India’s first electricity exchange starts trading spot contracts

India’s first electricity exchange starts trading spot contracts
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First Published: Wed, Jul 16 2008. 10 57 PM IST
Updated: Wed, Jul 16 2008. 10 57 PM IST
New Delhi: The country’s first electricity trading platform, Indian Energy Exchange Ltd, was officially launched three weeks after it began operations and may help reduce shortages in a country where 12-hour blackouts are common.
The highest electricity trading volume so far was 7,383MW-hours on 14 July, chief executive officer Jayant Deo said after an inaugural ceremony in New Delhi on Wednesday. The exchange aims to help meet India’s “rising mismatch between power demand and supply”, he said.
The exchange started operations in Mumbai on 27 June and allows spot trading in electricity, which is usually sold by Indian generators through contracts. The platform also allows captive power plants run by companies to sell surplus power. Generators can sell as much as 20% of their output.
India needs to boost power supply to beat shortages of as much as 15% during peak hours to sustain economic growth.
The country’s power industry is expected to grow 9.5% annually till March 2012.
State and private generators plan to add 78,755MW, or about 50% of India’s current capacity, in the five years to 2012 and 100,000MW in the next five years, according to the government.
“An exchange is a step in the right direction as supplies are expected to increase in the long run,” said Anjan Ghosh, a Mumbai-based energy analyst at ICRA Ltd, an affiliate of Moody’s Investors Service. “There will be more transparency as all players know the prices on offer.”
The Indian Energy Exchange offers hourly and block contracts that allow participantsto draw power from the grida day after the trade, according to the company’s website.
The exchange’s members include generators, distributors and industrial users.
Last year, 17-18 billion kW-hours of electricity, or about 2.5% of India’s total output, were traded, according to PTC India Ltd, a state-run electricity trader. PTC has a 26% stake in the exchange.
Financial Technologies (India) Ltd, founder and majority owner of the world’s third biggest gold exchange, owns a 51% stake in the exchange and other stakeholders include Reliance Infrastructure Ltd, Tata Power Co. Ltd and Adani Enterprises Ltd.
India needs to invest as much as $1.6 trillion (Rs6,912 crore) on infrastructure over the next 10 years to maintain economic growth, the Asian Development Bank (ADB) had said in December.
A lack of infrastructure, especially electricity, has eroded as much as 2% of India’s growth, according to Rajat Nag, managing director general of ADB.
India’s economy expanded 9% in the year ended on 31 March, the least since 2005, the statistics office said on 30 May. Growth may slow further to about 8.5% in the current fiscal year, according to Chidambaram.
One kilowatt consumed in one hour is equivalent to a 100-watt light bulb burning for 10 hours.
Bloomberg
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First Published: Wed, Jul 16 2008. 10 57 PM IST