POWER TRADING PROCESS: MANIKARAN POWER LIMITED
What is Power Exchange?
It is a common platform where buyers & sellers of Electricity come together for trade. This is a new concept of Power trading introduced in India under the approved guidelines of CERC.
It is a common platform where buyers & sellers of Electricity come together for trade. This is a new concept of Power trading introduced in India under the approved guidelines of CERC.
What are the aims of Power Exchange?
To retrieve the excess generation from surplus region and transmit to a deficit region at a market clearing price (MCP). The MCP is discovered based on the principles of demand and supply. Prior to Exchange operation, this was done by electricity traders on negotiation basis.
To retrieve the excess generation from surplus region and transmit to a deficit region at a market clearing price (MCP). The MCP is discovered based on the principles of demand and supply. Prior to Exchange operation, this was done by electricity traders on negotiation basis.
Why Power Exchange is needed?
In market driven economy market forces are contradictory. Buyer wants low price, seller wants other wise. These conflicting forces determine the correct price of a commodity at a given time.
It is thus important that market forces must remain faceless and anonymous. Facelessness and anonymity creates a level field for all players.
In today’s scenario electricity is no more a service, it is a commodity. On an electronic power exchange, buyers and sellers of electricity from the length and breadth of the country can converge without revealing their identity.
For this we need a nation wide Electronic Power Exchange to allow the Electricity Market to be driven by genuine market forces of demand and supply.
Indian Energy Exchange (IEX) is the first power exchange in India. It serves as an optional, electronic, nationwide platform for trading of Electricity.
In market driven economy market forces are contradictory. Buyer wants low price, seller wants other wise. These conflicting forces determine the correct price of a commodity at a given time.
It is thus important that market forces must remain faceless and anonymous. Facelessness and anonymity creates a level field for all players.
In today’s scenario electricity is no more a service, it is a commodity. On an electronic power exchange, buyers and sellers of electricity from the length and breadth of the country can converge without revealing their identity.
For this we need a nation wide Electronic Power Exchange to allow the Electricity Market to be driven by genuine market forces of demand and supply.
Indian Energy Exchange (IEX) is the first power exchange in India. It serves as an optional, electronic, nationwide platform for trading of Electricity.
What Benefits does Exchange bring to the Electricity Market?
The Exchange has brought a true market driven economy in Electricity sector of India. Ours is a power deficit country, but some regions have surplus power because of abundant hydro potential or coal reserve. Today our country’s Transmission System is electrically integrated, therefore it is possible to transmit power from the most remote area of one region to the load center of any other region. In Pre-Exchange scenario this power trading was conducted purely on bilateral basis. Along with transmission losses and UI risks, payment uncertainties prevented the true market driven economy in electricity market. Power Exchange wipes off all these issues by:
- Empowering the Market to discover a uniform market clearing price (MCP) and market clearing volume (MCV).
- Evenly distributing transmission losses at both ends.
- Enabling participants to hedge against UI risks.
- Guaranteeing secure & timely payment to sellers.
- Generously improving the market environment to encourage investment in new generation capacity, thus helping make India a power-surplus country.
Who are the promoters of the Indian Energy Exchange (IEX)?
Financial Technologies (India) Ltd (FTIL), Multi Commodity Exchange of India Ltd (MCX) shares its Exchange operations and management experience with IEX.
Who is the regulator of IEX?
Central Electricity Regulatory Commission (CERC).
Central Electricity Regulatory Commission (CERC).
What are the Modes of Power Trading?
- Long term PPA for 25 Years.
- Bulk Power supply agreement.
- Bilateral through power traders.
- Short term bilateral contracts where both Buyers & Sellers are identified before hand &
the prices are decided by negotiation.
- Through Power Exchange platform, where prices are discovered through competitive bidding and the power is sold to and brought from the single large countrywide pool.
What is Collective Transaction?
- Trading through Power exchange is called Collective transaction. Participants of Collective transaction enjoy priority in Scheduling over bilateral transaction application received within three days prior to the date of scheduling and up to 15:00 hrs of the one day before date of scheduling clubbed to-gather.
- They also enjoy priority during curtailment due to sudden transmission Congestion over short term bilateral transaction.
What are the different modules of Electricity trading through Exchange?
At present Day-ahead. Anonymous, Simultaneous Competitive Bidding of Electricity Contracts on the Exchange with price determined from uniform pricing mechanism.
In future Week ahead, Fortnight ahead, Month ahead, Quarter ahead, Year ahead and 3 year ahead markets are envisaged.
At present Day-ahead. Anonymous, Simultaneous Competitive Bidding of Electricity Contracts on the Exchange with price determined from uniform pricing mechanism.
In future Week ahead, Fortnight ahead, Month ahead, Quarter ahead, Year ahead and 3 year ahead markets are envisaged.
What is the Contract Size?
- Minimum Volume = 1MWH
- Minimum Size = 1Hr
- Minimum Bid Price: Tick Size = Re. 1/MWH
- Minimum Volume: Tick Size = 0.1MW
Who is Eligible for Trading at IEX Platform?
- Intended buyers & sellers shall have to go through an entity who has been admitted by Power Exchange as a registered member, by becoming their client.
What are the Preliminary Requirements for start of trade?
- Grid Connectivity either at 11KV, 33 KV, 66 KV, 132KV, 220 KV or 400 KV level.
- NOC from respective SLDC in prescribed format i.e. PX-I.
- Installation of special Energy meter & other auxiliary equipments as directed by
SLDC, which records flow of energy, demand, Voltage & Average frequency at
Fifteen Minute intervals.
Fifteen Minute intervals.
- Depositing annual subscription of Rs. One Lac per financial year, to IEX, against
which IEX will provide a unique identification number which enables an applicant
to start trading.
to start trading.
- Depositing the margin money to IEX which equals to the Last seven days average trading obligation (Applicable for Buyers only)
. .
How the Power will Flow?
The power will flow through the existing STU/CTU network depending on the location of the entity's injection/drawl point.
Who will control or regulate the power flow?
The National Load Dispatch Centre (NLDC), Regional Load Dispatch Centre (RLDC) & State Load Dispatch centre (SLDC) controls and Regulates the power flow.
The National Load Dispatch Centre (NLDC), Regional Load Dispatch Centre (RLDC) & State Load Dispatch centre (SLDC) controls and Regulates the power flow.
How Power is delivered?
- The Exchange prepares the schedule based on the ATC, MCP & MCV. The Final Schedule is given by the Power Exchange to the NLDC.The NLDC sends the Schedule to respective RLDC’s who incorporates the schedule in their schedule and send the same to respective SLDC's.SLDC delivers the schedule to concerned buyers or sellers. Once the schedule is delivered, it is deemed that power has been delivered.
- The actual injection/ drawl are recorded by the special energy meter installed at the point of injection / drawl. The meter reading is collected through telemeter or by joint inspection.
How Deviation from Schedule is settled?
Electricity is very dynamic in nature. Any devotion from the schedule is either payable/receivable by the client and is settled by the RLDC/SLDC under the UI mechanism. UI calculation is compiled by RLDC and certified by Regional Power Committee (RPC).
Electricity is very dynamic in nature. Any devotion from the schedule is either payable/receivable by the client and is settled by the RLDC/SLDC under the UI mechanism. UI calculation is compiled by RLDC and certified by Regional Power Committee (RPC).
What are UI Charges?
- It is the price of power at a particular grid frequency.
- Presently it varies from Rs 7.35/- per KWH at 49.22Hz to RS 0/- per KWH at 50.30 Hz.UI rate at less than or equeal to 49.2 Hz is Rs 10.30/- per KWH.
How Market Clearing Price (MCP) and Market Clearing Volume (MCV) is calculated?
Prices are governed by the principal of Demand Vs Supply at exchange platform. MCP Is the price of hourly electricity contracts established on IEX arrived at after considering all valid purchase and sale bids on unconstrained transmission network.
Prices are governed by the principal of Demand Vs Supply at exchange platform. MCP Is the price of hourly electricity contracts established on IEX arrived at after considering all valid purchase and sale bids on unconstrained transmission network.
- All Purchase & Sale bids are aggregated to trace a demand supply curve.
- The bids and offer portfolio shall be assumed to be a sloping curve. All purchase bids can have only non-increasing quantity for every increase in bid price & every sale bid will have only non-decreasing quantity for every increase in bid price
- An example for calculation of Market Clearing Price (MCP) & Market Clearing Volume (MCV) is given below.
In the graph shown below:
(a) Demand curve is drawn by plotting the sum of purchase (buying) data (volume) against price. This curve has a slope downwards.
(b) Supply curve is drawn by plotting the sum of sale data (Volume) against price. This curve has a slope upwards.
(c) These two curves intersect at a point. This is the point of equilibrium. At this point price for both buying and selling is same.
d) If a perpendicular is drawn from point of equilibrium to price axis i.e. Y axis it will meet at a point on Y axis. Price representing this point is market clearing price (MCP)
(e) If a perpendicular is drawn from point of equilibrium to volume axis i.e X axis it will meet at a point on X axis. Volume up to this point represents Market clearing volume.
Mathematically it can be proved that the area under supply curve up to point of equilibrium taking X axis as base is equal to the area under demand curve from point of equilibrium to the high point of the curve taking the MCP line which is parallel to X axis, as base.
(f) All sale bides having price less then or equal to MCP value and all purchase bids having more than or equal to MCP value will be cleared for trade.
(a) Demand curve is drawn by plotting the sum of purchase (buying) data (volume) against price. This curve has a slope downwards.
(b) Supply curve is drawn by plotting the sum of sale data (Volume) against price. This curve has a slope upwards.
(c) These two curves intersect at a point. This is the point of equilibrium. At this point price for both buying and selling is same.
d) If a perpendicular is drawn from point of equilibrium to price axis i.e. Y axis it will meet at a point on Y axis. Price representing this point is market clearing price (MCP)
(e) If a perpendicular is drawn from point of equilibrium to volume axis i.e X axis it will meet at a point on X axis. Volume up to this point represents Market clearing volume.
Mathematically it can be proved that the area under supply curve up to point of equilibrium taking X axis as base is equal to the area under demand curve from point of equilibrium to the high point of the curve taking the MCP line which is parallel to X axis, as base.
(f) All sale bides having price less then or equal to MCP value and all purchase bids having more than or equal to MCP value will be cleared for trade.
- How financial settlement of trade is done?
- The proceeds from sale of power are transferred to members settlement account by 2 P.M of the day following the day of delivery by IEX. The fund transfer to clients account is either through electronic money transfer system or by issuing cheque as preferred by the client.
- The buyers have to pay the amount of power purchased at MCP by 14.30 Hours of the day of bidding.
- Trading session is 10am to 12 noon i.e. the clients bid will be accepted on the system during this period. After this it is our responsibility to take care of the rest of the formalities.
- Members will inform the buyers about the status of their bid by 12.30 P.M. If the buyers bid are provisionally accepted at Exchange platform, they should deposit the money to members account by 14:30 hours or else their bid will be rejected. If you are a seller we will let you know the Final MCP/MCV at 4.00 PM
- IT infrastructure for bidding on electronic exchange platform
- Advisory advices related to power prices and the follow on bidding strategy (e.g weather related information, demand supply position etc.)
- Facilitation of procedures on behalf of his clients for delivery of power (e.g. SLDC standing clearances, co-ordination with NLDC etc.) We also provide additional received to our clients.
- Training And Client Grooming
- Market Monitoring And Client Alerting
- Facilitation of procedures on behalf of his clients for delivery of power (e.g. SLDC standing clearances, co-ordination with NLDC etc.) We also provide additional received to our clients.
- In day ahead marked. Both buyers & sellers are to adjust the loses up to their regional periphery. RLDC will adjust the CTU & STU loses at the time of scheduling
Financial settlement is done by electronic transfer of funds between the clearing members & the Exchange.
What are the Trading Hour & Timeline?
Timeline for Scheduling & Settlement
TIME | DETAILS |
| 9.00 AM | Collection of ATC from NLDC/RLDC & display the information on IEX website and also to be used as an internal input (master) for scheduling. |
| 10.00 AM to 12.00 PM | Bid - Call session |
| 11.00 AM | Funds pay out pertaining to day before previous days transaction for sellers. |
| 12.00 PM to 12.30 PM | Exchange to determine MCP & match the orders. |
| 12.30 PM | PROVISIONAL MCP & MCV |
| 12.30 PM to 1.00 PM | Communication to bank to Confirm & block the funds pay in from buyer member’s settlement account. |
| Communication to NLDC/RLDC for transmission capacity. | |
| 1.30 PM | Exchange will receive confirmation from bank for availability & blocking of clear balance along with a note on shortages. |
| 2.30 PM | In case if the member brings in funds in his settlement account afterwards (members who were reported as short), the bank will confirm it to the exchange. |
| 3.30 PM | NLDC/RLDC will confirm the transmission capacity |
| 4.00 PM | Exchange will generate FINAL MCP & MCV |
| 4.00 PM to 4.30 PM | Dispute period |
| 4.30 PM | File sent to banks for actual debits |
| Exchange releases the trades schedule to the NLDC/SLDC | |
| 4.45 PM | Confirmation file received from bank |
| 5.00 PM | NLDC/RLDC will confirm the final ATC & confirm the schedule if any |
Members will provide following services to their clients:-
- What are the charges to be paid by the client?
Statutory Charges to be paid by the Client:
* Price for traded volume of electricity @ MCP discovered at IEX platform
* NLDC Application Fee @ Rs. 5000/- per day. (To be shared by the number of successful bidders on national basis. For example, Suppose number of successful bidders in national level = 50. So share of NLDC application fee for each successful bidder = Rs.5000/50)
* Applicable transmission charges for CTU lines @ Rs. 100 per MWH
* Applicable transmission charges for /STU lines. @ Rs 80 per MWH, if applicable and if not separately notified by the concerned SERC. In case the concerned SERC notifies the transmission charges separately the same shall be applicable.
* NLDC scheduling & operating charges Rs.5000 per day per entity involved.
(All buyers within a state shall be clubbed together into one group and all sellers within a state shall be clubbed together into another group .Each buyer group counted as regional entity buyers and each seller group counted as regional entity sellers).
Example: Suppose No of successful buyers on regional basis = 7 and number of successful sellers on regional basis = 6 and number of successful bidders in national level = 16. Then Share of NLDC scheduling & operating charges for each successful bidder = (Rs.5000 X Regional Entity buyers + Rs.5000 X Regional entity sellers) / No of successful bidders.
* SLDC scheduling & operating charges Rs. 2000/- per day. (If applicable)
* Trading margin of IEX @ Rs. 10/MWH
IEX will pay the above amounts to the respective authorities and deduct or add the amount from/to the client obligation.
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