IEX: Building Power Market for India...
Devesh Singh – Regional Head (SR)
Email: Devesh.Singh@iexindia.com
Website: www.iexindia.com
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In this presentation …
• Power Trading in India
• Power Exchange - Mechanism
 Trading of Power
 Trading of REC
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Who are we ?
Promoters
Joint Equity Partners:
Technology :
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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
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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
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Indian Power Market
Long Term
Upto 25 Years
Medium Term
3 months- 3years
Short-Term
Intraday - 3 months
Power Purchase Agreements
OTC
Licensed traders (42)
OTC Intraday- 3 months
Exchanges
1. Intra-day
2. DAM
3. DAC
4. Daily
5. Weekly
Balancing Market
Real Time
Unscheduled Interchange
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What is IEX
Voluntary
Delivery…
On-line
National
•Spot
Standardised
Contracts
Automated
•Intra-Day
•Day-ahead
•Forward
•Weeks
•Months
Electronic
Central
Counterparty
Exchange as Organized Marketplace
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Power-specific
IEX capabilities
•
•
•
•
•
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
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IEX Self Regulating Institution
•
•
•
•
•
•
Due diligence before Membership
Networth Criteria
Security deposit & Margins
Voluntary participation
IEX Counterparty
SLDC Clearance
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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 State level Contract
– RPS & Certificates Trading
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IEX: Market Segments…
Day-Ahead Market
Term-Ahead Market
REC Market
(Since June,2008)
(Since Sep,2009)
(Since February,11)
Hourly Contracts
Matching through
Close Auction*
• Intra Day
• Day-Ahead Contingency
• Daily
REC Contracts
Matching through
Continuous Trade Session
Weekly Contracts
Matching through
Open Auction
• Market splitting feature
* Without Market split feature
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Matching through
Auction*
Day-ahead Market
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IEX Bid Areas
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IEX - DAM Product Description
• 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)
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[1/2]
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
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Time Line for scheduling of Collective Transaction
10:00
Market
Participants to
place their Bids
12:00 13:00 14:00
PX to send
provisional
unconstrained
solution to
NLDC and flow
on TS as
informed by
NLDC
15:00 17:30
NLDC to check
for congestion.
In case of
congestion shall
intimate PX
regarding to the
period for
congestion and
available
margins
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18:00
NLDC to
confirm
acceptance. PX
to send files to
SLDCs for
scheduling
PX to send Scheduling
Request to NLDC based
on margin specified by
NLDC
RLDCs/SLDCs to
incorporate
Collective
Transactions in
the Daily
Schedule
Price Calculation Algorithm ….each hour
Price (Rs./kWh) 0
1
1.1
2
2.1
2.5
3
3.1
20
20
0
40
40
40
-40 -60
-80
Portfolio A, MW 20
Portfolio B, MW 60
60
Portfolio C, MW 40 20
0
0
SUM, Purchase 120 100
80
80
SUM, Sale
0
0
Net transaction 120 100 80
80
40
60
4
4.1
20
0
40
20
20
-81 -120
60
60
-40 -60
-80
-81 -120
-120
20
-20
-21 -80 -100
-100
0
40
40
-120
20
20
250
Price
Purchase
200
4
Sale
Price ($/MWh)
4
5
MCP:
3
Rs./kWh
2.5
3
150
Rs/kWh
2
100
2
50
1
MW
40
80
60 MW
120
2.5
0
-150
MCV (Market clearing volume):
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-100
-50
0
MW balance
50
100
150
Trader Station: Single Bid
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Trader Station: Block Bid
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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
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Treatment of Losses… for buyer
• NR (Regional) Loss: 6%
• S1 (State) loss: 4.85 %
• Buyer X bids for 100 mw at its respective regional periphery
Scheduled Drawal
<= SLDC Clearance
Bid Volume
NR
100 MW
at NR
Loss
periphery
6%
S1
94 MW at S1
periphery
Loss
X
89.441 MW at
Buyer End
(Buyer)
4.85%
Maximum Bid= Volume in standing clearance + Regional & State losses
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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
Scheduled Generation
<= SLDC Clearance
Bid Volume
SR
100 MW at
regional
periphery
Loss
6%
A1
106 MW at state
periphery
Loss
4.85%
111.14 MW
Injected by seller
at its end
Y
(Seller)
Maximum Bid= Volume in standing clearance – Regional & State losses
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Congestion Management
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Congestion Management
SR
WR
S3
S1
B2
B3
S2
B1
50
MW
50
MW
150
MW
30
MW
407500
50
MW
RS
RS
8000
RS
7000
8500
RS 9000
Deficit
100 MW
S3
50 MW
Rs 7.5/u
S1
50 MW
Rs 8/u
S2
40 MW
Rs 8.5/u
B2
150 MW
Rs 9/u
S1
B1
S2
S3
Surplus
120
100
MW
80 MW
RS 9500
6000
8000
5500
RS
100
MW
Required
Flow
100 MW
B1
50 MW
RS 8.5/u
B3
30 MW
Rs 7/u
S2
100 MW
Rs 5.5/u
S2
20 MW
Rs 8/u
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S1
80 MW
Rs 9.5
B1
100 MW
Rs 6/u
Congestion Management
SR
WR
Deficit
100
20 MW
MW
Surplus
100
20 MW
MW
Lowest Buyers getting rejected
S3
50 MW
RS 7500
S1
50 MW
RS 8000
S2
40 MW
RS 8500
B2
150 MW
RS 9000
Highest Seller getting rejected
Allowed
Flow
20 MW
B1
50 MW
RS 8500
B3
30 MW
RS 7000
S2
100 MW
RS 5500
S2
20 MW
RS 8000
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S1
80 MW
RS 9500
B1
100 MW
RS 6000
Risk Management System
Trader 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
Facilitator Member
 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.
At D+1 14:00 Hrs : Pay-out.
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Performance so far…
IEX won India Power Award for
“ Best e-enabled consumer platform”
17th November,2009
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OA status in India
Northern Region
States
Buy
East & North Eastern Region
States
Sell
Buy
Sell
Assam & Bihar
Haryana
Manipur & Mizoram
Punjab
Tripura & Sikkim
Rajasthan
Jharkhand
Arunachal Pradesh
HP & J&K
Meghalaya
Uttaranchal
Orissa
Delhi & UP
West Bengal
Western Region
States
Madhya Pradesh
Buy
Southern Region
Sell
States
Andhra Pradesh
DNH&DD-UT
Gujarat
Chhattisgarh
Maharashtra
23-Mar-16
Karnataka
Tamil Nadu
Kerala
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Buy
Sell
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
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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 MUs unconstrained (23rd September 10)
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IEX monthly Average Price
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IEX Monthly Volume
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IEX Dominant Market Share
(DAM+TAM)
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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
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IEX Membership Category
Proprietary Member
(right to trade and clear on its own account)
Generator- Distribution licensees- IPPs - CPP- MPPs –O A consumers
Professional
(trade and clear on behalf of its Clients)
NO CREDIT /FINANCING
Electricity Traders
(trade and clear on behalf of its Clients)
CREDIT /FINANCING
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Clients
Grid Connected
Generator, Distribution
licensees, IPPs, CPP, MPP, OA
consumers
Trader Client
With valid PPA
Financial Requirements
Membership Category: Proprietary / Professional Member The
financial criteria for payment options available on IEX are:
Fees
Professional & Proprietary &
Electricity Trader
(Full Payment Option)
Proprietary member
(Light Payment
Option)
Admission fee
Rs. 35,00,000*
Rs. 10,00,000
Interest Free Security
Deposit
Rs. 25,00,000
Rs. 10,00,000
Annual Subscription
Fees
Rs. 5,00,000
Rs. 2,50,000
Rs. 10,000
Rs. 10,000
Rs. 65,10,000
Rs. 22,60,000
1p/kWh
2p/kWh
Processing Fees
TOTAL
Exchange Transaction
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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
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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.
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Renewable Energy Certificates
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Introducing an another option… REC
Feed-in Tariff
REC Option
[State Regulated Tariff]
Electricity
Sale of Electricity
at Market Price in
open market
Sell to DisComs at
Price ≤ Pooled Cost
of Power Purchase*
Green Attributes
REC
[Solar & Non-Solar]
Sale of electricity to
DISCOMs at State
regulated tariff
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
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Salient Features of REC Mechanism
Participation
Voluntary
REC Denomination
1 MWh
Validity
365 Days after issuance
Categories
1. Solar REC 2. Non-Solar REC
Trading Platform
Power Exchanges only
Banking
Not Allowed
Borrowing
Not Allowed
Transfer Type
Single transfer only , repeated trade of the same certificate is
not possible
Penalty for Non-compliance
‘Forbearance’ Price (Maximum Price)
Price Guarantee
Through ‘Floor’ Price (Minimum Price)
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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)
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2200
300 REC Sell @ Rs 2000
MCP: Rs 2200/REC
200 REC sell @ Rs 1700
100 REC Buy @ Rs 3900
100 REC Sell @ Rs 1500
Cleared volume : 600 RECs
BUY
SELL
A 100 REC @
A
100 REC @ Rs
1500
B
200 REC @ Rs
1700
C
300 REC @ Rs
2000
Rs 3900
B 600 REC @
Rs 2200
C 200 REC @
Rs1700
MCP Rs. 2200 /REC, Cleared Volume : 600 RECs
200 REC Buy@ Rs
1700
600 REC Buy @ Rs 2200
600
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REC - Fee & Charges
State Nodal Agency
Central Agency
Accreditation
Fee & Charges
Registration
Fee & Charges
Application
Processing Fee
Rs. 5000
Application
Processing Fee
Rs. 1000
Accreditation
Charges (One Time –
Rs. 30,000
Accreditation
Rs. 5000
Charges (One Time –
for 5 Years)
for 5 Years)
Rs. 10,000
Annual Charges
Rs. 1000
Re-Validation Fees Rs. 15000
Re-Validation
Fees (After 5 Years
Rs. 5000
Annual Charges
(After 5 Years
Central Agency
IEX
Issuance
Fee & Charges
Redemption
Fee & Charges
Fees Per REC
issued
Rs. 10
Fees Per REC
issued
Rs. 10
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REC - Fee & Charges Impact
Cost Impact of Fee and charges in First Year
Assumptions:
•
Project of Capacity = 1 MW
•
Capacity Utilisation Factor = 22%
•
•
Cost Head
REC @ 1500
REC @ 2600
REC@3600
Accreditation
45000
45000
45000
Registration
7000
7000
7000
Issuance
19270
19270
19270
71720
71720
71720
2890500
5010200
6937200
2.48%
1.43%
1.03%
3.7 Paise
3.7 Paise
3.7 Paise
TOTAL COST
No. of Units Generated = 19.27 MU
Revenue from
REC
No. of REC Issued = 1927
% Cost Incurred
Paise Impact Per
Unit
Similarly the cost impact (in Paise / Unit) for:
TWO Year
THREE Year
FOUR Year
FIVE Year
2.15 Paise
1.65 Paise
1.32 Paise
1.20 Paise
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REC trade at IEX
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Benefit for RE Generators from REC Mechanism
Installed Capacity of a Plant in MW
10.0
Average RE Generation PLF/CUF over a Year
22.0%
Annual Generation in MUs
19.272
Option 1: PPA with State Utility
Description
Option 2: Availing REC Benefit
Amount (Rs)
Description
Amount (Rs)
1A. State Regulated Tariff (Rs./kWh) 3.75
2A. Market Rate/APPC for Electricity
(Rs./kWh)
2.60
1B. Income from CERs (Rs./kWh))
0.40
2B. Income from RECs (Rs./kWh))
2.615
1C. Total Revenue per year (Million
Rs.)
79.98
2C. Income from CERs (Rs./kWh))
0.40
2D. Expenses for availing and trading
RECs (Rs/kWh)
-0.15
2E. Total Revenue per year (Million
Rs.)
105.321
Net benefit derived by an RE Generator from REC Mechanism [2E – 1C] (Amount in Million
25.343
Rs.)
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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
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IEX Initiatives
Continuous communication with Users
IEX Daily SMS
Service for Trade
Details
IEX hourly
Trade Prices
displayed on
its website
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IEX Monthly
Bulletin
Thank You !!!
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Promoters
Joint Equity Partners:
Technology :
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