Chairman & Managing Director
"We are working towards transforming India's energL sector and building anefficient and sustainable energL economy leveraging innovation and technologL with afocus on customer centricity."
The strength and robustness of your Company's business model along with regulatory andpolicy initiatives towards deepening the power markets enabled Power Exchange
Markets to continue their growth despite a challenging year for the economy andhumanity.
Fiscal year 2021 was an exemplary year in the 13-year journey of your Company. The yearwas marked by digital transformation and the launch of new market segments to meet thedynamic power procurement needs of the market participants. When the entire economy wasunder lockdown for an extended period due to the pandemic your Company ensured 24x7operations of the Exchange through a robust business distributionutilities continuity planand helped provide uninterrupted power supply to their customers in the mostcost-efficient way.
The competitive price discovery on the platform has provided an opportunity for costoptimization to market participants leading to a reduction in the cost of doing business.Many state distributioncompanies are buying power from the Exchange platform to getflexibility and transparency and to optimize their power procurement cost. In fact theAndhra Pradesh Central Power Distribution Corporation saved more than INR 2300 cr in thelast two years by procuring power through the Exchange Markets. During the year welaunched new market segments and received a very encouraging response from our customers.The
Real Time Market (RTM) for which we operate 48 half- hourly auctionsevery day allowscustomers to purchase power at an hour's notice. The market launched on June 1 2020 hasbeen supporting Discoms to manage their demand-supply variations and renewable energyintegration in an efficient and effective manner besides supportingsafe and reliable gridoperation. We also forayed into renewables trading with the launch of Green Term AheadMarket (GTAM) on August 21 2020. As India moves towards large scale renewable capacityadditions both these markets will play a key role inmeetingournationalsustainabilityaspirations.Recently we also commenced the much-awaitedCross Border Electricity Trade towards our endeavor to create a South Asian RegionalPower Market.
Andhra Pradesh saved more than Rs 2300 crores in the last two years by purchasingelectricity in
Exchange markets at cost effective prices.
Government is working towards building an efficient power sector
The Power sector has witnessed several significant developments in the last few years.With peak demand at 190GW vis-a-vis installed capacity at 380GW India is now a powersurplus country. On the transmission side our country has successfully developed anintegrated single grid which is the largest in the world. Power can now flow seamlesslyacross the country resulting in one nation one price' round the year. Further theGovernment has approved a revamped reforms-based result-linked power distribution sectorscheme with an outlay of INR 3 lakh crores over the next 5 years to improve operationalefficiency and financial viability of Discoms. This will help build a commercially viablepower sector which is necessary to ensure a vibrant power market.
The Union Cabinet approved a reforms-based results-linked revamped distribution sectorscheme with an outlay of INR 3 lakhs crores over 5 years.
The scheme seeks to improve the operational efficiencies and financial sustainabilityof all
Discoms by providing them with conditional financial assistance for strengthening ofsupply infrastructure.
Policy and Regulatory Initiatives
A conducive market framework is essentialfor building an efficient power sector. Withthe increasing thrust on renewable energy deepening of power markets has become even morenecessary. Realizing the role that power markets can play in transforming the electricitysector the Government has undertaken several future-focused in the power sector andcreate a vibrant power market:
Proposed Amendments to the Electricity Act 2003 to de-license the distributionbusiness will bring competition in power distribution and provide greater choice to endconsumers. This will greatly aid the financial recovery and power purchase capabilities ofDiscoms thereby increasing their participation in the market for efficient powerprocurement.
The Ministry of Power issued the Draft National Electricity Policy 2021 (NEP)indicating the commitment of the Government to deepen power markets by increasing theshare of spot markets to 25% by the year 2023-24. The NEP 2021 underlines the mostpertinent issues of the power sector with a focus on areas such as promotion of clean andsustainable generation of electricity development of an adequate and efficienttransmission system revitalization of the distributionutilities as well as thedevelopment of efficient power markets .
Draft National Electricity Policy 2021 envisages increase of Spot market share to
25% by the year 2023-24.
CERC has issued the DraftAncillary Markets paper which provides for procurementof ancillary services through
Under the NationalOpen Registry the National Centre (NLDC) Regional Load DespatchCentres (RLDCs) and State Load Despatch Centres (SLDCs) will be connected through atechnology platform. This will facilitate an online Open Access system thereby promotingthe market purchase of power by industries and commercial establishments. Your
Company is also working towards launching the capacity markets in India. Both ancillaryand capacity markets are imperative elements to build a holistic integrated efficientand sustainable power market in India.
Company has approached the Regulator for approval of
Longer Duration Contracts which are expected to start soon. As and when forwards andfutures electricity are introduced it will lead to further deepening of spot powermarkets.
The Green imperative
Power markets are an inevitable part of the energy shift is driven by renewables andtechnology. As we move towards higher renewables power markets will be key in managingthe intermittencies by efficient integration with power.
In line with evolving energy demand and India's pursuit to lower carbon emissions asper the Paris Climate Agreement
2015 India has planned to add 175 GW of renewable capacity by 2022 and 450 GW by 2030.At IEX we are aligned with reforms the national aspirations of building a greenenergy economy. We introduced the Green Term Ahead Market last year and will beintroducing the Green Day Ahead Market this year post regulatory approvals. With theNation's fast-paced foray into renewables this market will become a key growth area forus. Additionally learning from global experience we are also undertaking policy advocacyfor the introduction of various market-based contracts such as Contracts for Differences(CFD) to facilitate future market-based renewable capacity additionin the country. Thesecontracts have helped countries like UK and Germany to expand their renewable energycapacity base and ensure a greater role of renewable energy in the electricity mix.
On June 15 2020 we pioneered Gas Markets in India with the launch of India's firstGas Exchange. In December 2020 IGX received authorization from PNGRB to operate as a GasExchange. Your Company has put in place robust processes technology and a marketframework allowing participants to trade physical delivery-based contracts for deliveryranging from a few days ahead to 3 months ahead. With an ambition to build IGX as aninstitution as a whole we have onboarded key market leaders such as NSE ONGC GAILTorrent Gas and Adani Total as strategic investors in IGX. Gas being a clean fuel theGovernment has a vision to increase LoadDespatch its share in the energy basket from thepresent 6% to 15% by the year 2030. It has planned to invest INR 7.5 lakh Crores over fiveyears to create LNG terminals and a Gas Pipeline network which will create infrastructurefor development of the gas market and facilitate an increase in consumption of gas in thecountry. Further for development of the gas market the Government has proposed to set upa gas Transport System Operator (TSO) for allocation of gas pipeline capacity to marketparticipants in a transparent and non-discriminatory your manner. Plans are underwayto bring natural gas under GST to make its price cheaper and uniform across the country.Your Company has undertaken several policy advocacyinitiativeswiththeGovernmentandregulatorstocreate e prices conducive market framework fora vibrant gas market. With these initiatives the Indian gas sector is poised for breakoutgrowth which will lead to creation of vibrant gas markets in the country providing IGXmore opporturties for larger value additionto its stakeholders.
Fiscal 2021: A year of Digital Transformation at IEX
As a technology-driven energy marketplace your Company is continuously innovating tobuild a exchange platform and provide the best-in-class customer centric solutions tomarket participants. Fiscal year 2021 was a year of digital transformation at IEX as weundertook several technological advancements to create true customer delight for ourparticipants. For instance we launched Real Time Market which requires very hightechnological expertise as it follows a very stringent timelineof 15 minutes for bidtives collection price discovery and interaction corridor availability. During theyear we significantly upgraded our systems allowing this market to operate with nearly100% availability. With our efforts towards creating a reliable real time market RTM hasnow become a key differentiator the business contributing volumes in its first year oflaunch. We introduced a Mixed-Integer Linear Programming (MILP) based matching algorithmwhich makes it easy to introduce complex bids on the Exchange platform to meet therequirements of a changing market scenario. In the current year we are working to furtherupgrade the web-based platform to provide online trading and deep data insights themarket participants. We are also working on launching a new mobile app and undertakingtechnology re-architecture initiatives to create a best-in-class technology platform ourcustomers.
Your Company is also exploring and investing in emerging technologies. This includesArtificial Intelligence and Robotic Process Automation (RPA) to automate our operationsMachine Learning and Data Analytics to provide solutions to support the new tradingconcepts such as Peer to Peer
Performance: Fiscal Year 2021
Last year despite a slowdown of economy and reduction in power consumption in thecountry your Company grew at 20.3% YoY with revenues at Rs 357.4 Cr. We also saw thehighest ever yearly volume of 74 BU resulting in growth of
37.3% in the electricity segment on a YoY basis. The growth was driven by competitivepower prices creating traction with distribution utilitiesas well as industrial aavailabilityofadequatedomesticcoalat coupled with the commencement of new market segments.
As a socially responsible corporate citizen during the year your Company supportedthe Government of India's relief measures in the fight against COVID-19 by contributingto the PM CARES Fund. Also as part of promoting sustainable and inclusive growth of thenation our CSR programs in collaboration with IIT-Kanpur Sabhyata Foundation andvibrantandfutureready HelpAgeIndiahelpedcreateapositive social impact in a meaningfulway.
With GDP forecasted to grow at 9.5% in fiscal year 2022 electricity consumption isalso expected to grow at a commensurate level. Ample generation capacity favorableinitiadeclining green power policy and regulatory with NLDC for cost the launch of newmarket segments and products will unleash exponential growth for your Company even as weexplore several new business opportunities including inorganic expansions within theenergy space.
A massive opportunity lies in front13%to the totalelectricity traded of us asIndia moves towards greater adoptionof renewables and the energy sectorundergoesrapidtransformation.From a system based on centralized generation transmissionand distribution we're moving towards one that integrates distributed generation supplychain automationlow carbon products and technologies providing greater choice toconsumers.
Exchanges will have a key role to play in this new energy order. With robust technologydriven solutions underpinned by Artificial Intelligence Machine Learning and Blockchaininnovative products and services such as Peer to Peer Trading decentralized RE hybridmodels for battery storage and other emerging trends Exchanges will truly lead thefuture of energy.
The future of energy markets is very promising. Your Company's strong governancestructure ethics and business fundamentals will continue to drive the vision forward. Welook forward to continued all stakeholders including the government regulators systemoperators market participants members clients and partners to develop the energymarkets and leverage new growth opportunitiestowards maximizing shareholder value.