NTPC goes for joint venture to set up power exchange

NTPC has formed a joint venture company, National Power Exchange Ltd (NPEX), to set up a power exchange. It will be a third exchange after Power Exchange India Ltd (PXIL) and India Energy Exchange and is expected to be operational within a year, officials said.

The joint venture with NHPC, Power Finance Corporation (PFC) and Tata Consultancy Services (TCS), has already received in-principle approval from the Central Electricity Regulatory Commission (CERC) to begin. NTPC officials said the implementation time may, however, vary depending on terms of CERC approval and other factors.

The exchange will have to compete in a market where there are already two players and the total power purchase from the exchanges account for four per cent of the total consumption.

“The power trading market has a strong growth potential. NPEX is backed by rich domain knowledge of the power sector and envisions a strong role in market development and optimal utilisation of generation and transmission resources,” NTPC officials said.

Also, the two players have launched weekly products for trading on a week-ahead basis on the exchange platform. The exchanges have proven to be very important market mechanisms with the exchange prices having become important benchmarks for the entire power trading market, said one of the exchange official.

The power price since then has come down from Rs 16-20 per unit to Rs 2.5/3 per unit, now. The long-term objective of exchanges is to drive the Indian power sector towards true competition-based pricing, as against scarcity-based pricing.