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Home News Power Sector News IEX and PXIL traded just 3% of total generation during first-year of operation

IEX and PXIL traded just 3% of total generation during first-year of operation

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Power ExchangeThe two power exchanges in the country,-The Indian Energy Exchange(IEX),Power Exchange India Ltd (PXIL)- created to facilitate trading of electricity in an open market, have recorded total business worth Rs 3,150 crore in the first year of operations.The volume of power traded on these exchanges is just about 3% of the total electricity generated in the country in a year. This is because most of the power produced is sold through long-term bilateral agreements called power purchase agreements (PPAs), ranging for up to 25 years.

The Indian Energy Exchange(IEX), promoted jointly by Financial Technologies—that also operates commodity exchange MCX and power trading firm PTC—generated trading revenues of Rs 3,000 crore since its launch in June 2008. Power Exchange India Ltd (PXIL) backed by NSE, the largest stock exchange in the country, recorded trades worth Rs 150 crore since its launch in October 2008.

The total volume traded on the two exchanges between June 2008 and June 2009 is 393 crore units of which 94% was traded on IEX. Before the power exchanges were set up, sellers and buyers used to strike direct deals with each other. This gave the seller a higher negotiating power as there is shortage of power supply in the country leading to inefficiency in prices.

Now, out of the total quantum of around 3,000 crore units of power traded in the country, about 13% is traded through power exchanges, which is expected to go up after the exchanges are allowed to offer long- term products.

“The exchanges have come a long way over the past year and participation of buyers and sellers has improved. Further, settlement of dues immediately after delivery has significantly improved working capital management of sellers,” said Jayant Deo, managing director & CEO, IEX.

Among the major players in the power market are PTC, trading arms of Tata Power, Reliance Energy, Adani Enterprises and Jindal Power. Some state utilities such as West Bengal State Electricity Distribution Company, Central Power Distribution Company of Andra Pradesh, and Jaipur Vidyut Vitran Nigam are also active participants in the market. NTPC, the country’s largest power generation firm, is not participating in the exchange currently, but plans to launch another power exchange through a joint venture.

PXIL managing director Rupa Devi Singh said Indian power market is different from developed markets, which have surplus electricity. “The power market in India is ready to take the next step through the introduction of the longer tenure products,” she said.

She said PXIL has taken steps to develop intra-state markets, which would play a key role in unlocking captive capacity in the states.

Source- Economic Times

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