India Energy Exchange Turns One
On the 8th of July the India Energy Exchange (IEX) celebrated its first successful year in operation. The IEX is India’s only bourse mandated to trade electricity electronically.
Electricity contracts are traded on a “day-ahead market hourly” basis in Megawatts with bed time hours trading around 2800 Rupees per MegaWatt Hour (INR/MWh) up to peak times during business hours and dinner time of around 4000 INR/MWh. Electricity volume also varies throughout the day with around 500 MWh per hour during off peak and 1100 MWh per hour at peak times.
Orders are entered during the bid-call period from 10:00 am to 12:00 noon with the IEX serving as counter party for all trades. Matching occurs at the Market Clearing Price (MCP) to maximize the Market Clearing Volume (MCV). Electricity is then delivered through regional and state electrical grid system.
There are plans to offer trading a “week-ahead” and a “quarter-ahead” basis in the future.
Members consist of Independent Power Producers (IPP), Captive Power Producers (CPP), Merchant Power Plants (MPP), distribution licensees and traders. Net worth of members must be at a minimum of 150 lakhs Rs. (See India Numbering System) or around US$300,000
The India Energy Exchange is regulated by the Central Electricity Regulatory Commission (CERC) and the Multi Commodity Exchange (MCX) offers support and expertise to the IEX.
There are 3 clearing banks for the IEX all based in Mumbai. They are HDFC Bank Limited, the IndusInd Bank Limited and the State Bank of India.
While the IEX is still small it is an interesting concept for maximizing electricity capacity efficiently in a power hungry India. As more and more capacity comes on-line this exchange will certainly be a barometer of India’s industrial output.