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Depressed domestic prices make IEX look abroad for power trade
The India Energy Exchange is looking to garner a share of the power trade with neighbouring countries as subdued demand in the domestic spot market has depressed average tariffs.
In its representation to the Central Electricity Regulatory Commission, short-term power purchase market IEX has noted, “…Cross Border trade through Power Exchange should be incorporated in view of the Cross Border transactions in TAM (Term Ahead Market) segment.”
This will allow the power producers to directly offer electricity to power distribution companies or to nodal agencies appointed by the neighbouring countries through the IEX platform. Domestic consumers can also directly purchase power from designated authorities.
Currently, India has transmission networks with Nepal, Bhutan and Bangladesh and power transfer is permitted after the government approval.
“We estimate a power demand of 100 MW to 200 MW per day from cross border trade in the spot market immediately and this is going to grow,” Director, Business Development at IEX, Rajesh Mediratta told BusinessLine . The exchange currently trades over 4,900 MW of power per day in the domestic market he added.
Power prices in the spot market have been depressed over the past two years. According to data shared by IEX, the average Market Clearing Price for February 2014 was Rs. 3.29 per unit, this fell to Rs. 2.85 per unit in February 2015, then to Rs. 2.30 per unit in February 2016 and has risen marginally to Rs. 2.54 per unit in February 2017.
Low demand
Due to the relatively low demand from abroad, prices are not expected to move upwards substantially. However, the prospect of increasing cross border power trade can push them up in the long run. Mediratta explained that the low prices have promoted domestic power traders to explore neighbouring markets. “There is a demand from local traders to sell power in Bangladesh and Nepal,” he said.
The other trigger for increasing cross border trade is the government push to increase renewable energy in India’s energy mix. Mediratta said, “Hydro Power generators from Bhutan having merchant capacity are looking forward to trading on the exchange with Indian consumers.”
According to the Central Electricity Authority India has turned around from a net importer of electricity to net exporter of electricity during the current financial year (April to February 2017).
India has exported around 5,798 million units to Nepal, Bangladesh and Myanmar. This is 213 million units more than the import of around 5,585 million units from Bhutan. The export to Nepal increased 2.5 times and export to Bangladesh has grown by 2.8 times in the last. Rishard Matthews Jersey
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