IEX Initiates Cross-Border Electricity Trade to Strengthen South Asian Market
Nepal is the first country to have commenced electricity trade in IEX day-ahead market
To expand power markets beyond India, the Indian Energy Exchange (IEX) has introduced cross-border electricity trade (CBET) on its platform. The initiative is a step towards building an integrated South Asian regional power market.
Mercom had earlier reported that in January 2019, the Ministry of Power had issued guidelines to facilitate and promote import and export of electricity and power trading with neighboring countries under the overall framework of the Central Electricity Regulatory Commission (CERC).
Following the notification of CBET Regulations by CERC in 2019 and the recent notification of CBET Rules in March 2021 by the Central Electricity Authority (CEA), NTPC Vidyut Vyapar Nigam (NVVN) secured approval from the CEA for Nepal’s participation in the day-ahead market on the Exchange.
Currently, the CBET with neighboring countries of India stands at about 18 BU conducted through medium-to-long-term bilateral contracts. As per the CEA and CERC, as of date, India imports 8.7 BU from Bhutan and exports 2.37 BU and 7 BU to Nepal and Bangladesh, respectively.
The power trade with these countries is expected to increase to about 40 BU by the financial year (FY) 2022 and 70 BU by FY 2027, according to a study by Integrated Research and Action for Development (IRADe).
Commenting on the new mandates, S.N. Goel, Chairman, and Managing Director, IEX, said, “We are immensely delighted to welcome Nepal as the first country to commence the CBET in our day-ahead electricity market.”
“With a large installed power generation capacity base of 382 GW and peak demand of about 185 GW, India is a power surplus country. We have a unique opportunity to lead the regional power market development and make efforts towards enhancing the energy access and security amongst the neighboring nations in the region,” he said.
Mohit Bhargava, Chief Executive Officer, NVVN, and Executive Director (Renewable Energy), NTPC, said, “Due to India’s unique location as well as sound electricity infrastructure, we should be able to lead in energy cooperation and development of the market in South Asia, regional transmission infrastructure development, and facilitate efficient utilization of the energy resources for the cross-border entities.”
“Nepal is the first country to avail the benefit of buying day ahead power from power exchange through NVVN. This is a new beginning in the South Asian region… we also aspire to work closely with Bhutan and Myanmar in the future,” Bhargava said.
Bolstered by robust demand for green power, IEX had last year had launched its green energy power trading platform, where prices followed a pattern similar to conventional power traded at the day-ahead market.
The growth in the traded volumes of electricity on the IEX platform during FY 2021 reiterates the exchange market’s role among the distribution utilities and industrial consumers in facilitating a competitive and efficient power procurement.