Electricity Trading

The extent of trading in electricity, in terms of volume traded in the short-term, has been continuously increasing over the years. The short-term volume in total electricity generation was also increased from 2.16% to 5.34% from 2004-05 to 2010-11. The volume of electricity (kWh / Units) transacted through trading licensees and power exchanges has increased four times since trading started as licensed activity i.e. from 11.85 Billion Unit in 2004-05 to 43.22 Billion Unit in 2010-11.

Short-term power trading leads to optimal utilization of generating resources. This is undertaken through traders, power exchanges and directly between distribution companies. Several steps have been taken by the regulatory commissions to facilitate short-term power trading. The CERC granted licenses to 44 entities and permitted power exchanges for trading in electricity. Traders have started their trading operations in the year 2004-05 and power exchanges namely, IEX commenced its operations in June, 2008 and PXIL commenced its operations in October, 2008.

In a large country like India with varied climatic conditions, fuel resource availability and load centres, short-term trading helps to exchange power between surplus regions and deficit regions. Distribution utilities are actively participating in the short-term markets to procure or sell power based on the existing shortages or demand. Between 2008-09 to 2010-11, the volume of power traded increased from 3.31 Billion Unit to 10.25 Billion Unit for direct bilateral transactions between the Discoms. Even open access consumers are accessing short-term trading market to procure power.