By .

Devesh Kumar Singh

Roll no. 19
MBA (PM),7th batch
2nd yr
Contents
 Objective
• Get knowledge practices and methods of power
trading in India w.r.t to developed world market
like NEM (Australian electricity market) ,
• Lessons and experiences in power trading
business done by them.
• Also to analyze basic comparison of both
electricity Markets.
• Elements that can be implemented in the future
prospective of power trading in India from
Australian power trading market.
 Introduction of Indian
Scenario
Power Trading Genco Disco
s ms
“Power trading is an activity in
which the utility having surplus
power transfers electricity to the
utility having deficit of power, at
some price (mostly Rs /Kwh)” Genco Disco
s ms

Power trading Trader

arrangements –

1.Bilateral
2.Intermediaries / Trading
licensee traders Disco
Genco ms
3.Power exchange
s
Trader
 Types of power market
in India
• Day ahead
• Term ahead
• Short term - 3 months less than 1
year.
• Long term - more than 5 years .
• Medium term - 1 yr to less than 5 yr.
 Day ahead market in
India
• 24 trading hours
of the calendar
day.
• 15 min time
block
• 96 trading day
block
 Term ahead market in
India
Contract Trading Matching
Intra-day Contracts Trading on delivery Continuous trading
day few hours before session.
delivery.
Day-ahead Trading to a day
Contingency before delivery and
Contracts after DAM auction.
Daily Contracts Trading up to 1 Week
in advance for any
calendar day.
Weekly Contracts Trading upto 1 Uniform Price Auction
month in advance for
any calendar week.
Indian Model
• Step I: Participants submit sale/purchase bids by means of
• an electronic trading system for each hour
• to PX
• Step II: PX check for bid validation/elimination
• Step III: Participants do bid revision/withdrawal
• Step IV: PX gets day-ahead ATC information from NLDC
• Step V: PX determines MCP with unconstrained market
• settlement
• Step VI: PX performs congestion management by market
• splitting and determines area wise MCP with
• constrained settlement
• Step VII: PX prepares and sends DA generation and drawl
• schedules to respective participants and publish
• price index on website
• Step VIII: PX submits DA schedule to NLDC for
• implementation
• Step IX: Next day 00h00 to 24h00 power is delivered and
• financial clearing is done once a week
Deciding the market spot
price in India

Seller

MCP

Buye
MCV
r

Quantity MWH
 Purchase Sell Unconstrain Unconstrain
Bid (MWh) Bid(MWh) ed ed
MCP(Rs/MW MCV(MWh)
h)
Total 28472.70 29499.30 - 22574.01
High 1828.80 1733.70 6501.38 1461.70
 Regulatory
Arrangements in India
CERC
• Section 2 (26) "Electricity Trader" means a person who has been granted a license
to undertake trading in electricity under section 12;
• 2(71) "Trading" means purchase of electricity for resale thereof and the expression
“trade” shall be construed accordingly.
• Inter state trading regulations
• Open access regulations – 1Mw

• Trading margin - 7 paise/Kwh ( more than Rs 3 /kwh)

• Price Cap - Rs 5/unit
• Volume of Trade (MUs)-20964.77
• Annual Growth in volume of trade- 40%
• % of Trading to Total Generation - 3.15%
Category of licensee Volume of electricity Net worth (Rs
traded million)
Category I No limit 500
Category II Not more than 500 MUs250

Category III Not more than 100MUs 50

Steps-for concurrence of Trader on behalf of buyer and
seller

1. concurrence of SLDC/RLDC
2. Application to nodal SLDC/RLDC
3. OA charges – 3 day ahead
i). Application charges – Rs 5000/-
ii) transmission charges in Rs/Mwh
iii) SLDC/RLDC operating charges.
 New Power market
Regulations of India
Australian Power Trading
market
• NEM
• AEMO
 NEM
• More than $10 billion of
electricity is traded annually
in the NEM to meet the
demand of more than eight
million end-use consumers.
• Demand for electricity across
the NEM is approximately
25,000 megawatts on a
business day.
 The National Electricity Market can
choose to take parting any combination
of two levels of trading-

1. Spot trading with energy traded through a

commodities type pool and a spot price set
every half hour by the last (most expensive)
generator selected to run.

2. Short term forward market trading in which

purchasers lock in energy prices through
hedging contracts (contracts for differences)
 NEM Spot Market
• Offers are submitted every five minutes of every
day
• Dispatch price is determined every five minutes,
and six dispatch prices are averaged every half-
hour to determine the spot price for each trading
interval for each of the regions of the NEM
• Maximum spot price, also known as Market Price
Cap, of $10,000 per megawatt hour (MWh).
• Market Floor Price and is currently set at-$1,000
per MWh.
Setting of spot price in
NEM
• Spot price for
trading period
calculated by
average of six
dispatch prices.
• i.e $35+$37+$37+
$38+$38+$37
6
= $37 per Mwh
FINANCIAL CONTRACTS FOR
ELECTRICITY in NEM
• Hedge Contracts-
• Hedge contracts are typically
agreements between generators and
customers
• contracts can be entered into under
either long-term or short-term
arrangements that set an agreed, or
strike, price for electricity traded
through the pool
Continue …….
 Comparison
NEM (Australia) INDIA

Participation Compulsory for day ahead market Voluntary

Day ahead spot

Market offerings Day ahead spot and short term forwards

Bidding type Double sided Double sided

Through purchase of Ancillary services, Deviations are subjected to UI charges

Real time/ Balancing market

Pricing Type Ex-post Ex-ante

 Continue….
NEM (Australia) India

Bilateral OTC, Bilateral OTC

Risk Management Derivatives on Sydney future exchange

Congestion Management Locational signals for transmission Tariff Area splitting

Time Blocks Half hourly blocks Hourly Blocks

• Adequacy of transmission capacity (18000MW)
• Low Margin (fixed by CERC)
• It is also recognized that it is not easy to create
spot markets without eliminating gaming
opportunities.
• Many of the State transmission schemes face
time/cost overruns and the Capacity becomes
available only after considerable time delay.
Suggestions
Suggestions
 Conclusion
• Australia’s power trading is much developed
that it’s all operations cannot implemented in
India because , India has poor grid discipline
low power trading in MU.
• Hope that in near future India will develop
a vibrant and dynamic whole market for power
trading under regulatory oversee.
?