The Hindu Business Line : Power exchange: NTPC-led group invites PFC, others

New powerhouse
It will be spot exchange model for developing pricing benchmark for power.
Trades on the exchange can only be settled by deliveries as mandated by CERC
Some power transmission capacity has to be reserve for power exchanges.

Gargi Shah

Mumbai, July 24 The second power exchange proposed to be set up by NTPC-led consortium has offered corporate entities such as Power Finance Corporation and others to join hands with it. NHPC and NCDEX are the other consortium members.

The proposed power exchange would be a spot exchange model for developing pricing benchmark for power. The model is what is called ‘a day ahead model’. This is so as the estimate of supply surplus or deficit is determined a week in advance, as power suppliers and users work out the definite supply surplus and deficit figures a day before that of actual use. Thus, the surplus of one zone can be traded on the proposed spot power exchange.

The trades on the exchange can only be settled by deliveries as mandated by CERC. Thus only genuine users and generators of power can use the power exchange platform.

Although the bid (sell) and ask (buy) trades are matched on the spot exchange, the Power Grid Corporation (PGCIL) transmits power to the purchaser. However, it is not clear if PGCIL has additional transmission capacity to join hands with the proposed power exchange.

But the regulator (CERC) has clarified that some power transmission capacity has to be reserved for the power exchanges, said Mr P.H. Ravikumar, Managing Director of NCDEX. In the long term there is a supply deficit but in the short term there are surpluses that can be traded through the spot exchange, he added.

Today Power Trading Corporation (PTC) is the leading provider of power trading solutions in India and is a Government of India public-private initiative. Power trading through PTC is done over the phone, which results in lack of transparency in the price.

Multi-Commodity Exchange of India has also proposed to set up a power exchange.

CERC’s decision on the NTPC-led power exchange is expected to come by November, as it will take 45 to 60 days to clear the application.