Functioning of Power

Exchanges: Regulation,
Development and Products

Akhilesh Awasthy
Director (Market Operations)

In this presentation
Fundamentals of Electricity Market
Evolution of Power Exchanges
Regulations for Power Exchange
Products at IEX
Future Products

Fundamentals of
Electricity Market

Electricity, a unique commodity

Flow

(Non storable)

Imbalances
Because of
complications in
Production &
Delivery systems,
mismatches will
always exist in supply
& consumption as
against contracted
Power. System
Operator manages
these imbalances

Laws of Physics

Interdependencies

Speed of Light

Congestion
Management

Ancillary
Services

Scheduling &
Dispatch

This commodity
Travels as per laws
of physics which are
unique to itself. We cant
Tell electricity where
to go or not to overload
a route/line. One
transaction of electricity
can affect any or all
other transactions for
delivery.

Production &
Consumption of
electricity is
dependent on
ancillary services
which make the
transmission system
Work, such as
Operating Reserves,
Reactive Power, etc.

SO Schedules Contracts
in advance and mingles
energy in real-time by
Dispatching Generation
to meet demend

Can Electricity Markets be designed to meet

standard economic theory?

Electricity is a flow, rather than a stock

Cannot be metered perfectly
Storing potential energy is expensive
Stochastic retail demand is too costly to moderate via spot
prices and devices for continuous control and metering
Flows on transmission lines are constrained continuously
by operational limits and environmental factors. Imbalances can
injure or destabilize transmission links, electrical systems require continuous
balancing of demand and supply

Ramping rates of generators are limited

Electricity Markets are inherently incomplete and
imperfectly competitive

Electricity Market Design

Electricity markets are designed to match supply and
demand, taking into consideration the technical
limitations, elasticities and delivery requirements
Design is influenced by not only Economic, Engineering
considerations but also by Historical, Political and Social
Considerations. These factors make every country unique.
If the spot electricity markets were complete and perfect then all
forward markets could be organized around financial contracts
pegged against spot prices
The efficiency of Spot Markets to facilitate intertemporal effects as
startup costs and ramping constraints, and spatial effects such as
constraints on transmission lines decides the level of dependence
on Forward Markets

Transformation of Vertically Integrated

to Liberalised Markets
From early 80s to late 90s, the process of privatisation of state
enterprises and liberalisation of markets was underway in
infrastructure industries (Telecom, Water, Gas, Electricity, Transport,
etc)
For Electricity, this shift was justified
by
diminished economies of scale in Generation
to
expose cross-subsidies and to improve efficiency via better pricing and
incentives for greater variety of products and services

as
privatization and liberalization seen as necessary to overcome organizational
inertia, and to attract private investment to serve rapidly growing demand arising
from economic expansion
through
separation of the public good embodied in the infrastructure network, such as
electricity or gas transmission and rail lines, from the associated commodity or
service

Designs for Spot Electricity Market

Power Markets are actually sequences of markets from
the pre-commitment of plants at Day(s) Ahead to real-time
balancing of actual injections and withdrawals; via the
allocation of transmission capacity and the necessary
management of unforeseen congestions.
Evolution of Global Electricity Markets by Sioshansi, 2013.

Vertical

or

Wholesale or Retail

Pool

or

Exchange

Single

or

Multiple

Auction

or

Continuous

Uniform

or

Pay-as-bid

Implicit

or

Explicit

Pool vs Exchange Model

Pool Model

Bilateral/Exchange Model

Generator

Generator

Central
Market

Bilateral
Contracts

Discom/
Consumer

Centralised Dispatch

Bilateral
Contracts

Power
Exchange

Discom/
Consumer

Decentralised Dispatch

Pool vs Exchange Model

Pool

Exchange

Charact
eristics

Largely emulates the originally vertically

integrated and strictly regulated market
architectures

Suited where decentralised markets exist, with

deregulated environment

Pros

Permits an excellent co-ordination of the

various sub-sections of the electricity
market
Considered the only way in which electricity
supply at minimum costs could be ensured
Advantageous if competition is strong or
regulation is effective, if the demand cannot
play a big role in pricing

Easier to achieve an active participation of the

demand side in electricity trading
market participants can usually avoid institutions
which do not work well
Errors in the design of the market cause less damage
and can be identified and remedied faster
Advantages if close co-ordination could be achieved by
means of a suitable market architecture

Cons

Demand side has few incentives and possibilities to make a

contribution in pool models or to respond to prices
Mandatory trading at an electricity pool suppresses the
competition among different market platforms
Defective or deficient design of the procedures and rules at the
pool results to grave imperfections as there wont be alternatives
Focus of the optimisation algorithms on short-term cost
minimisation, which leads to a situation in which investment
incentives can be distorted
Requirement of close monitoring of the market not only implies
high costs but also that the regulator (with poorer information)
has to take decisions which the market takes in an Exchange
model

Coordination problems

Consolidated Overview

Participation
Market Offerings

Nord Pool

PJM

AEMO

IEX

Voluntary for DAM

Compulsory for Real Time

Compulsory for DAM

Voluntary

DA spot, hour-ahead,
forward, futures, options

DA spot, real-time balancing,

capacity credit markets

DA spot, Short term

forwards

DAM, TAM

Double Sided

Double Sided

Double Sided

Double Sided
Closed, Open
Auction &
Continuous

Elbas: Intra-day auction

market

Bid quantity can be changed

till gate closure

--

Not available

Real-time /
Balancing market

Counter trade

Balancing Market

Purchase of ancillary
services & reserve
capacity

UI charge for
deviations

Pricing Rule

Zonal Pricing

Nodal Pricing

Zonal Pricing

Zonal Pricing

Pricing Type

Ex-ante

Ex-post

Ex-post

Ex-ante

Risk
Management

Forwards, futures,
options

FTRs, Bilateral OTC, Multisettlement, virtual bidding

Bilateral OTC, Derivatives

on Sydney Exchange

Bilateral OTC

Congestion
Management

Area splitting

Security constrained
economic dispatch

Locational signals for

transmission

Area splitting

Transmission
Losses

Included in zonal price

Included in LMP

To be purchased by
generators

To be purchased
by participants

Bidding Type
Adjustment
Market

Evolution of Power
Exchanges

Erstwhile Vertically Integrated Structure

Generation
Vertically
Integrated State
Electricity
Boards (SEB)

Transmission

Distribution

Consumer

Consumer

Consumer

Introducing Competition
Electricity Market
Production
Function

Transportation
Function

Generation

Transmission
Distribution

Merchant
Function
Wholesaling (Supply)
Retailing (Demand)

Natural Monopolies

Step-1: Introduce competition in Supply side so as to decrease electricity prices.

(Demand side competition doesnt result in reduction of prices unless
production is competitive)
Step-2: Introduce competition in Demand Side so as to pass the gains in supply side
directly to consumers

Pre requisites for a competitive market

Unbundling of
Utilities

Separation of Vertically integrated utilities, transmission should be separated

from generation & supply

Multi Buyer Model

Choice to consumers to buy from any generator or third party

Choice to generator to sell to any buyer

System operator

Independent System Operator:

To maintain grid security and reliability, transmission allocation

Open Access

Open Access in Transmission & Distribution Network

Imbalance
Settlement
Mechanism

Deviation or Imbalance settlement mechanism to ensure discipline

Balance Responsible Party ( Control Areas)

Trading

Recognizing trading as a distinct activity

Autonomous
Regulator

To overlook the working of the Market

Development of Power Market

Advantages of an Organized Power Market
Market Participants can efficiently manage their portfolios by
choosing different products available under long term , medium term
and short term duration.
Provides an exit route for PPAs.
Efficient Market provides transparency and which may lead to easy
financing .
Markets are driven by the force of economies i.e. demand and
supply and hence the prices are derived.
Market Participants e.g. DISCOMS may reap benefits of real time
balancing.
Typically lower unit pricing compared to standard electricity supply
contracts.
Derivative products may provide an avenue to hedge against spotprice volatility
16

Power Exchange?

Organised Marketplace
Handles

Bidding
Delivery
Money
Risks

Delivery

On-line
Voluntary
National
Automated

Standardized
Contracts
Central
Counterparty

Spot

Intra-Day
Day-ahead

Forward
Weeks

Power Exchange
facilitates

Price Transparency

Ability to know the price of electricity now and in

the future (up to 15-18 months)

Risk Management

Manage price/ delivery risk

Secure and Regulated market

Guaranteed performance of trades

Credit tracking mechanism
Default Mitigation mechanism

Lower Transaction Cost

Flexibility
Term of delivery
Time of Closure

Access to a wider/ larger market spectrum

Role of Power Exchange

A neutral and easy access to the marketplace

Standardized Contract
Offers law of One Price
An automatic interface.
Clearing & settlement of deals
Security by being a safe counterpart
Information disemination among the participants

Power Exchange Functions

TRADING

BROADCAS
T

CLEARING
DELIVERY

SETTLEMENT

POWER EXCHANGE

Easy Access
Anonymous
Transparent
Reliable
Secure

LIQUIDITY

Price
References

Regulations for Power

Exchange

Regulatory Boost for Power Market

Development (1/2)
EA 2003 and enabling provisions on Power Market

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
Recognized Trading as a distinct activity. Defined 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

23

Regulatory Boost for Power Market

Development (2/2)
National Electricity Policy 2005 Para 5.7
To promote market development, 15% of the new generating
capacities, be sold outside long term PPAs.
-As the power markets develop, it would be feasible to finance projects
with competitive generation costs outside the long term PPAs.this will
increase the depth of power markets.and in long run would lead to
reduction in tariff

Open Access Regulations , 2004 & 2008

Universal Open Access to transmission networks
Separate procedures for Day-Ahead Market( collective
transactions) and OTC transactions

24

Evolution of Electricity Regulations

The Indian Electricity Act, 1910
The Electricity (Supply) Act, 1948
Electricity Laws (Amendment Act), 1991
Electricity Laws (Amendment Act), 1998
And Electricity Regulatory Commissions Act, 1998
The Electricity Act, 2003
(Consolidates above laws)

Open Access Regulations, 2004

Power Exchange Guidelines, 2008

Power Market Regulation, 2010

MoL Notice of Open Access Circular , Nov,2011
The Electricity Act Amendment Bill , 2014

Market related legislations in India

Electricity Act, 2003
De-licensing of generation
Development of a multi-buyer multi-seller market in power
Trading licensed activity.

National Electricity Policy,2005

Sec 5.7.1 (f) Enabling Regulations for inter and intra state trading
and also regulations on power exchange shall be notified by the
appropriate commission within six months

National Tariff Policy, 2006

Promote Merit Order
Competitive Bidding compulsory
Cross Subsidy Surcharge formula

Legislative Enabler for operationalization of Power

Markets in India : Electricity Act 2003
Intent of the Act was to promote competition by freeing all
possible avenues of procurement and sale of power:
De-licensing of generation (Sec-7)
Development of a multi-buyer multi-seller market in power
(Restructuring of SEBs Sec 131)
Trading licensed activity (Sec-12).
Non Discriminatory open access to transmission (Sec 38-40) and
Open Access in Distribution (Sec-42)

Autonomous Regulatory Commission (Sec 76) to overlook

functioning of Power markets
Development of Power Market

Section 66 of the Electricity Act 2003 gives powers to the regulatory

commissions to develop the power market including trading

Framework for Development of Power Market

Legislative and Regulatory Framework
Electricity Act, 2003

Open Access means The non discriminatory provision for the use
of transmission lines or distribution system by any licensee or consumer
or a person engaged in generation in accordance with the regulations
specified by the appropriate commission

Open Access to transmission network was introduced after the

Electricity Act,2003
Open Access to inter-state transmission immediately allowed by
the Centre

CERC (Interstate Open Access) Regulation, 2008

Facilitates bilateral transactions
Non discriminatory use of transmission lines
Nominated SLDC/RLDC to carry out transactions

Policy initiative for market development

National Electricity Policy, 2005
~15% of new generation can be sold outside PPA
To increase the depth of power markets
Additional alternative to generators and licensees/consumers to
sell/purchase power which would facilitate reduction in tariff in long
run
As power markets develop, financing projects with competitive
generation costs outside long-term PPA would be feasible
Development of Power Market by Central and State Commission with
due consultation with stakeholders
CSS: the amount of surcharge and additional surcharge levied from OA
consumers should not become so onerous that it eliminates
competition.

National Tariff Policy

8.3.2: Tariff to be +/-20% of cost of supply by 2010-11

Evolution of Power Markets in India:

Regulatory Framework
2004: First CERC OA Regulations
Reservation of transmission capacity: Long Term and Short Term Access
Short term open access granted on inherent margins

2005: Trading License Regulations

2008 & 2009: CERC OA Regulations and Amendments

Defined Power Exchanges
Transaction categorized as Bilateral or Collective (thru PXs)
Transmission charges: PoC Method for collective transactio

Features of Power Market Regulations, 2010

Role of PXs defined and norms for setting up and operating PX
Procedure for application, eligibility criteria, shareholding pattern, Net worth, risk
management by PX,
CERC approval for setting up a PX and oversight for contracts offered
Objectives for PX
Ensure fair, neutral, efficient and robust price discovery
Provide extensive and quick price dissemination
Design standardised contracts and work towards increasing liquidity in contracts
Defined principle of price discovery for the exchange
Economic principle of social welfare maximisation
Closed double sided bidding, uniform price discovery, market splitting for congestion
management

Open Access in Inter-State Transmission

Regulation Implemented w.e.f. 6-May-2004, revised Regulations w.e.f 1st April
2008 and amended in May 2009. Last amended in 2015
Transmission Capacity Reservation Categories
Monthly bilateral
Advance /FCFS
Day ahead bilateral
Collective Transactions through Power Exchange
Intra day bilateral
Nodal Agency
Bilateral : RLDCs & Collective : NLDC
Transmission Charges moved from Contract Path to Point of Connection for
Collective/Bilateral
Other Commercial Issues
Handing deviations from schedule
Handing reactive energy supply/drawl
Payment security
Collection and disbursement of charges

Present Market Overview

Long Term

OTC
PPAs

91%

OTC
Bilateral

<1%

TWh

Upto 25 Years

Short Term Market Remained Stable

Medium Term
3 months 3 years

Short Term

9%

10 %

FY10
FY11
Total Generation

11 %

11%

11 %

FY12
FY13
FY14
Short Term
ST Share (%)

9%

FY15

Exchange Transactions Registered Growth in Short Term Mkt.

OTC
Bilateral
+
EXCHANGE
Weekly
Daily
Day Ahead
Intraday

4%
3%

100%

28

25

21

19

16

24

31

29

38

51

51

53

50

FY11
OTC(ST)

FY12
Exchange

80%

26

28

60%

16

33
FY10

40%
20%
0%

FY13
FY14
DSM (Balancing)

TWh

Intraday - 3 months

1200
1000
800
600
400
200
0

FY15

Installed Capacity Tilted Towards Coal & Renewables

10%

Balancing Market
Real Time

DSM
Frequency
linked

2%

22%
3%
1%
11%

13%
15%

Aug'10
53%

165 GW

2%
0%
9%

Coal
Gas
Diesel

Dec'15
61%

276 GW

Nuclear
Hydro
Ren'

Products at IEX

IEX Market Segments

Delivery-based Contracts
E
L
E
C
T
R
I
C
I
T
Y
C
E
R
T
S

Day-Ahead
Market

Closed , Double-sided Auction

Term-Ahead
Market

Day-Ahead Contingency Another window 3-5pm

10-12 am bidding
Each 15-min block , 0.1 MW min NOC required

since June,08

since Sep,09

Intra-Day

- for the same day, delivery from 14:00 to 24:00

Daily- for rolling seven days (delivery starting after 4 days)

Weekly- for 1 week (Monday-Sunday)

Renewable Energy
Certificates
since Feb,11

Green Attributes as Certificates

Sellers : RE generators not under feed in tariffs
Buyers: Obligated entities
1MWh equivalent to 1 REC

Under development Energy Saving

Auction

Certificates
Continuous

IEX at a glance
ELECTRICITY
Day Ahead Market (DAM)

Term Ahead Market (TAM)

Renewable Energy Cert (REC)

Day Ahead
Market

1. Intra-day
Contracts

2. Day Ahead
Contingency

3. Daily
Contracts

4. Weekly
Contracts

REC Market

Delivery

Next day

1400-2400 Hrs
same day

For next day

From 4th day

to next 7 days

For next week

Next day

Auction Type

Closed
Auction

Continuous
Trading

Continuous
Trading

Continuous
Trading

Open Auction

Closed
Auction

Contract Unit

15 minute

Hourly

Hourly

Block of Hours

Block of Hours

1 Cert

96% Market Share by volume

~80,000 MWh average daily trade

3400+ Participants

3000+ Industries

300+ Generators

DAM Gained Liquidity Over Time

40.0
30.0

7.3

5.2

20.0

3.6

3.5

FY11

FY12

3.5

2.8

FY13

FY14

3.5

10.0
0.0

FY09

FY10

Volume(TWh)

MCP (Rs/kWh)

FY15

Bid Matching
Open/Closed
Auction

Continuous
Trading

Orders accumulated during

order accumulation phase
(no matching)

Price-time priority based

continuous matching

Orders matched after

closure of order
accumulation period
Orders are used for
calculation common price
i.e. Equilibrium Price.
All successful orders
matched at Equilibrium
Price.

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

IEX - DAM Product Description

[1/2]

Bidding
- Double sided Closed Auction

Order Types:
15-min block or Portfolio Orders
Min 15 Min
Different Price-Quantity Pairs
Partial Execution Possible
Block Orders
Relational Block Bid
Any 15-min block or series of 15-min blocks during the same day
Customized block bid allowed

Order Characteristics
SLDC Clearance should be 0.1 MW (Subject to state regulations issued by
concerned SLDC)
Minimum Order quantity cannot be less than 0.1 MW
Minimum volume step: 0.1 MW
Minimum price step: Rs 1 per MWh ( 0.1p/kWh)

IEX - DAM Product Description

[2/2]

Trading Availability
Every Calendar Day

Firm commitment to purchase or sell

Order Entry / revise /cancel
Entry of orders on D-1 from 10:00 hrs to 12:00 hrs
related to Delivery Day (D day)

Delivery Point
Periphery of Regional Transmission System in which the gridconnected entity, is located

Features of Day Ahead Market

Closed double-sided anonymous auction for each
15-min time block for the following day
Intersection between the aggregated sale and
purchase curves defines the market clearing price
(MCP)
12 Bid area defined
Congestion Management through market splitting
and determining Area Clearing Price (ACP) specific
to an area
Bid types: Portfolio Orders or Block Orders
Minimum bid=Re.1 for 0.1MWh
Minimum Price & Volume Step = 0.1p * 0.1 MWh

12 Bid Areas

DAM Price Calculation Algorithm .each block

Price (Rs./kWh)
Portfolio A, MW

20

Portfolio B, MW

60

Portfolio C, MW

40

SUM, Purchase
SUM, Sell
Net transaction

1.1

2.1

2.5

3.1

20

20

20

10

60

50

40

40

40

40

20

-40

-60

-80

-81

-120

120 100

80

80

70

60

60

50

40

-40

-60

-80

-81

-120

80

20

-20

-21

-80

0
120 100

80

4.1

5.0

20
0

40

20

20

-120

40

20

20

-120
-100

-100

Purchase

250
5

Sell

200
4

Price ($/MWh)
Rs./kWh

Price (Rs./MWh)

3
150

2.5

100
2
50
1
0

-150

Volume (MW)

-100

-50

0
MW balance

50

100

150

Term Ahead Market 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.
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.

Salient Features of REC Mechanism

Participation

Voluntary

REC Denomination

1 REC = 1 MWh

Validity

1095 Days after issuance*

Categories

1. Solar REC 2. Non-Solar REC

Trading Platform

Power Exchanges only

Banking/Borrowing

Not Allowed
Single transfer only , repeated trade of the same certificate is not
possible

Transfer Type
Solar RECs

*Floor Price: Rs 3,500 /MWh

*Forbearance Price: Rs 5,800/MWh

Non Solar RECs

Floor Price: Rs 1,500/MWh

Forbearance Price: Rs 3,300/MWh

Penalty for Non-compliance

Forbearance Price (Maximum Price)

Price Guarantee

Through Floor Price (Minimum Price)

*CERC Order dated: 30 Dec14

Future Products

Milestones & Way Forward

PX
SPOT
2004

2008

PX
Forward
Contracts

Transmission &
Generation
Capacity
Market
Ancillary
Market

2009

2003
2001

Way
Forward

Derivatives
(Futures)

Indian Power Market

ProductsMissing Blocks (1/2)
Medium Term
3 months- 3years

Short-Term
Intraday - 3 months

Balancing Market
Real Time

OTC Licensed traders (42)

Exchanges
OTC Intraday- 3 months
Exchanges
1. Intra-day
2. DAM
3. DAC
4. Daily
5. Weekly
6. Monthly
7. Derivatives

Unscheduled Interchange/DSM
Ancillary Services
Demand Response

Indian Power Market

ProductsMissing Blocks (2/2)
Transmission
25 Years

Transmission Licensee
Exchanges

Financial Transmission Rights

Physical Transmission Rights

Missing Blocks (1/2)

Ancillary Services
Ancillary Services for frequency control are a necessity for the huge
Indian power system.
Market based Mechanisms for Frequency Control Ancillary Services help
to procure ancillary services at optimum cost, maximizing the global
welfare.
Proposed Ancillary Mechanism 2015 largely involves URS, to start with

Demand Response
Demand-side response may prove as a appreciation to power
management in supply deficit situation like ours

Derivative Products:
Electricity Derivative (hedge) products allow managing the risk
associated with purchasing electricity off the spot (wholesale) market.
Hedge contracts can shield your expected electricity costs from
unpredictable shifts in the spot market.

Missing Blocks (2/2)

Financial Transmission Rights (FTRs):

Holding a financial transmission right would prevent company from price
hike in power due to transmission congestion.
A counter product to congestion charge.
Transmission right will guarantee the market participant about price
certainty and delivery of power
The aforementioned products can help a participant to better predict demand
and create a portfolio which may optimize his cost.

Energy Savings Certificates

(ESCerts)

PAT
Perform Achieve and Trade (PAT)
A market based mechanism to enhance cost
effectiveness of improvements in energy efficiency in
energy-intensive large industries and facilities, through
certification of energy savings that could be traded

Covers 478 designated consumers in 8 sectors

All DCs consume about 165 mtoe energy
National Target = 6.6 mtoe at the end of 1st PAT Cycle (2012-15)

ESCerts Trading Mechanism

in a nutshell

MoP in consultation with BEE notifies Targets (SEC)

for each DC for a 3 year period. Targets are based on
SEC of a DC in the Baseline period
DCs on closure of target year should get energy audited
(M&V) by AEA and submit the audit result to BEE
specifying the SEC achieved
If SEC in target year exceeds the Target, ESCerts are
issued to the DC (Seller)
If SEC in target year falls short of Target, DC has to
purchase ESCerts for the shortfall
DCs not complying face penal action by SERCs/State
Adjudicator

ESCerts Mechanism
Start

2012

Compliance

Mandatory

Obligated Entities

Energy intensive industries from 8 sectors, 478 in total

Target

6.6 Mtoe for1st cycle, allocated on SEC basis for each plant

Mechanism

Market based Cap and Trade

Banking

Allowed till next cycle

Denomination of ESCert

1 toe

Issuance

Ex-post based on Energy Audit (80% issuance for intra-cycle,

every year)

Cycle span

3 yrs (2012-15 for 1st Cycle)

Market Place

Multiple Power Exchanges, regulated by CERC

Trading Regulator

CERC

Administrator & Scheme Rtor BEE

Central Registry

POSOCO

Penalty

As per Section-26(1A) of EC Act, 2001, to be decided by SDA

Designated Consumers
Industry Sector

Annual Energy Consumption

Norm to qualify as DC (toe)

No. of Identified DCs

Aluminum

7500

10

Cement

30000

85

Chlor-Alkali

12000

22

Fertilizer

30000

29

Pulp & Paper

30000

31

Thermal Power Plants

30000

144

Iron & Steel

30000

67

Textiles

3000

90

Total
Accounts for about 165 mtoe of energy consumption annually
1st Cycle target of 6.686 mtoe (TPPs target share is 3.2 mtoe)
*Railways not included

478

Proposed ESCert Contract on IEX

Name of the Tradable Instrument:
Underlying

Energy Savings Certificate (ESCert)

Energy Savings Attributes of 1toe of energy savings by
Designated Consumer allowed in Energy Conservation (Energy

Consumption Norms and Standards for Designated Consumers, Form,

Time within which, and Manner of Preparation and Implementation of
Scheme, Procedure for Issue of Energy Savings Certificate and Value of
Per Metric Ton of Oil Equivalent of Energy Consumed) Rules, 2012

Instrument Types
Price Quotation
Price tick
Price Limits
Volume tick
Minimum Order volume limit:
Transaction Fee

ESCert denominated by Cycle (e.g. ESCERT-C12-15)

INR/ESCert
1 INR
Not Applicable
1 ESCert
1 ESCert
Specified by the exchange from time to time, upon approval
by the Commission

Matching
Trading Cycle

Closed double-sided uniform price auction

Once a month, Weekly trading from Jan15 to Form -D
submission date (TBD)

REC Vs ESCerts Scheme

REC

ESCert

Cycle

1 year

3 years

Life of Cert

365 days (second time extended to

1095 days)

Closure of second Cycle

(> 3 years)

Target

State specific set by SERC, for Solar

and Non-Solar

Plant/DC specific, set by GoI

Unit

1MWh equivalent
Renewable Attribute

1 Toe
Energy Conserved

Buyers

Obligated Entities (Discoms, CPPs and

OA Consumers)

Designated Consumers
falling short of Target

Sellers

Qualified Renewable Generators

Designated Consumers
surpassing Target

Banking

No

Yes (1 Cycle)

Multiple Trading

No (Once traded renders Extinguished)

---

Floor Price

Yes

(Solar: Rs 3,500 /MWh,

No

Forbearance Price

Yes

(Solar: Rs 5,800 /MWh,

No

Regulator

CERC (Trading) & SERCs (Compliance)

BEE(Scheme) & CERC(Trading)

Penalty

SERCs

SERCs

Non-Solar: Rs 1,500/MWh)

Non-Solar: Rs 3,300/MWh)

Thank You for your attention

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