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IEX: Building Power Market for India. Devesh Singh – Regional Head (SR) Email: Devesh.Singh@iexindia.com Website: www.iexindia.com. In this presentation …. Power Trading in India Power Exchange - Mechanism Trading of Power Trading of REC. Promoters. Who are we ?.

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slide1

IEX: Building Power Market for India...

Devesh Singh – Regional Head (SR)

Email: Devesh.Singh@iexindia.com

Website: www.iexindia.com

in this presentation
In this presentation …
  • Power Trading in India
  • Power Exchange - Mechanism
    • Trading of Power
    • Trading of REC
who are we

Promoters

Who are we ?

Joint Equity Partners:

Technology :

ea 2003 and enabling provisions on power market
EA 2003 and enabling provisions on Power Market
  • Electricity Act 2003
    • The intent and object of the EA 2003 is to develop power market through increased competition, more players and protect consumer interests
    • Development of Power Market – EA 2003, Section 66, “The Appropriate Commission shall endeavor to promote the development of power market…”,guided by the National Electricity Policy
    • Suitable safeguards to prevent adverse effect on competition
    • Recognize Trading as a distinct activity
    • Definition under section(2) (47): “Purchase of electricity for resale thereof”
    • Adequate and progressive provisions governing open access both :
      • to transmission networks (inter-state and intra-state) and
      • to distribution networks
introduction of new products
Introduction of New Products
  • Short & Medium Term transactions for peak/off-peak load balancing
    • Duration of Transactions (Few hours to 3 years)
    • Hours of Supply
      • Round the Clock
      • Evening Peak / Morning Peak
      • Night Off Peak / After Noon Off Peak
  • “As and When Available” Power for balancing Scheduled Interchanges
  • “Weekend / Holiday Power”
  • Banking of Power
indian power market
Indian Power Market

Long Term

Power Purchase Agreements

Upto 25 Years

OTC

Licensed traders (42)

Medium Term

3 months- 3years

Short-Term

OTC Intraday- 3 months

Intraday - 3 months

Exchanges

1. Intra-day

2. DAM

3. DAC

4. Daily

5. Weekly

Balancing Market

Unscheduled Interchange

Real Time

what is iex
What is IEX

Voluntary

Delivery…

On-line

National

  • Spot
    • Intra-Day
    • Day-ahead
  • Forward
    • Weeks
    • Months

StandardisedContracts

Automated

Electronic

CentralCounterparty

Exchange as Organized Marketplace

Power-specific

iex capabilities
IEXcapabilities
  • Spot Auction (Closed or Open) for real time prices
  • Continuous Trading for Long-term contracts
  • Automated matching engine
  • Online risk management system
  • Online clearing & banking interface for margins & trade proceeds payment
  • Derivatives - for Hedging & Price Discovery
    • Forwards
    • Futures
  • Physical or financial settlement
iex self regulating institution
IEX Self Regulating Institution
  • Due diligence before Membership
  • Networth Criteria
  • Security deposit & Margins
  • Voluntary participation
  • IEX Counterparty
  • SLDC Clearance
slide10

Tried & Tested Global Technology

  • NASDAQOMX
  • Six Sigma Efficiency
  • “Error Free” operation since inception
  • Capable for handling
    • Day Ahead Auction
    • Term Ahead Bilateral
    • Market splitting upto 30 areas
    • National, Regional and Statelevel Contract
    • RPS & Certificates Trading
iex market segments
IEX: Market Segments…

Day-Ahead Market

(Since June,2008)

Term-Ahead Market

(Since Sep,2009)

REC Market

(Since February,11)

  • Intra Day
  • Day-Ahead Contingency
  • Daily
  • Matching through Continuous Trade Session
  • Weekly Contracts
  • Matching through
  • Open Auction
  • Hourly Contracts
  • Matching through
  • Close Auction*
  • REC Contracts
  • Matching through
  • Auction*
  • Market splitting feature

* Without Market split feature

slide14

IEX - DAM Product Description [1/2]

  • Order Types:
    • Hourly or Portfolio Orders
      • Min 1 hour
      • Different Price-Quantity Pairs
      • Partial Execution Possible
    • Block Orders
      • Relational Block Bid
      • Consecutive hours during the same day
        • Customized block bid allowed
  • Firm commitment to purchase or sell
  • Order Characteristics
    • SLDC Clearance should be ≥ 1 MW
    • Minimum Order quantity can be less than 1 MW
    • Minimum volume step: 0.1 MW
    • Minimum price step: Rs 1 per MWh ( 0.1p/kWh)
slide15

IEX - DAM Product Description [2/2]

  • Trading Availability
    • Every Calendar Day
  • Bidding
    • Double sided Closed Auction
  • Order Entry / revise /cancel
    • Entry of orders on D-1 from 10:00 hrs to 12:00 hrs related to Delivery Day (D day)
  • Contract
    • Clearing Price : Area Clearance Price
    • Cleared Volume
    • Total Contract Value: Cleared Volume multiplied by ACP
    • Final settlement adjusted for any force majeure deviations
  • Delivery Point
    • Periphery of Regional Transmission System in which the grid-connected entity, is located
slide16

17:30

10:00

12:00

13:00

14:00

15:00

18:00

RLDCs/SLDCs to incorporate Collective Transactions in the Daily Schedule

NLDC to confirm acceptance. PX to send files to SLDCs for scheduling

Market Participants to place their Bids

NLDC to check for congestion. In case of congestion shall intimate PX regarding to the period for congestion and available margins

PX to send provisional unconstrained solution to NLDC and flow on TS as informed by NLDC

PX to send Scheduling Request to NLDC based on margin specified by NLDC

Time Line for scheduling of Collective Transaction

slide17

Portfolio A, MW

20

20

20

0

0

Portfolio B, MW

60

60

40

40

20

20

40

40

40

Portfolio C, MW

40

20

0

0

-40

-120

-120

-60

-80

-81

SUM, Purchase

120

100

80

80

60

60

60

40

40

20

20

SUM, Sale

0

0

-40

-120

-120

-60

-80

-81

Net transaction

120

20

-80

-100

100

80

80

0

-20

-21

-100

5

Price

4

4

Sale

Purchase

MCP:

3

2.5

Rs./kWh

3

2

2

2.5

1

MW

40

80

120

MCV (Market clearing volume):

60

Price Calculation Algorithm ….each hour

Price (Rs./kWh)

0

1

1.1

2

2.1

2.5

3

3.1

4

4.1

20

Rs/kWh

MW

slide20

Treatment of Losses

  • Both Buyers and Sellers to absorb losses
    • Buyer
      • draw less than Contracted Power

(Contracted Power – losses)

    • Seller
      • inject more than Contracted Power

(Contracted Power + Losses)

  • Average Transmission Losses of the Region where the Entity is geographically located
  • Additional Losses for Wheeling, if necessary
    • To be notified in advance by NLDC
    • Only for Injection
treatment of losses for buyer

100 MW

at NR periphery

94 MW at S1 periphery

89.441 MW at Buyer End

Treatment of Losses… forbuyer
  • NR (Regional) Loss: 6%
  • S1 (State) loss: 4.85 %
  • Buyer X bids for 100 mw at its respective regional periphery

Bid Volume

Scheduled Drawal

<= SLDC Clearance

NR

Loss

6%

S1

Loss

4.85%

X

(Buyer)

Maximum Bid= Volume in standing clearance + Regional & State losses

treatment of losses for seller

111.14 MW Injected by seller at its end

106 MW at state periphery

Treatment of Losses… for seller
  • SR (Regional) Loss: 6%
  • A1 (State) loss: 4.85%
  • Seller Y bids for 100 mw at its respective regional periphery

Bid Volume

Scheduled Generation

<= SLDC Clearance

SR

Loss

6%

A1

Loss

4.85%

Y (Seller)

100 MW at regional periphery

Maximum Bid= Volume in standing clearance – Regional & State losses

congestion management
Congestion Management

SR

WR

Deficit

100 MW

S3

50 MW

RS 7500

Surplus

100 MW

S1

50 MW

RS 8000

B1

50 MW

RS 8500

B2

150 MW

RS 9000

S2

40 MW

RS 8500

B3

30 MW

RS 7000

S1

80 MW

RS 9500

B1

100 MW

RS 6000

S2

120 MW

RS 8000

S3

100 MW

RS 5500

Required Flow

100 MW

B2

150 MW

Rs 9/u

S3

50 MW

Rs 7.5/u

S2

100 MW

Rs 5.5/u

B1

50 MW

RS 8.5/u

S1

50 MW

Rs 8/u

S2

20 MW

Rs 8/u

S2

40 MW

Rs 8.5/u

B3

30 MW

Rs 7/u

B1

100 MW

Rs 6/u

S1

80 MW

Rs 9.5

congestion management1
Congestion Management

SR

WR

Deficit

100 MW

Deficit

20 MW

Surplus

100 MW

Surplus

20 MW

Allowed Flow

20 MW

Lowest Buyers getting rejected

Highest Seller getting rejected

B2

150 MW

RS 9000

S3

50 MW

RS 7500

S2

100 MW

RS 5500

B1

50 MW

RS 8500

S1

50 MW

RS 8000

S2

20 MW

RS 8000

S2

40 MW

RS 8500

B3

30 MW

RS 7000

B1

100 MW

RS 6000

S1

80 MW

RS 9500

risk management system
Risk Management System

Trader Member

Facilitator Member

  • D-1 At 09:30 Hrs : Pre-trade Margin Check.
    • equal to the initial margins or average of last 7 days’ trading value, whichever is more.
  • D-1 At 12:30 Hrs : Preliminary Obligation Margin Check

Preliminary Obligation =< Funds Available (incl initial margin)

  • Block funds.
  • D-1 At 15:30 Hrs : Pay-ins
  • At D+1 14:00 Hrs : Pay-out.
  • D-1 At 09:30 Hrs : Pre-trade Margin Check.
    • equal to the 100% of the bid value to be provided by Client directly to IEX in Client Settlement account
  • D-1 At 15:30 Hrs : Pay-ins
  • At D+1 14:00 Hrs : Pay-out.
slide27

Performance so far…

IEX won India Power Award for“ Best e-enabled consumer platform”17th November,2009

participation at iex

STATE

No. of Private Generator

Open Access

Industrial Consumers

Maharashtra      

9

0

Rajasthan

10

48

Karnataka       

15

0

Andhra Pradesh  

10

17

Punjab           

3

235

Orissa 

1

2

Madhya Pradesh  

10

4

Chhattisgarh 

28

0

Haryana  

1

28

Tamil Nadu

0

384

Gujarat

9

6

Uttarakhand

0

10

Arunachal Pradesh

0

3

Others

14

1

Total

110

738

Participation at IEX

over 2 years of adequate liquidity

Over 2 years of Adequate Liquidity

  • 29 State Utility
  • 990+ Portfolios
  • 738 Direct consumer
  • 520+ participants on single day
  • Cleared Volume :19 Billion Units
  • DAM Volume Record
      • 59.98 MUs constrained(23rd September ’ 10)
      • 61.58 MUsunconstrained(23rd September 10)
slide34

Who Can become Members of IEX ?

Entities eligible for Membership:

  • Inter-State Generating Stations (ISGS)
  • Distribution Licensees
  • State Generating Stations
  • IPPs
  • CPPs and IPPs

(with consent from SLDC)

  • Open Access Customers

(with consent from SLDC)

  • Electricity Traders / Brokers
iex membership category

Proprietary Member

(right to trade and clear on its own account)

Generator- Distribution licensees- IPPs - CPP- MPPs –O A consumers

IEX Membership Category

Professional

(trade and clear on behalf of its Clients)

NO CREDIT /FINANCING

  • Clients
  • Grid Connected
    • Generator, Distribution licensees, IPPs, CPP, MPP, OA consumers
  • Trader Client
    • With valid PPA

Electricity Traders

(trade and clear on behalf of its Clients)

CREDIT /FINANCING

slide36

Financial Requirements

Membership Category: Proprietary / Professional Member The financial criteria for payment options available on IEX are:

how to move ahead
How to Move Ahead…
  • Become Member or Client (of a Member)
      • Rs 22.6 Lacs +2p/kWh transaction fee

or

      • Rs 65.1 lacs + 1p/kWh transaction fee

or

      • Client @ 1Lakh
  • Technical Requirements
    • Standing Clearance from UTs/State SLDC
      • ABT Meters
      • Sufficient transmission capacity
    • Connectivity with exchange can be done in two ways
      • Internet Immediate
      • Leased Line
  • Start Buying from IEX or Sell surpluses to IEX
financing by rec
Financing by REC
  • Members can get finance from Rural Electrification Corporation to fulfill their trade obligations at a nominal interest rate(8.5%).
  • Procedure :
    • Member will apply to REC for sanction of credit limit.
    • After due verification, REC shall sanction the credit limits
    • Tripartite agreement between IEX – REC – Member
    • Member allowed to bid to exposure limit, net of utilization till date.
    • Each tranche of disbursements by REC to IEX on behalf of the participants shall be treated as a separate loan for the purpose of determination of loan period, payment of interest, other charges and repayment of loan.
introducing an another option rec
Introducing an another option… REC

Feed-in Tariff

[State Regulated Tariff]

REC Option

Electricity

Green Attributes

Sale of electricity to DISCOMs at State regulated tariff

REC

[Solar & Non-Solar]

Sale of Electricity at Market Price in open market

Sell to DisComs at Price ≤ Pooled Cost of Power Purchase*

Sale of RECs at Power Exchange

* - Weighted Average Pooled Price at which distribution licensee has purchased electricity (including cost of self generation, long-term and short term purchase) in the previous year, but excluding the cost of RE power purchase

trading at iex
Trading at IEX

Trading Day

Last Wednesday of every Month

Market Clearing

Closed Double sided auction

Trading Time

1300-1500 Hrs

By 1530 Hrs

Verification by Central agency for Valid REC by cleared seller at IEX

By 1600 Hrs

Central agency confirms REC

By 1630 Hrs

IEX finalizes trade

By 1700 Hrs

Buyer & Sellers informed to Central Agency

By 1800 Hrs

Invoice raised (proof of REC trade)

slide43

Cleared volume : 600 RECs MCP: Rs 2200/REC

100 REC Sell @ Rs 1500

100 REC Buy @ Rs 3900

200 REC sell @ Rs 1700

300 REC Sell @ Rs 2000

2200

600 REC Buy @ Rs 2200

200 REC Buy@ Rs 1700

600

slide44

REC - Fee & Charges

State Nodal Agency

Central Agency

Central Agency

IEX

slide45

REC - Fee & Charges Impact

Cost Impact of Fee and charges in First Year

  • Assumptions:
  • Project of Capacity = 1 MW
  • Capacity Utilisation Factor = 22%
  • No. of Units Generated = 19.27 MU
  • No. of REC Issued = 1927

Similarly the cost impact (in Paise / Unit) for:

slide48

How to commence …participation on IEX

  • New Membership only for those interested in REC trading
    • Professional REC Member
    • Proprietary REC Member
  • New Clients : No Registration fees ( FY 11-12)
  • Buyers : Very Simple Process of filing registration with IEX
  • Sellers : Complete 4-step procedure before registration with IEX
iex initiatives continuous communication with users
IEX InitiativesContinuous communication with Users

IEXMonthly Bulletin

IEX Daily SMS Service for Trade Details

IEX hourly Trade Prices displayed on its website

slide50

Thank You !!!www.iexindia.com

Promoters

Joint Equity Partners:

Technology :