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Power Exchange India Limited
Promoters
Partners
Promoters
National Stock Exchange
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Incorporated in 1993 and commenced business in June
1994.
Became ‘Largest’ Stock exchange in India in October 1995.
Current Market share – 70% in equity trading and 98%; in
F&O trading
4th largest exchange in the World in terms of no. of trades
National Commodity & Derivatives Exchange
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NCDEX is the only commodity exchange fully owned by
Institutions.
Promoted by reputed Institutions like LIC, Canara Bank,
NABARD, CRISIL, Goldman Sachs, etc
Both institutions are committed to market development
Equity
Partners
Power Finance Corporation Ltd:
Power Finance Corporation (PFC) is one of the Nav-Ratna PSUs of
Govt. of India. Dedicated to Power Sector financing and committed
to the integrated development of the power and associated sectors.
PFC has also taken a Professional Clearing Membership (PCM) of
PXIL to provide funding supports to entities buying and selling power
on the exchange.
Gujarat Urja Vikas Nigam Ltd:
The holding company for power utilities of Gujarat, GUVNL
represents the progressive face of Vibrant Gujarat and is engaged in
the business of bulk purchase and sale of electricity, supervision, coordination and facilitation of the activities of its six subsidiary
companies viz. the generation, transmission and distribution
companies.
Support from key Public-Sector entities
Equity
Partners contd..
WBSEDCL
Is responsible for distributing power in the State of West Bengal at 33KV
level and below and has a consumer strength of over 68 Lakhs.
WBSEDCL received the "Power India 2008 Excellence Award" for
undertaking Power Sector Reform Initiatives. Earlier, under the
provisions of West Bengal Power Reform Scheme, 2007, West Bengal
State Electricity Board was restructured and split into two companies
namely West Bengal State Electricity Transmission Company Limited
(WBSETCL) and West Bengal State Electricity Distribution Company
Limited (WBSEDCL).
MP Power Trading Company Ltd
MP Tradeco inherited the rights and obligations of the erstwhile MPSEB
and is incharge of bulk purchase of electricity from the generating
companies and bulk supply of electricity on short, medium and long term
basis to the three Discoms in the State of Madhya Pradesh.
Support from key Public-Sector entities
Equity
Partners contd..
JSW Energy
One of the top energy companies. The company has generating capacities in
Karnataka and plans to set up additional capacities in various States of India
including Gujarat, Jharkhand, West Bengal, Andhra Pradesh and Sikkim.
Tata Power Trading Company Limited (TPTCL):
Is a wholly owned subsidiary of India's largest private sector power utility,
the Tata Power Company Limited. The first company to be awarded a power
trading license by CERC, TPTCL caters to various State Utilities, CPPs and
IPPs across all the regions in India. Besides electricity, TPTCL provides
solutions for procurement / trading in other products such as Coal, Gas/LNG
Carbon Credits.
GMR Energy
One of the largest private sector power generators based out of India, GMR
has made significant forays in the infrastructure development in India. GMR
plans to set up power plant in Nepal in addition to India.
Deep sectoral experience of equity partners
Supportive Policy and
Regulatory Framework for Power Exchange
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2003 June:
Enactment of Electricity Act ’03 which ushered in development
of an ‘organized’ electricity market.
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2005 February:
Promulgation of National Electricity Policy by Ministry of Power
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2006 July:
CERC issued ‘Staff Paper on Developing a Common Platform for
Electricity Trading’, whereby, it recommended a spot (dayahead) market for electricity trading.
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2007 February:
CERC issued ‘Guidelines for Setting Up Power Exchanges’
Supportive Policy and
Regulatory Framework for Power Exchange
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2008 January:
CERC finalized new ‘Open Access Regulations for Inter-State
Transmission’, which includes guidelines for Power Exchange based
transactions (Collective Transactions)
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2008 June:
Guidelines for Scheduling of transactions on Exchanges
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21st October 2008:
Finalization of operating instructions in a multi-exchange scenario
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22nd October 2008:
Start of PXIL’s operations!!
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20th January 2010:
CERC Notifies “Power Market Regulation 2010”
Demand Management
Framework
 Utilities have a Base load which they have to cater to
at any point in time.
 Variable load is the fluctuation in demand based on
the time-of-day or from season-to-season.
 Management of these loads is usually done as follows:
- Base load is met by long term PPAs
- Seasonal Variable loads through Short Term arrangements
such as Banking, Bilateral trading
- Daily Variable load through real time balancing under UI
mechanism or through Power Exchanges
 A Power Exchange is a fair and transparent platform
for entities to manage their electricity demand and
supply.
Over 90% of the generation capacity of the
country is tied up through Long Term PPAs
Demand Management
Framework
For illustrative purposes only
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BASE LOAD
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BASE LOAD
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10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Base Load – Managed through Long Term PPAs
Seasonal Variations – Managed through Short Term trades, by
1) Traders, 2) Bilateral Contracts or 3) Banking Arrangements
Daily Variations – Managed through
1) Day ahead Power Exchange or 2) UI Balancing
Hours
in 100 MW
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Demand Management
Managing the Load on Exchange
 The Load Curves of Utilities vary from each other in
terms of fluctuation patterns vis-à-vis time of the
day. This leads to Short Term Power Surpluses for
some Utilities while Deficits for some others.
 These Surpluses may be sold, Deficits overcome
through procurement of power from each other.
 Power exchanges provide a fair and transparent
platform for various entities to transact efficiently.
 Power Exchanges act as central counterparty for all
transactions, thus removing credit issues from the
system.
Load balancing on PX platform leads to
optimum utilization of generation capacity
Benefits provided by PXIL
PXIL helps in:
 Convenient Sale and Purchase:
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Fully-integrated computerized platform and a user friendly interface allows buying and
selling on click-of-the-mouse.
No separate arrangement for corridor required as the same is taken care of by PXIL.
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PXIL is counter-party for all trades – removes credit risks from the system
 Provides robust Clearing & Settlement systems
 Better Price Discovery through anonymous auction, as large number of suppliers
and buyers interact
 Reference price for all market participants. Helps in instantaneous price
dissemination.
 Rigorous financial standards and surveillance procedures ensure safe, orderly, fair
market.
 Shall lead to higher Availability and capacity addition leading to better prices. All
this will augment short term power market.
Operational Products
Day Ahead Spot Products
 Day-Ahead auction for all the 24 hours of the next day, subdivided into
hourly contracts.
- Allows simultaneous Buy and Sell bids
- Demand -Supply curves to be formed
- Intersection of the two curves is the price for the market
- Bids which get matched are in the day-ahead schedules
 Congestion Management is done through Market Splitting
 Buy trades are settled at or below the quoted price and Sell trades are
settled at or above the quoted price, ensuring maximum benefits to both
buyers and sellers of electricity
 Complete anonymity of the bids
 Clearing and Financial Settlement done by the exchange
Day Ahead Spot Products
Trading Contract Specifications
Type of Market
Day Ahead
Trading System
PXIL
Trading Methodology
Closed bid, double-sided Auction through linear interpolation
Auction Timings
10.00 am to 12.00 noon (Day D)
No. of contracts per day
96 quarterly contracts for next day delivery (Day D+1)
Minimum Bid Volume
1 MWh (with volume quotation step of 0.01MWh)
Minimum Value Quotation step
Rs. 0.01 per KWh (Rs. 10 per MWh)
Delivery Point
Periphery of Regional Transmission System in which the gridconnected exchange entity, is located.
1.
Transmission charges
2.
Regional Transmission System: As Per Central Electricity
Regulatory Commission (Open Access in inter-State
Transmission) Regulations, 2008.
State Transmission System: As per the concerned State
Electricity Regulatory Commission’s Regulations/ CERC
(Open access) Regulations, 2008.
Transmission Losses
Payable in kind from delivery point to its grid connection point.
Settlement Price(s)
The Market Clearing prices of the respective Bid Zones
Day Ahead Spot Products
Market System
Day of Delivery (D)
Trading Day (D-1)
Hours
Buy Bids
Hours
Sell Bids
Prices (INR / KWh)
1 5 7
10
00-08 200
08-16
500 400 250
16-24
400
INR/KWh
Prices (INR / KWh) Price
1 5 7
10
00-08 150
08-16
400 500 600
16-24
350
Calculation of Imbalances
Resources
Commitments
Imbalance
MCP
Volume
Metered
Day-Ahead
generation
Schedule
MW
Price / Volume Bids
Price determination based on Bids
Final Day-Ahead Schedule includes PX
transactions.
Binding Contracts
Financial settlement based on Cleared Volume
Deviations managed through UI Mechanism
and Price
Price = Market Clearing Price (MCP) +/Transmission and Operating Charges
- Balanced on a real-time basis
- Penalties for over-drawal or under-supply
- Benefits for under-drawal or over-supply
Operational Products
 Day-Ahead Contingency Products
 DAC products supplement the Day Ahead Spot Products
 Any surplus or demand generated after the Day Ahead Spot Market trading hours can
be met through this Market.
 DAC products are traded through short term bilateral open access mechanism on a
Discriminatory Pricing mechanism wherein bidding and matching is done on a Regional
basis.
 Weekly Products
 Weekly products are traded through short term bilateral open access mechanism
wherein participants can trade for the whole next week.
 The Trading happens every Thursday for the week starting upcoming Monday.
 The Term-Ahead nature of contracting allows participants to contract for power early
thereby getting a higher priority than DAS and DAC for scheduling, while mitigating their
risks of price and volume variations of electricity.
Products in the Offing
Sl. No.
Products
Term / Duration
1
Intra-Day Contracts
Contracts with same-day delivery
2
Any-Day(s) Contracts
For upto a given no. of days
3
Month-ahead-contracts
1st, 2nd and 3rd calendar months
4
Renewable Energy Certificates
Once in a month
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PXIL’s In-house software development enables dynamic responses to local market needs
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Longer tenure products at PXIL fashioned in line with local market practices
Products in the Offing
Renewable Energy Certificates
 REC – a market based instrument
 Provides evidence that a generator has produced a certain quantum of power from a RE
resource which has been consumed
 Reflects the environmental attributes of the source of generation
 Can therefore be traded in the market to allow entities to meet their Renewable
Purchase Obligations
 Entities Involved
 Eligible Entities (EE) – Generators who can only sell RECs
 Obligated Entities (OE) – Entities having RPO from SERC who can only buy RECs
 Power Exchange – RECs can only be traded through Exchanges
 Central Agency – National Load Despatch Center
 Uniform price auction (similar to Day-Ahead Spot Market) to be conducted
 To start with, auctions would be held once a month on the last Wednesday of the
month.
PXIL Trading Application
Features
 Application accessible through internet
- High security architecture
- Low initial Costs Normal Orders
- Application also accessible through Leased Lines
 Application is capable of splitting ‘N’ no. of markets
- All buy and sell bids would be aggregated to form demand and supply curves
through which the Market Clearing Price (MCP) would be determined.
- In case of congestion MCPs would be obtained for split markets.
- No. of markets as per NLDC directions.
 Application is enabled for trading in 15 min time blocks
- Allows management of load peaks and troughs easily.
- In line with time blocks for long term, short term and UI.
 Online calculations of margins
Clearing & Settlement
Features (for Day-Ahead-Product)
 Members need to provide adequate margins to cover the trades
 Value of Margins:
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Buyer
Seller
Trade Value
Nil
Transmission Charges
Transmission Charges
Operational Charges
Operational Charges
 Margins shall comprise of:
 Initial Security Deposit + Additional Funds as per Bid Value
- Additional Funds can be brought in the form of Cash/BG/FDR or Bank Limits
 Pay-in from Buyer : at 11 AM on T+1
 Pay-out to Seller : at 11 AM on T+2
PXIL assumes the Counter-Party Risk
and ensures timely settlement
Treatment of Transmission Losses on PXIL
 The transmission losses on PXIL shall be collected in kind and split between both buyers and
sellers upto their respective Delivery Points.
 The ‘Delivery Point’ shall be reckoned at the periphery of the regional transmission system
in which the grid connected entity is located.
 The actual schedule shall be worked out after incorporation of transmission losses in kind.
Illustration
Entity embedded in Maharashtra
Eligibility for Membership
 Inter-State / State Generating Stations
 Power Departments, SEBs
 Distribution Licensees
 CPPs & IPPs on ISTS or State Network*
 Open Access Customers*
 Electricity Traders
 Banks, Financial Institutions
* With a clearance to be obtained from the concerned SLDC
Memberships
Types
Type of Membership
Entitlement
Suitable for
Trading and Self Clearing
Member (TSCM)
Entitles the members to trade and
clear for themselves only.
Large captives and
utilities
Trading cum
Clearing Member (TCM)
Entitles the members to trade and
clear, both for themselves and / or
on behalf of their clients
Traders / Active
Utilities
Different Types of Memberships to meet diverse
needs of participants of different nature
Membership
Fees
Rs. in Lakhs
Trading and Self
Clearing Member
Trading cum Clearing
Member
One time Fee
10.00
10.00
Annual Fee
2.50
2.50
Interest Free Security
Deposit
25.00
40.00 *
Processing Fee
0.05
0.05
Net worth Criteria
150
150
* For a maximum of self + 5 clients. For every additional Client Rs 2 lakhs per client
has to be given as additional interest free security deposit
Rs 1.05 Lakhs has to be paid along with the membership documents out of which
Rs 1 Lakhs would adjusted from One time fee.
Low cost of entry to ensure greater
depth and liquidity
Salient Features of PXIL
Institutional Framework
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Promoters
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NSE, NCDEX: Market transformers giving
shape to national mandate.
Institutionally owned entities
Independent and Neutral to the Power Sector
Equity Participants
Participation from State Utilities and large private
players to ensure institutionalization
Focus on wide-basing equity participation from
State Utilities
 Members
Urging Utilities to take direct membership
Low entry barrier for wide-spread participation
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Salient Features of PXIL
Indian Context
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Software:
Continuously evolving software to inculcate inputs from market participant
and regulatory bodies.
 Scalability of software ensures high volumes that can be traded
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Product:
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Product and algorithm developed from scratch in line with evolving Indian
Market
Focus on Domestic Needs:
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Introduction of different membership categories
Salient Features of PXIL
Efficient Processes
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Low Cost Model
- In-house development of software & low maintenance
costs result in:
- Low entry charges
- Recovery of membership charges within a few days
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Product Development process
- Taking inputs from market participants
- Support and guidance of industry leaders through
Business Advisory Committee of PXIL
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Continuous Innovation to meet needs of market participants
Way Ahead
Increase Depth and Liquidity
 Increasing the liquidity of transactions
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Introduction of products of different tenures and hedging instruments
- Week ahead, 1st, 2nd and 3rd month ahead products in line with present Regulations
- Intra-day and day-ahead products of shorter terms for providing flexibility
 Trading of Renewable Energy Certificates
 Wide basing the scope with plans to introduce energy efficiency products etc
 Increase the depth of participants
 Helping entities of various types and sizes to efficiently utilize their demand-supply mix
 Providing a platform to captive power plants / IPPs for their electricity sales
 Plans to provide large load consumers access to “on-demand electricity”
 Knowledge partnership with regulators and policy makers
 Assist and support regulators and policy makers to develop the power market in India
Thank You
PXIL
Please Contact Us On:
Address
POWER EXCHANGE INDIA LIMITED
Email
[email protected]
Website
www.powerexindia.com
Telephone No:
Fax No:
+91 22 2653 0500 / 0541
+91 22 2659 8397
"B" Wing, 3rd Floor, Exchange Plaza
Bandra Kurla Complex, Bandra (E)
Mumbai - 400051, India.