Anil Sasi

New Delhi, Feb. 24 Indian Energy Exchange (IEX) — the country’s first power bourse — has roped in leading global electricity exchange Nord Pool ASA for operational expertise to ensure that the kick-starting the exchange goes without a hitch.

IEX is carrying out mock trading prior to launching the online electricity trading platform and is expected to go live in a couple of months.

Efficient bourse

Nord Pool, which is among the most efficient exchanges globally, has a strong physical and financial market with an array of products and services.

“We have inked a pact with Nord Pool for sharing operational expertise, especially in the backdrop of the Exchange going live shortly.

“We expect significant learning for both IEX and Nord pool from the exercise,” the IEX Director, Mr Joseph Massey, told Business Line.

IEX’s promoters — Financial Technologies India Ltd (FTIL) and PTC India Ltd — had earlier signed up Nord Pool’s technology provider, Swedish firm OMX Technology, to offer tech support to IEX.

Mr Massey said that IEX has already got EoIs from some 100 prospective members, including a host of Central generating stations, distribution licensees across states and State generating stations.

Major power exchanges across the globe have between 80 and 400 members, with France’s Powernext having 88 members, Germany’s EEX having 150 members, Nord Pool having 339 members and US’ PJM having 428 members.

Structure

As per the design of the exchange, all transactions on the IEX platform will be carried out by or through registered members, each of whom will be designated as Trading-cum-Clearing Member (TCM). TCMs will be IEX’s immediate customers while every other participant on IEX will be a client of a TCM.

Once the exchange goes live, all the participants will submit the bids for buying and selling of power to the exchange though a closed double side auction process.

Bids

The power bourse would accept bids and offers from prospective buyers and sellers during the bid call period — from 1,000 hours to 1,200 hours — for each hour of the next day (hourly contracts).

The bids would be displayed on the screens of IEX online work stations. The bids matched by the bourse mechanism would be settled at a uniform market clearing price and the energy flow would be arranged through inter-state transmission system.

While a day-ahead market hourly contract is being currently offered, IEX also proposes to offer other products going forward, including week-ahead, month-ahead, quarter-ahead, year-ahead, 3 year-ahead and seasonal contracts along with OTC clearing.

Transparent

While 90 per cent of electricity is sold in the country through long-term, bilateral power purchase agreement between buyers and producers, distribution utilities rely on mainly power traders for short-term needs.

“The deals negotiated over telephone and other means often tend to be non-transparent and counterparty’s are never sure whether they have got the best right price in the deal.

IEX would offer a transparent trade mechanism for those involved in short-term power trade and also take care of the complex compliance process on behalf of traders,” Mr Massey said.

IEX, which had bagged approval from the Central Electricity Regulatory Commission on August 31 last year for establishing the Power Exchange, has on board IDFC, Adani Enterprises, Reliance Energy, Lanco Infratech, Rural Electrification Corporation (REC), and Tata Power Company as investors, besides FTIL and PTC.