“ Introduction to Power Markets”

www.iexindia.com

February 14-15, 2011

Rajesh K Mediratta

VP- Business Development

17-Feb-11

Outline

• Introduction to Power Markets

• Indian Power market

• Indian Energy Exchanges – Products

www.iexindia.com

– DAM (Trading Details, Congestion Management, Scheduling)

– TAM (Trading Details, Scheduling)

– REC

• SAARC Energy Exchange – Way forward

Development of Power Market

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Market Models in Power Sector

• Complete Monopoly

• Single-Buyer Model

• Wholesale Competition

• Retail Competition or Direct

Access

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Access

Transmission Co.

Gen.Co.-1

Gen.Co.-2

Gen.Co.-3

Competition in generation

Transmission a natural monopoly therefore regulated

Whole Sale Competition

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Transmission Co.

Dist.Co.-1

Dist.Co.-2

Dist.Co.-3

Consumers

therefore regulated

Distributors can choose who will supply them (Distributor can buy from any GENCO).

Transmission Co.

Gen.Co.-1

Gen.Co.-2

Gen.Co.-3

Competition in Generation

Transmission: Natural monopoly

Retail Competition

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Retailers / Suppliers

Distribution System

Consumers

Retailers / Suppliers can choose who will

supply them

Distribution: A monopoly

End consumer can choose who will supply them

Market Development M

atu

rity

Exchanges

Derivatives

www.iexindia.com72/17/2011POWERGRID

Time

Ma

rke

tM

atu

rity

OTC /

Bilateral

Markets

Individual

B & S

Competition in Electricity Market

To make electricity market competitive following elements are essential:

► Several buyers and sellers to avoid exercise of market power

► Demand and supply responsiveness to price

► Equal access to essential facilities like transmission and distribution

► Liquid and efficient marketplacesMulti-buyer multi-seller model

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► Liquid and efficient marketplacesMulti-buyer multi-seller model

► Open Access both at utility level and consumer level

► Competitive procurement for medium-term and long-term power

► Development of a vibrant trading platform

network ownerssystem operator(s)

regulatorsInfrastructure

Power MarketsThe players and their function

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power exchange(s) Market Places

generatorsConsumers

tradersnon-license members

Market Participants

Role of Power Exchange

► A neutral and easy access to the marketplace

► Standardized Contract

► Offers “law of One Price”

► An automatic interface.

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► An automatic interface.

► Clearing & settlement of deals

► Security by being a safe counterpart

►Information disemination among the participants

Evolution of Electricity Market

2008

1998…1996..

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2001….

2004

APX

UK

European Power Exchanges

Nord Pool

Emerging system price zones?

Market Copling

Consolidation?

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12

OMEL

UK

EEX / Powernext

GME

OMIP OPCOM – SE POOL

Indian Power Market – An Overview

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Ancillary

Market

Evolution of Power Market in India

Capacity

Market

Financial

Derivatives

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Grid Code

Feb.’2000

Market

Settlement System

2002-03

Open Access

2004

Power Exchange

2008

NEW Grid

South

Grid

October 1991

East and Northeast

synchronized

March 2003

West synchronized

With East & Northeast

August 2006

North synchronized

With Central Grid

Five Regional Grids

Two Frequencies

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South

West

North

East

Northeast

Five Regional Grids

Five Frequencies

Central Grid

Installed Capacity 162 GW

MERGING

OF

MARKETS

Indian Power Market

Indian Power Market

Long Term Short Term

BilateralBilateral

Medium

Term

BilateralBilateral

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UIPPA’s2 Trader

Bilateral1 Direct

2 Trader

Exchange

1.Day Ahead

2. Same day

3. FCFS

4. Upto 3

months

5. Banking

Day Ahead

1. Intra day

2. DAC

3. Daily

4. Weekly

5. Monthly

Real

Time

2 Trader

Bilateral1 Direct

2 Trader

Long-term market (88%)

State Sector

generation

45 %

Central Sector

generation

37 %Pvt

Sector

Generation

Electricity Market Segments

Short-term market

(12%)

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9%

Bilateral Market (52.32%)

Through Traders

38.37%

Direct Trading

13.95

UI (30.10 %) Exchange

(17.58 %)

Short-term Market

As per CERC August 2010 MMC Report

Indian Energy Exchanges – Products

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● Day-Ahead Market

● Term-Ahead Market� Intra-day, Day-Ahead Contingency

� Daily

� Weekly

� Monthly (awaiting approval)

● RE Certificates Market

Products on Exchange

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● RE Certificates Market � Commenced since November,2010

� Sellers :RE generators sell certificates

� Buyers: Obligated entities purchase certificates to fulfill RPO

� National market for RE

Day-Ahead Market

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IEX - DAM Product Description [1/2]

• Order Types:

– Hourly or Portfolio Orders

• Min 1 hour

• Different Price-Quantity Pairs

• Partial Execution Possible

– Block Orders

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• 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)

• Trading Availability

– Every Calendar Day

• 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

IEX - DAM Product Description [2/2]

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• 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

Time Line for scheduling of Collective Transaction

10:00 14:00 18:0012:00

Market

RLDCs/SLDCs to

incorporate

Collective

Transactions in

13:00 15:00

NLDC to

confirm

17:30

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Market

Participants to

place their Bids

PX to send Scheduling

Request to NLDC based

on margin specified by

NLDC

Transactions in

the Daily

SchedulePX to send

provisional

unconstrained

solution to

NLDC and flow

on TS as

informed by

NLDC

NLDC to check

for congestion.

In case of

congestion shall

intimate PX

regarding to the

period for

congestion and

available

margins

confirm

acceptance. PX

to send files to

SLDCs for

scheduling

Scheduling and open access for collective transactions

discovered in a power exchange through anonymous

simultaneous competitive bidding by buyers and sellers,

presently on day-ahead basis.

Collective transaction:

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presently on day-ahead basis.

• NLDC shall indicate by 11:00 hrs, the list of interfaces/transmission system

on which unconstrained flows are required.

• Power exchange(s) by 13:00 hrs shall furnish interchange on various

interfaces along with information on total drawal and injection in each of

the regions.

NLDC to check for congestion and intimate to the exchange by 14:00 hrs.

Collective transaction:SUBMISSION/PROCESSING OF APPLICATION

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• NLDC to check for congestion and intimate to the exchange by 14:00 hrs.

• Application to be submitted by power exchange(s) to NLDC by 15:00 hrs

each day for transactions to be implemented on the following day.

• Power exchange shall club all buyers within a state in one group and all

sellers in another group for purpose of scheduling by RLDCs.

• NLDCs shall send the details to various RLDCs by 16:00 hrs for final

checking and accommodating them in their schedules. The RLDCs should

confirm acceptance to NLDC by 17:00 hrs.

• NLDC to convey acceptance of scheduling of collective transactions to

power exchange(s) by 17:30 hrs.

Collective transaction:SUBMISSION/PROCESSING OF APPLICATION

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Collective transaction:

SCHEDULING

• Inter-regional schedules to be issued by RLDCs at 18:00 hrs

each day.

• RLDCs shall schedule the Collective Transaction at the

respective periphery of the Regional Entities.

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Collective transaction:COMMERCIAL CONDITIONS

� Non-refundable fee of Rs. 5000/- payable along with each Application.

� Transmission Charges, for use of inter-State transmission system, at the

rate of Rs.30/MWh for the energy approved for transmission for each

point of injection and for each point of drawal.

� Operating Charges @Rs.5000/- per day per Entity involved.

� All Buyers within a State shall be clubbed together into one group and all

Sellers within a State shall be clubbed together into another group by the

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Sellers within a State shall be clubbed together into another group by the

Power Exchange(s).

� Payments of Transmission Charges and Operating Charges shall be made

by the Power Exchange(s) to the NLDC/SLDC (in case of intra-state), by

next working day falling after the day on which its Application was

processed at NLDC.

Price (Rs./kWh) 0 20 1 2 2.1 3 3.1 4 4.11.1 2.5

Portfolio A, MW 20 020 1020

Portfolio C, MW 40 -400 -12020 0 -120-80 -81-60

SUM, Sell 0 0 -40 -120-120-80 -81-60

Net transaction 120 20 -100-80-20 -21100 80 80 -1000

Price Calculation Algorithm ….each hour

20 0

5.0

Portfolio B, MW 6060 2050 40 4040 4040 20

SUM, Purchase 120 100 80 80 70 60 50 40 204060 20

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0

50

100

150

200

250

-150 -100 -50 0 50 100 150

MW balance

Pri

ce

($

/MW

h)

0

50

100

150

200

250

-150 -100 -50 0 50 100 150

MW balance

Pri

ce

($

/MW

h)

1

2

3

4

5

Rs.

/kW

h

2.52.52.52.52.52.52.52.5

Pri

ce (

Rs.

/MW

h)

Volume (MW)

Purchase

Sell

Terminology

• Bidding Area: A geographical area comprising whole or part of actual PX market area. All bids must be related to a bidding area.

• Market Clearing Price (MCP): The Unconstrained Initial Price consisting of all bidding areas.

• Partial Calculation Area: Smaller Calculation area that arises after splitting the bid area.

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• Area Clearing Price (ACP): A set of bidding areas that gets common price (i.e. no internal bottlenecks) as end result of SAPRI price calculation.

• Bottleneck: A cut where calculated flow exceeds capacity.

• Source: The surplus partition of a calculation area.

• Sink: The deficit partition of a calculation area.

BID AREAS

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Trader Station: Single Bid

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Trader Station: Block Bid

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Linked Block Bid

• Mother-Child Linked Bids

Link different block bids; condition of selection of linked block bid (child block bid)

will depend upon the selection criteria of “linked to” (mother block bid) block bid.

Rules for bid linking :

• A bid (bid B) can only be linked to one other bid (bid A).

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• Both bid A and bid B must be of same type, i.e. sale-sale or purchase-purchase.

• Bid A and bid B can span any set of hours independently of each other.

• Bid A and bid B can have any bid price independently of each other.

Collective transaction:

TREATMENT OF LOSSES

• Inter-state transmission losses to be applied separately on buyers and

sellers.

• To compensate for losses in the system, the sellers shall inject extra power

into the system in addition to the contracted power.

• To compensate for losses, the buyers shall draw less power than

contracted.

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contracted.

• Intra-state transmission losses should also be taken care of in the

schedules by respective SLDCs.

• 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)

Treatment of Losses

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(Contracted Power + Losses)

• Average Transmission Losses of the Region where the Entity is geographicallylocated

• Additional Losses for Wheeling, if necessary– To be notified in advance by NLDC– Only for Injection

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

Bid VolumeScheduled Drawal

<= SLDC Clearance

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100 MW

at NR periphery

NR

Loss

6%

94 MW at S1

periphery

S1

Loss

4.85%

89.441 MW at

Buyer End

X

(Buyer)

<= SLDC Clearance

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

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 VolumeScheduled Generation

<= SLDC Clearance

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SR

Loss

6%

111.14 MW

Injected by seller

at its end

A1

Loss

4.85%

Y

(Seller)106 MW at state

periphery 100 MW at

regional

periphery

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

Open Access Charges

• All Payment related to Open Access Charges

– Payment to be made by Applicant to the Nodal RLDC

– within three working days from the date of acceptance

• Application Fee:: (Rs. 5000/-) to Nodal RLDC

– Along with application (for Advance/FCFS transaction)

– With in 3 working days ( for same day or next day transaction) fromthe date of application submission.

• Transmission charges :: to be in Rs/MWH

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• Transmission charges :: to be in Rs/MWH

– Intra-region (Rs.80/MWh)

– Adjacent Region (Rs.160/MWh)

– Wheeling (Rs.240/MWh)

– STU charges – as specified by respective SERCs or Rs.80/MWh(default)

– Collective transactions:;Rs100/Mwh

Congestion Management

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Congestion Management

SR WR

S1

50 MW

RS 8000

B1

50 MW

RS 8500

B2

150 MW

RS 9000

S2

40 MW

RS 8500

S3

50 MW

RS 7500

B3

30 MW

RS 7000

Deficit

100 MW

S1

80 MW

RS 9500

B1

100 MW

RS 6000

S2

120 MW

RS 8000

S3

100 MW

RS 5500

Surplus

100 MW

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S1

50 MW

Rs 8/u

B1

50 MW

RS 8.5/u

B2

150 MW

Rs 9/u

S2

40 MW

Rs 8.5/u

S3

50 MW

Rs 7.5/u

B1

100 MW

Rs 6/u

S1

80 MW

Rs 9.5

B3

30 MW

Rs 7/u

S2

20 MW

Rs 8/u

S2

100 MW

Rs 5.5/u

Required

Flow

100 MW

Congestion Management

SR WR

Deficit

100 MWSurplus

100 MW

Surplus

20 MW

Highest Seller getting rejectedLowest Buyers getting rejected

Deficit

20 MW

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S1

50 MW

RS 8000

B1

50 MW

RS 8500

B2

150 MW

RS 9000

S2

40 MW

RS 8500

S3

50 MW

RS 7500

B1

100 MW

RS 6000

S1

80 MW

RS 9500

B3

30 MW

RS 7000

S2

20 MW

RS 8000

S2

100 MW

RS 5500

Allowed

Flow

20 MW

Highest Seller getting rejectedLowest Buyers getting rejected

price

area 1

price

area 2

price

area 1 & 2

Congestion Management : Market Splitting

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MWhMWh MWh

Needed capacity for exchange between the areasNeeded capacity for exchange between the areas

in order to achieve the same price in both areasin order to achieve the same price in both areas

Courtesy Nordpool Consultancy

area 1

price

area 2

price

(exchange volume)

area surplus

at

MCP

needed

capacity

available

capacityavailable

capacity

price forprice for

area 2area 2

SystempriceSystemprice

Congestion Management : Market Splitting

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MWh MWh

(exchange volume)

area deficit

at

MCPneeded

capacity

available

capacity

available

capacity

price forprice for

area 1area 1

SystempriceSystemprice

Courtesy Nordpool Consultancy

Risk Management System

�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

Trader Member Facilitator Member

� D-1 At 09:30 Hrs : Pre-trade Margin Check.

� equal to the 100% of the

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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.

� 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.

Availability Based Tariff (ABT)

Applicable to participants buying/selling in Short-term

Settlement system for contracted sale / purchase of power.

Two parts of triff system

1. Energy charges

for scheduled energy

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2. Imbalance Charges : Unscheduled Interchange Charges for deviation from schedules

10.00

12.00

14.00

16.00

18.00

20.00

U I Rates w.e.f May 03, 2010

UI

Ra

tes

in R

s/U

nit

U I Rates

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0.00

2.00

4.00

6.00

8.00

10.00

49

.00

49

.04

49

.08

49

.12

49

.16

49

.20

49

.24

49

.28

49

.32

49

.36

49

.40

49

.44

49

.48

49

.52

49

.56

49

.60

49

.64

49

.68

49

.72

49

.76

49

.80

49

.84

49

.88

49

.92

49

.96

50

.00

50

.04

50

.08

50

.12

50

.16

50

.20

50

.24

50

.28

UI

Ra

tes

in R

s/U

nit

Frequency in Hz

Balancing Market (UI)

• Third part of ABT

• Frequency linked rates

• Incentives for helping the Grid

• Inculcates self discipline

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• Inculcates self discipline

• Scientific commercial mechanism

• Simple dispute-free weekly settlement

Term-Ahead Market

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TAM Market Segments

Open Auction Continuous

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Open Auction Continuous

Continuous Continuous

Bilateral transaction:

“Bilateral transaction” means a transaction for exchange of energy (MWh)

between a specified buyer and a specified seller, directly or through a

trading licensee or discovered at power exchange through anonymous

bidding, from a specified point of injection to a specified point of drawl for

a fixed or varying quantum of power (MW) for any time period during a

month.

• Scheduling and open access up to three months in advance.

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• Scheduling and open access up to three months in advance.

• Scheduling and open access for the current month up to four days in

advance.

• Scheduling and open access for the day-ahead and up to three days in

advance.

• Scheduling and open access for the same day in the event of a

contingency.

Bilateral transaction: APPLICATION SUBMISSION

• RLDC will check if connectivity with CTU/ ISTS or STU system (as the case

may be) is established, necessary metering , protection, communication

are in place, transfer capability upto the CTU network for power flow of

the quantum of injection/drawal applied for is available on the date of

application and whether the applicant has undertaken to abide by the

Central Electricity Authority (Technical Standards for Connectivity to the

Grid) Regulations, 2007.

• Application to be submitted to::

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• Application to be submitted to::

– Nodal RLDC where point of drawal is situated

– & also to all RLDCs involved in the transaction

• Application Contents

– Details:: Buyer / Seller / Point of injection/ point of drawal /Contracted power at supplier interface/ date/ time period (as per(Format-I-Application for scheduling) along with application fee.

Bilateral transaction: ADVANCE SCHEDULING

• Advance Scheduling – 3 months in advance

• Separate Application –

– Month wise - each transaction

• Time Line for submission

– Last date for submission ( -10 / -5 / 0 days prior to end of currentmonth MO – for transaction in M1, M2, M3)

– Cut-off time of application: 17:30 Hrs. of last day (Day 0)

– Request for concurrence (RLDC) – by 12:00 Hrs. next day (Day 1)

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– Request for concurrence (RLDC) – by 12:00 Hrs. next day (Day 1)

– Concurrence - by 20:00 Hrs (Day 1)

– Congestion Information to Applicant – next day 12:00 Hrs (Day 2)

– Revised Request – next day 11:00 HRs. (Day3)-Format-V-Request forrevision due to congestion)

– E-bidding – in case of Congestion (Day 4)

– Acceptance/Refusal of Scheduling Request – (Day 5)-Format-VI-Acceptance for scheduling

Bilateral transaction: e-bidding procedure

• Invitation of Bids from the concerned applicant– period of congestion– RTS/IR corridor – expected to get over stressed

• Only Registered Users– User ID & Password– Electronic submission – website of CTU– Bid Closing time as specified– Single Price Bid– No Modification/withdrawal once submitted

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– No Modification/withdrawal once submitted• Bid Price• – In addition to Open Access Transmission charges

- Multiples of Rs. 10/ MWh . ( Min. Rs. 10/MWh)• Mandatory - Non-participation – Rejection of Application• Acceptance - Decreasing order of Price Quoted• Equal Price Bids – Pro-rata• Applicant getting approval < request � Charges as quoted• Applicant getting approval=request � Charges as paid by last applicant getting

approval = request

“First-come-first-served” basis

• Scope

– FCFS shall be considered only when transactions are commencing & terminating in the same calender month.

• Separate Application for each month

• To be submitted 4 days prior to date of Scheduling

• Processing time – 3 days on FCFS basis

• Application Received upto 1730 hrs in a day to be processed together –

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• Application Received upto 1730 hrs in a day to be processed together –same priority

• Application Received after 17:30 Hrs. - to be considered as received next day

• Congestion Management – pro-rata

Day-ahead bilateral transaction

• Applications received within 3 days prior to the day of

Scheduling and up to 15:00 Hrs. of the day immediately

preceding the day of scheduling shall be treated as same

priority

• Processing only after processing of the Collective

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• Processing only after processing of the Collective

Transactions of the Power Exchange (s)

• Congestion Management – Pro-rata

Contingency

• Buying Utility/Trader on its behalf to make an Application tothe Nodal RLDC

• To be considered after 1500 hrs of the day immediatelypreceding the day of scheduling

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• In case of intra-day/same day –

scheduling from 6th time block

• Congestion Management – Pro-rata

Incorporation in daily schedules

• Incorporation in Daily Schedules of the RegionalEntities

• Average energy losses - estimated on weekly basis

– RLDCs – ISTS (Inter Control area)

– SLDC – (Intra-State/Control area)

• Resolution of 0.01 MW at each State/inter-Regional

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• Resolution of 0.01 MW at each State/inter-Regionalboundaries.

• Losses on the system to be compensated by Drawingutility (net drawal schedule after deducting losses)

• Ramp-up- commencement of the transaction

• Ramp-down- at the time of termination of thetransaction

MATCHING OF BIDSOPEN UNIFORM AUCTION

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The Sellers

S1S2

S3S4

S5 S6

The BuyersTrade MatchedSelected Sellers : S1,S2,S3,S4 (partial)Selected Buyers : B1,B2,B3,B4MCP :Rs 8000/MWh Volume: 125 MW

50 MW @ Rs

5,500

40 MW @ Rs

7,000

50 MW @ Rs

8,000

50 MW @ Rs

9,000

50 MW @ Rs

10,000

10 MW @ Rs

6,000

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B1B2

B3 B4

B6B5

B7

125

10 MW @ Rs

10,000

40 MW @ Rs

9,000 50 MW @ Rs

8,000

25

MW

@ Rs

8,000

25

MW

@ Rs

7,000

50 MW @ Rs

6,00050 MW @ Rs

5,500

Advantage of Closed Double Sided Closed Bidding

• Better price discovery due to independent bidding by sellers

and buyers.

• Uniform pricing is achieved.

• Non discriminatory pricing i.e. Price is free from any

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• Non discriminatory pricing i.e. Price is free from any

extraneous factors

• Competitive quotes from the participants.

MATCHING OF BIDS CONTINUOUS TRADING

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CONTINUOUS TRADING

TWS Screen

Pending Buy Order Pending Sell Order

Sell 15 MW @ RS 5500/MWhBuy 10 MW @ Rs 4500/MWh

Trading Engine

Buy 10 MWh @ RS 4500/MWh Sell 15 MWh @ RS 5500/MWh

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Buy 10 MW @ Rs 4500/MWh Sell 15 MWh @ Rs 5500/MWh

Buy 10 MWh @ RS 4500/MWh Sell 15 MWh @ RS 5500/MWh

TWS Screen

Pending Buy Order Pending Sell Order

Sell 15 MW @ Rs 5500/MWhBuy 10 MWh @ 4500

Trading Engine

Buy 10 MW @ RS 5000/MWh

Buy 10 MW @ RS 5000/MWh

Buy 10 MW @ RS 4500/MWh

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Buy 10 MW @ 5000/MWh

Buy 10 MW @ RS 5000/MWh

TWS Screen

Pending Buy Order Pending Sell Order

Sell 15 MWh @ 5500

Trading Engine

Sell 15 MW @ Rs 5000/MWh

Buy 10 MWh @ 5000

Buy 10 MWh @ 4500

Sell 15 MWh @ 5500Sell 5 MW @ Rs 5000/MWhBuy 10 MW @ RS 4500/MWH

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Sell 15 MWh @ 5500Sell 15 MW @ RS 5000/MWh

Sell 15 MW @ Rs 5000/MWh

Trade 10 MW @ RS 5000/MWh Bid Modified

Types of Contracts

• Weekly and Daily

– FBA -- Firm Base – 24 Hrs

– FNT -- Firm Night – 8 Hrs (0-7 & 23-24)

– FDY -- Firm Day – 11Hrs (7-18)

– FPK -- Firm Peak – 5 Hrs (18-23)

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• Day Ahead Contingency and Intra-Day

– Hourly ( DAC-24 hrs & Intraday-18-24)

Region Specific Contracts

Trading of Intra day Contracts

Trading Hours 5 (12-17)

12-13

13-14

Delivery Hour 6 (18-

24)

18-19

19-20

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13-14

14-15

15-16

16-17

19-20

20-21

21-22

22-23

23-24

Trading of Weekly & Daily Contracts

SUNDAY MONDAY TUESDAY WEDNESDAY THURSDAY FRIDAY SATURDAY

1 2 3 4 5 6

7 8 9 10 11 12 13

Weekly

Daily

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14 15 16 17 18 19 20

21 22 23 24 25 26 27

28 29 30

Treatment of Losses…TAM

• An Example: Seller in NR, Buyer in SR, FBA Contract of 100 MW at Seller’s State

Periphery (Delivery Point).

StateNR SRERState

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State

Buyer

4%84.48 MW at

Buyer end

NR

Loss

3.5%

SR

Loss

5%

ER

Loss

4%

State

Seller

3%

X

(Sell)

Contract Region

(Delivery Point)

103.09 MW

at Seller end

Y

(Buy)100 MW at

State

Periphery

96.5 MW at

Region

Periphery

88 MW at

State

Periphery

92.64 MW at

Region

Periphery

* Loss and charge details are of indicative purposes

Transmission and Operating Charges…TAM

• An Example: Seller in NR, Buyer in SR, Contract of total 1000 MWh at Seller’s State

Periphery (Contract Region). All transmission charges will be paid on the basis of

total MWh at the point of injection.

Charges to be paid

by Seller Charges to be paid by Buyer

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NR

Tx-

Rs.80/MW

h

Op-Rs.

2000/Day

SR

Tx-

Rs.80/MW

h

Op-Rs.

2000/Day

ER

Tx-

Rs.80/MW

h

Op-Rs.

2000/Day

State

Seller

Tx-

Rs.40/MW

h

Op-Rs.

2000/Day

X

(Sell)

Contract Region

(Delivery Point)

Y

(Buy)

State

Buyer

Tx-

Rs.35/MW

h

Op-Rs.

2000/Day

* Loss and charge details are of indicative purposes

DAM & TAM Features

Feature DAM TAM

Contracts Day Ahead Intra-day, Day-Ahead Contingency, Daily,

Weekly

Contract Availability National level Region-wise

Delivery Period Hourly RTC, Off Peak, Day, Evening Peak & Hourly

Matching Close, double-sided Auction Open Auction / Continuous

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Scheduling As per “Procedure for scheduling

of Collective Transactions”

As per “Procedure for scheduling of

Bilateral Transactions”

Delivery point Regional periphery Seller’s State Periphery

Losses & Charges Seller: Its State & Region

Buyer: Its State & Region

Seller: till its state periphery

Buyer: from Seller state to its drawal point

Quantity variation Nil Intra-Day & DAC: Nil

Others: Some contracts upto (-)20%

Trading Procedure

MATCHING

Open Auction•Orders accumulated during call phase

(no matching)

• Orders matched after call period

• Orders are used for calculation common price i.e. Equilibrium Price.

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• Orders are used for calculation common price i.e. Equilibrium Price.

• All successful orders matched at Equilibrium Price.

Continuous Trading• Price-time priority based continuous matching

• The highest Buy order & lowest Sell order gets the priority

• If the prices are same then priority is given to the time of the order received.

Renewable Energy Certificates

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Introducing an another option… REC

Feed-in Tariff[State Regulated Tariff]

REC Option

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Sale of Electricity

at Market Price in

open market

Sale of electricity to

DISCOMs at State

regulated tariff

REC [Solar & Non-Solar]

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

Sell to DisComs at

Price ≤ Pooled Cost

of Power Purchase*

Electricity Green Attributes

APPROVED RE SOURCES

WindWind

Biomass,Biomass,

Bio Bio –– fuel fuel

co co -- generationgeneration

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SolarSolar

Small HydroSmall Hydro

Municipal WastesMunicipal Wastes

Any type/source Any type/source approved by approved by MNREMNRE

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

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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)

Price Discovery Mechanism Closed Double-sided Auction

Trading Calendar Last Wednesday of the month (T day)

Trading Period 1300-1500 hrs (T day)

Market Clearing 1700 hrs(T day)

Floor Price Forbearance Price

Solar RECs Rs. 12,000/REC Rs. 17,000/REC

RECs Floor/Forbearance Price

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Non-Solar RECs Rs. 1,500/REC Rs. 3,900/REC

1 REC is equivalent to1 MWh

Reference : CERC Order in matter of Petition no. 99/2010, dated March 23, 2010

Process

Procedure for ACCREDITION Procedure for ACCREDITION ((Through State nodal Agency)Through State nodal Agency)

Procedure for REGISTRATION Procedure for REGISTRATION (Through Central Agency NLDC)(Through Central Agency NLDC)

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Procedure for ISSUANCE Procedure for ISSUANCE (Through Central Agency NLDC)(Through Central Agency NLDC)

Procedure for TRADING & REDEMPTIONProcedure for TRADING & REDEMPTION(Through PXs)(Through PXs)

Trading at IEX

Trading Day Last Wednesday of every Month

Market Clearing Closed Double sided auction

Trading Time 1300-1500 Hrs

Verification by Central agency for Valid REC by

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By 1530 HrsVerification 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)

Performance so far…

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Performance so far…

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IEX won India Power Award for

“ Best e-enabled consumer platform”

Over 2 years of Adequate Liquidity

• 29 State Utility

• 850+ Portfolios

• 641 Direct consumer 84%

16%

IEX

PXI

IEX Market Share (as on January 31, 2011)

www.iexindia.com

• 641 Direct consumer

• 505+ participants on single day

• Cleared Volume :17.5 Billion Units

• DAM Volume Record

• 59.98 MUs constrained (23rd September ’ 10)

• 61.58 MUs unconstrained (23rd September 10)

Participation at IEX

STATE No. of CPP'sOpen Access

Industrial Consumers

Maharashtra 4 0

Rajasthan 7 22

Karnataka 5 0

Andhra Pradesh 5 17

Punjab 3 209

Orissa 1 2

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Orissa 1 2

Madhya Pradesh 9 3

Chhattisgarh 29 0

Haryana 2 17

Tamilnadu 0 357

Gujarat 6 2

Uttarakhand 0 8

Arunachal Pradesh 0 2

Total 75 641

Increasing Participation

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IEX monthly Average Price

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IEX Monthly Volume

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IEX Day Ahead Market Price & Volume Trend – January’2011

www.iexindia.com

Prices for various time block- January’2011

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SAARC Energy Exchange ?

www.iexindia.com

SAARC Energy Exchange ?

Way Forward

• Integrating Markets

• Liquidity

• Diversity

• Better Price Discovery

• Share Shortages/Surpluses

www.iexindia.com

IEX Capabilities

�The platform can be used for trading :

� Electricity among South Asian Nations

� Associated transmission capacity

� Multi-currency trading

� Certificates for Renewable

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� Certificates for Renewable

� Any Product within Nepal

SAARC Energy Exchange Way Forward ?

• Jurisdictional Issues

� Allowing Grid connected entities from SAARC nations

� Settlement Deviations : Uniformity

� NLDC to act as Nodal Agency for scheduling at national

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� NLDC to act as Nodal Agency for scheduling at national

boundaries

• Imbalance mechanism within each nation

• Nepal-Bhutan-India may be the first to connect markets

SAARC Energy Exchange Similar initiatives

• South African Power Pool (SAPP)

• NORDPOOLNorway:

FinlandNord Pool FinlandHelsinki

www.iexindia.com

• Central-West Europe

Norway:Nord Pool ASANord Pool Spot ASOslo

DenmarkNord Pool DanmarkFredericia

SwedenNord Pool SverigeStockholm

SAARC Energy Exchange Similar initiatives

Several Initiatives in Central-West Europe

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Thank You !!!Thank You !!!www.iexindia.comwww.iexindia.com

Promoters

Joint Equity Partners:

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Technology :

Key Success Factors

• Control area demarcation & boundary metering

• Simple Design

• Robust transmission system

• Balancing mechanism

• Transparency and non-discriminatory implementation

www.iexindia.com

• Compliance

Market Design in Europe

• Mostly decentralized markets

• Voluntary Participation

• Day-Ahead Auctions with Implicit Auction of Capacity

• Trading through OTC markets supplemented by DA auctions

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• Explicit auction for others

• DA markets are coupled, intra-day markets are not accessible across the

border

History of the Liberalisation in the Nordic Electricity Market

SWEDEN

FINLAND

• Electricity Market Act, June/Nov 1995

• Full market opening 1998

• Part of Nord Pool area 1998

Rapid electricity market opening in the 1990´s.

NORWAY

• Energy Act, Jan 1991

• Full market opening 1992

• Power Exchange 1993

• Nord Pool Norway-Sweden 1996

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SWEDEN

• Electricity Market Act, Jan 1996

• Full market opening 1999

• Nord Pool Sweden-Norway 1996

DENMARK

• Electricity Act, 1998

• Energy act amandment, June 1999

• Full market opening Jan 2003

• Nord Pool West Denmark 1999, East Denmark 2000

National marketsplaces replaced by

single Nordic market

Source: Statnett

Nordic Market

Nord Pool Nordic TSOs

Spot market

Elspot- DAM

Intra-day Market

Elbas

MW

Price

Spot price

Demand Supply

Bids / Asks MW

Price

Real time balancing market (BM)

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Auction trade system

Single hour contracts and block contracts

Auction trade

Bid areas approximately national TSO areas

Congestion management between bid areas

Total ATC allocated to DAM

Portfolio bidding

Self dispatch

Balance requirements

Data for 2006:

Trade volume: 250 TW h

Market share: ~ 60 %

Continuous trade system

Single hour contracts

Operates after DAM

Remaining ATC allocated to Elbas

Gate closure 1 hour before delivery

Can manages congestion

Germany is included

Portfolio bidding

Self dispatch

Trade volume (2006): ~ 1 TWh

Based on merit order bid curve

Merit order by price only

Demand side bidding

Starting price connected to DAM price

Manages all real time congestions

Separate BMs for all Nordic countries

Step-wise harmonisation

At present Norwegian hydro power

provide most of the balance power.

Separate imbalance prices for TSOs

• Founded: 1 January 1993

• Owners: All 4 TSOs in the Nordic countries

• Locations: HQ – Oslo (Norway), Stockholm (Sweden), Helsinki(Finland), Fredericia (Denmark), Berlin (Germany) and Amsterdam (the Netherlands).

• Participants: >400

• Physical trade (2005): 176 BUs

• Financial trade (2005): 786 BUs

• Clearing of bilateral

market trades: 1, 316 BUs

Nord Pool Group: Facts and Figures

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market trades: 1, 316 BUs

• Employees: >90

• EEX (Germany): 17.3% shares in EEX (European Energy Exchange)

• PWX (France): Licensing – spot market trading system is licensed to France’s Powernext exchange

NP = Nord Pool ASA, Nord Pool Clearing, Nord Pool Consulting NPS = Nord Pool Spot AS, Nord Pool Spot Finland Oy

Source: Nord Pool

Volume of Electricity Transacted through Trading Licensees

and Power Exchanges (inter-State transmission)

20.00

25.00

30.00

35.00

2.77

7.09

Vo

lum

e (

BU

s)

www.iexindia.com

0.00

5.00

10.00

15.00

2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

11.8514.19 15.02

20.96 21.92

26.82

Vo

lum

e (

BU

s)

Electricity Transacted by Trading Licensees Electricity Transacted by Power Exchanges

2/17/2011

Price trend in Short Term markets

4.1

6

7.0

4

6.4

1

7.5

7

5.7

3

6.8

9

4.9

9

2

3

4

5

6

7

8

Pri

ce (

Rs/

kW

h)

www.iexindia.com

0

1

2007 2008 2009

Pri

ce (

Rs/

kW

h)

Price of Electricity Transacted through Traders

Price of Electricity Transacted through Power Exchanges

Price of Electricity Transacted through UI

• Weighted Average power price in 2009 less than 2008

• Average Price through Traders higher than transaction in Power Exchange

1022/17/2011