’s Projected Energy & Capacity requirements
1200
8% Growth Rate
Cummulative Capacity @8% Growth
rate
9% Growth Rate
1000
Cummulative Capacity @9% Growth
rate
685
800
960
778
575
G
600
W
488
425
400
306
337
275
220 233
200
67 78
86 104
119
151
150
197
203
0
XI Plan XII Plan XIII Plan XIV Plan XV Plan
2027-32
2007-12
Immense task ahead in terms of capacity addition requirements
www.powerexindia.com
ROLE AND IMPACT OF POWER EXCHANGES IN ENERGY
MARKET DEVELOPMENT
www.powerexindia.com
Electricity Act 2003- transition to a market
Development of a multi-buyer multi-seller market in power
Compulsory Unbundling of utilities
Complete De-licensing of generation
“Trading” of Electricity – a licensed activity
Provides Consumer level choice of supplier
Separation of “transmission ownership” and “system operation”
Universal Open Access to transmission networks for all consumers over 1 MW
Robust Policy framework providing ground rules for competition
National Electricity Policy detailing roadmap for development of markets - PXs
Mandated Competitive procurement of power by uitilities
Global competitive bidding for projects in transmission
A proactive approach for development of a market in renewables
Committed the Nation to Development of a Vibrant Market in Electricity
www.powerexindia.com
Indian Power Sector – Post Reforms Transition
Monopoly
Purchasing Agency
Government
Ownership
(Vertically
integrated)
Public
Corporation
Commercializati
on
Competition
Introducti
on of
Power
Exchanges
Corporatization
Wholesale Competition
Private
Corporation
Retail Competition
Privatization
www.powerexindia.com
Products
Sl.
No.
Products
Term / Duration
1
Day Ahead
(10 AM-12 Noon)
For 24 Hrs the next day
2
Day-ahead-contingency contracts
3 PM to 4:30 PM
(after closure of Day ahead)
For 24 Hrs the next day
3
Weekly contracts
For pre-defined calendar weeks upto a month
ahead

Product Development at PXIL is a consultative process involving stakeholders of power sector

PXIL’s In-house software development enables dynamic responses to local market needs

Lack of clarity over regulatory jurisdiction impacting launch of forwards and futures
www.powerexindia.com
Volumes Transacted
Increased Transactions
Through Power Exchanges
Cumulative Monthly Transacted
Volumes
1600
Million Units
1400
1200
1000
800
600
400
200
Volumes Transacted
through PXs
0
1800.00
1600.00
1400.00
1200.00
1000.00
800.00
600.00
400.00
200.00
0.00
2009
2010
0
2
4
6
8
Month of FY 2010-11
Dec-09 Jan-10 Mar-10 May-10 Jun-10 Aug-10 Sep-10

Volumes on Exchanges have shown an increasing trend as percentage of total generation

Proactive approach from the regulator and efficient grid management by the system operator

Absence of Universal Service Obligation on Utilities resulting in reduced demand
www.powerexindia.com
Average Price of electricity
Traded over Exchanges
 2008 Rs. 7.57/kWh*
 2009 Rs. 5.73/kWh
Traded in OTC market
 2008 Rs. 7.04/kWh
 2009 Rs. 6.41/kWh
Average Daily Price (Rs./kWh)
Prices
Average Daily Prices exhibit a declining
trend
2009
2010
Days of the year
Prices in 2010 exhibit a further declining trend.
* Exchanges were in operation only during the last three quarters of the year

Efficient Price Discovery leads to Lower prices on exchange

Softer Prices at the exchange cast a spill over effect on the OTC market
www.powerexindia.com
Participation
29 States
More than 300 participants
More than 400 portfolios
Maximum Volumes Transacted
Day Ahead Market 65.5 MUs on 21st Aug 2010
Term Ahead (weekly) Market 22 MUs on for the delivery week
19/07/2010 to 25/07/2010

Access – Easy, Electronic and Efficient

Information Dissemination – Fast and reliable

Evolution of the market from utility based to industrial consumers oriented
www.powerexindia.com
Services
Information Dissemination
Region-wise hourly price data
Congestion occurrence and details
Close interaction with System Operator
Capacity Building – Power Markets Centre of Excellence
Power Markets Leadership Programme
 Jointly organized with premier institutes like IIM Ahmedabad/IIT Mumbai
 More than 150 participants
Power Markets Certification Programme
 Jointly organized with NPTI/ASCI/ISPE
 More than 50 participants

PXIL’s two pronged strategy for services

To be the thought leaders in the Indian Power Markets

Knowledge sharing amongst stakeholders through continuous engagement
www.powerexindia.com
Achievements of Exchanges
Lowered cost of participation as well as transaction cost
Increased participation with Industrial consumers, small captives
Increased depth and liquidity
Availability of different types of membership to suit the context
Lowered the minimum bid from 1 MW to 0.1 to 0.01 MW
Increased liquidity
Increased participation
Introduced Professional Clearing Membership as a category
Membership to funding agencies like PFC to provide funds for bids
New Bidding Methodology
Bidding in week ahead market which is quasi – continuous to suit Indian
context
www.powerexindia.com
Impact of Power Exchanges
Access
Utilities
Industrial Consumers
Open Access Consumers
Captive sellers
Transparency & Efficiency
Better price discovery
Spill over effect on OTC market
Demand Management
Freedom to choose amongst products for better portfolio management

PXs have demonstrated that National market for electricity is feasible

PXs have reached their second stage of development to be mandated platforms

Exchanges have made the Open Access Dream; A Reality
www.powerexindia.com
KEY ISSUES AND CHALLENGES
www.powerexindia.com
Electricity Act 2003- transition to a market
Compulsory Unbundling of utilities
Complete De-licensing of generation
Separation of “transmission ownership” and “system operation”
Universal Open Access to transmission networks
Consumer level choice of supplier
Development of a multi-buyer multi-seller market in power
The intent and the ethos of EA 2003 towards creating competition at the utility level
as well as the end customer level is still elusive
www.powerexindia.com
Key issues and Challenges-Multiple State level markets
Mixed response to national
legislation
Multiple States and Jurisdictions
Many still vertically integrated
Isolated nearly self sufficient
markets
Open Access to transmission lines
controlled by State Transmission
Utilities
Limited Inter - connector capacity
Inter-connector capacities not
with the exchanges
Exchanges and OTC compete for
capacity
www.powerexindia.com
Creating Markets
Historically illiquid market
Planned dependence on PPA-only 8% of electricity produced traded
through short term market
Trading of electricity only a few years old
A stable Day Ahead spot market on the Exchange
Pricing Challenges
Long term price view yet to emerge
Declining trend in merchant power prices-with near zero cost of
avoidable load
Exposure to international coal prices-consumer level pricing shocks ?
Sudden Unrestrained growth
High capacity addition might lead to excess supply or stranding
Issues on fuel availability /fuel mix may emerge in the long run
www.powerexindia.com
Transmission Pricing
Infrastructure
5 Electrical Regions, More than 25 Control areas
Transmission constraints across regions
Transmission pricing based on tenure of transactions
Long Term – More than 25 years
 Transmission access given for specific seller and buyer
 Transmission pricing based on cost of asset and socialized over all beneficiaries in the Region
Short Term – Upto 3 months
 Transmission access given for each transaction separately for a specific seller and buyer pair
 Transmission pricing arrived at as a percentage of long term transmission pricing
 Earnings used to reduce the cost of asset for long term transmission consumers
Day-Ahead Spot Market – For the next day only
 Transmission access for trades through Power Exchanges - Collective transactions
 Point of connection tariff – equal price for connection from anywhere in India
Balancing – Real time
 Power system frequency based pricing
 Penalty or reward based on deviation from schedule in any 15 min time block
www.powerexindia.com
Transmission Access
Priority to Transmission Open Access given to Long term, followed
by Short term and then power exchanges
Based on timing of application for Short Term
Congestion charge applied only on transactions happening through
PXs
Different Products treated differently
Collective transactions for DAS
FCFS for Term Ahead (Weekly) Product
www.powerexindia.com
FUTURE OUTLOOK
www.powerexindia.com
Mainstreaming Environmental Products
Renewable Energy Certificates
Market based instruments for trade between the Eligible Generating firms
and Entities carrying Renewable Obligation
Initially Non-transferable contracts, mandated to be traded on PXs
Energy Efficiency Certificates
Market based mechanism to promote energy efficiency in 9 identified
industrial sectors
Firms maintaining higher efficiency than set Targets would sell certificates
whereas firms with lower efficiency would need to buy
Industrial consumers also carry renewable purchase obligation
PXs evolve from being voluntary to mandated platforms
www.powerexindia.com
Longer Tenure Products
Delivery Based Forwards
Monthly Contracts


CERC has initiated the process to develop the product attributes to suit the market
For delivery contract
Ancillary Services Contract
Concept paper floated by NLDC
Financial Products
Envisaged in future
www.powerexindia.com
Future Outlook - PXIL
PXIL remains committed to delivering to its participants
contextual products and services on the following principles
Accessibility
Affordability
Reliability
Quality
Availability
www.powerexindia.com
THANK YOU
Contact Details
Address
POWER EXCHANGE INDIA LIMITED
"B" Wing, 3rd Floor, Exchange Plaza
Bandra Kurla Complex, Bandra (E)
Mumbai - 400051, India.
Email
[email protected]
Website
www.powerexindia.com
Telephone No:
Fax No:
+91 22 2653 0500
+91 22 2659 8397
www.powerexindia.com