Power exchanges to get nod for electricity exports

Saddled with surplus power generation and lower demand from the utilities, the government is looking at throwing open a short-term power market to the consumers in the neighbouring countries by allowing them access to Indian power exchanges for meeting day-to-day requirements.

Sources privy to the development said that power regulator Central Electricity Regulatory Commission (CERC) is vetting a proposal to allow cross-border power trading in the short-term market. Once the proposal is finalised, it will issue necessary regulations allowing power exchanges to tap the new customers.

"The cross-border trading of electricity may become a reality soon with the CERC in the last lap of issuing the new regulations," said a government official privy to the development.

As part of its efforts to develop a robust and dynamic electricity market, the government has been toying with the idea of also involving exchanges in export and import of power.

In fact, in December, the Centre issued new guidelines for export and import of electricity and power trading with neighbours, replacing the earlier guidelines of 2016.

Though the guidelines provide for trading, it is restricted to export and import of power under bilateral agreements. With the CERC regulations, even exchanges would become a platform for such trading, even for supplying electricity for meeting short-term needs of the neighbours.

"While cross-border transactions in TAM (Term Ahead Market) segment is currently allowed, the same is not permitted for short-term power purchase through exchanges. The changes by the CERC will allow power producers to offer electricity directly to the distribution entities in the neighbouring countries through Indian power exchanges," said an official of the Indian Energy Exchange (IEX), the country's largest power trading platform.

Once implemented, the short-term mechanism would give fillip to the country's power exchanges that often have to battle subdued demand in the domestic spot market and depressed average tariffs.

Also, a lot of renewable projects in wind and solar could be relevant for sale in the neighbouring markets, giving them additional access.

Sources said the facility for cross-border trading through power exchanges may initially be available to countries such as Nepal, Bhutan and Bangladesh with which India already has transmission links and medium term transfers are permitted after government approval.

It could be extended to other neighbouring markets such as Myanmar and Sri Lanka once the necessary infrastructure is created.

Though correct estimates are yet to be made, industry sources said that there could be demand for 300 to 400 MW from cross-border trade in the spot market initially. But the potential is enormous and this could only grow in future.

A vibrant power exchange market with the ability to trade in spot market for consumers in domestic as well as overseas markets would also be a good news for the power generators which are also facing back downs and are operating at low average plant load factor (PLF) in the absence of demand from the debt-ridden state electricity boards (SEBs).

Moreover, the option to sell electricity outside could also give a fresh lease of life to about 20,000 MW of stranded power projects that has also put the Indian banking segment under strain. Domestic power traders have already shown interest in striking overseas deals.

(Subhash Narayan can be contacted at subhash.n@ians.in)

--IANS

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