www.iexindia.com

Cross Border Electricity Trade

Rohit BajajVP (BD)

In this presentation

Introduction to Exchange Mechanism

Proposed mechanism for cross border trade through exchange

International examples

Way Forward for SAARC Exchange

Introduction to Exchange Mechanism

Company Snapshot

96% Market Share ~80,000MWh average daily trade

3000+ Participants 2100+ Industries

Competition

LiquidityTransparency

IEX Market SegmentsDelivery-based Contracts

Day-Ahead Marketsince June,08

Closed , Double-sided Auction 10-12 am biddingEach 15-min block , 0.1 MW min NOC required

Term-Ahead Marketsince Sep,09

Day-Ahead Contingency – Another window 3-5pm

Intra-Day - for rolling evening peak hours

Daily- for rolling seven days (delivery starting after 4 days)

Weekly- for upto 11 days

Renewable Energy Certificatessince Feb,11

Next… Energy Saving Certificates

Green Attributes as CertificatesSellers : RE generators not under feed in tariffsBuyers: Obligated entities1MWh equivalent to 1 REC

Auction Continuous

Features of Day Ahead Market

A closed double-sided anonymous auction for each 15-min time block for the following day

The balance between the aggregated sale and purchase curves defines the market clearing price (MCP)

12 Bid area defined

Congestion Management through market splitting and determining Area Clearing Price (ACP) specific to an area

Bid types: Portfolio Orders or Block OrdersMinimum bid=Re.1 for 1MWh 12 Bid Areas

N1

N2A2

A1

W3

E2

E1

N3

W2

W1

N2

S2

S1

DAM Cleared Volume and Market clearing price (MCP)

DAM Monthly average Price

Proposed mechanism for cross border trade through Exchange

Status of Bilateral Interconnections within SAARC Countries

Existing Interconnections

Volume traded PPA/PSA Planned/Expected Interlinks

India– Nepal 22 links of 132/33/11kV

~ 150 MW imported from India by Nepal

Medium Term, commercial transactions

400 kV AC double-ckt lines operated at 220 kV. Expected by 2015

India-Bhutan 400/220kV D/C links

Import by India from 3 projects.

120MW Dagachhu expected by Sep.

Inter-government Agreement for 3 projects.

Methodology for accounting to be decided.

India-Bangladesh

HVDC Link 500 MW imported from India by Bangladesh

250 MW under Long, rest under medium term

IEX transactions possible for 30-100 MW. Up-gradation of 500 MW link to 1000 MW

India –Sri Lanka

No Link No N/A 500 MW HVDC Bipole line with submarine cable are discussed.

India-Pakistan

No Link No N/A Under discussions

Why harness the Power Exchange markets for regional trade?

• Better resource optimization– Can use the inherent margins in transmission to transact

power• Management of daily demand variations

– Daily demand variations and Peak requirements can be managed optimally through Day-Ahead Transactions.

• Competitive, transparent and neutral market• Liquid, diversified market• Standardized contracts, competitive prices through

market determined prices (no need for negotiations)

Bangladesh: Trading through Exchange

• At present, against 500 MW capacity, Bangladesh is getting maximum of 470 MW

• Utilise IEX platform for the remaining 30 MW

• Designate trader as the nodal facilitator for cross border trade with the exchange

• Major Trading Licensee already registered as Member of IEX

• BPDB can designate any of these traders to carry out trade on the Exchange on behalf of the country

• Bangladesh will be identified as an extension of the E1 bid area

Nepal: Trading at the Exchange

• Step 1: NEA to become client of an Indian trader– NEA can become client of the Indian Trader who is already a member at

the Exchange and will carry out trade on behalf of NEA

• Step 2: Bid entry at the Exchange– Post determination of ATC, the trader can enter bids for the available

quantum and a limiting price daily into the Exchange trading system on behalf of NEA.

• Step 3: Payment Settlement – Traders to make pay-in on behalf of NEA to IEX on daily basis.– NEA can have a weekly or monthly payment arrangement with the trader. – The trader can be paid trading margin plus financing charges.

Identification of separate bid area

12 Bid Areas Additional bid area could be added for each country

N1

N2A2

A1

W3

E2

E1

N3

W2

W1

N2

S2

S1

N1

N2A2

A1

W3

E2

E1

N3

W2

W1

N2

S2

S1

B1

B3

B2

B4

International Experience

Evolution of Integrated Electricity Markets

Example: SAPP, WAPP Nordpool North West Europe Coupling

Integration level: Shallow Intermediate Fully integrated

Liquidity: Low High Very High

Rules and Procedures: Formalised between all countries

Pre existent rules of Competitive Market followed by other joining markets

Re aligning of the rules to bring markets on a common platform

Mainly long term transactions Long term with short term transactions

Diversified products and presence of derivatives market

Individual Satellite markets come together to form a

single Liquid Market

CMCM

CMCM

SM

SM SM

SM

CM

Individual Satellite markets join already existent single

Liquid Market

Two or more competitive markets join/couple to form

larger integrated market

CMSM

SM SM

SM

Efficiency, Liquidity, Integration level

Proposed Market for the SAARC

Region

Way forward for SAARC Exchange

SM

SM SM

SM

CM

Proposed market for SAARC Region

Presence of Liquid markets in India

Exchanges in India offers standardised contracts and competitive platform and allow market based price discovery

Governing regulations and policy development are still at nascent stage in many countries, this will allow other countries to align the relevant rules for development of a harmonized market.

• SAARC single Electricity Market– Single Day-Ahead Market for SAARC Market– Examples around world:

• NORDPOOL ( 4 countries +Lithuania & Estonia)• Central West Europe• SAPP

• Limited Harmonisation of Rules (Common minimum)– Balancing & Settlement Rules across countries– Payment Security & Commercial terms– Grid connectivity standards

• Gather political will for mutual benefit of energy sectors of countries

Highly Scalable model for competitive electricity market

Way Forward

Best Power Exchange in India – Enertia Awards ‘13

Best Performing Power Exchange – Power Line Awards ’13 & ‘12

Best E-enabled consumer platform – India Power Awards ‘09

Thank You for your attentionwww.iexindia.com

Price Tick 0 1 1.1 2 2.1 2.5 3 3.1 3.5 3.8 4 4.1 5 7 9 12 14 17 19 20Portfolio A 20 20 20 20 20 20 20 10 7 4 0 0 0 0 0 0 0 0 0 0Portfolio B 60 60 60 60 50 40 40 40 40 40 40 40 20 20 20 20 20 20 20 20Portfolio C 70 70 70 70 70 60 50 50 50 50 50 50 50 10 10 10 10 10 10 10

Portfolio D 40 20 0 0 -40 -60 -80 -81 -85 -100 -120 -120 -120 -120 -120 -120 -120 -120 -120 -120Portfolio E 0 0 0 0 0 -40 -50 -50 -50 -50 -60 -60 -90 -90 -90 -90 -90 -90 -90 -90Portfolio F 0 0 0 0 0 -20 -20 -20 -20 -20 -20 -30 -40 -40 -40 -40 -40 -40 -40 -40

190 170 150 150 140 120 110 100 97 94 90 90 70 30 30 30 30 30 30 30

0 0 0 0 -40 -120 -150 -151 -155 -170 -200 -210 -250 -250 -250 -250 -250 -250 -250 -250

Total Buy, MW

Total Sell, MW

190 170 150 150 100 0 -40 -51 -58 -76 -110 -120 -180 -220 -220 -220 -220 -220 -220 -220Net Transaction, MW

Model Price Calculation algorithm

0 50 100 150 200 250 3000

2

4

6

8

10

12

14

16

18

20Demand (Buy) Supply (Sell)

MCP: Rs 2.5

MCV: 120 MW

Why Exchange for cross border trade

Competitive & Vibrant Markets

Transparent and neutral platform

Price discovery – trusted and reliable

Double-sided bidding – best price discovery tool

Implicit Auction: Transmission management

REGIONAL IMPLICIT AUCTIONS

CWE Price coupling

Austria AT price coupled to GE/CWE (no congestion)

BritNed GB price coupled to NL/CWE

Nordic + Estonia Price coupling, also Poland via Swepol

ITVC Volume coupling CWE - Nordic

Italy - Slovenia Price coupling

Mibel (Iberia) Price coupling

Czech - Slovak Price coupling

Current Status

REGIONAL IMPLICIT AUCTIONS

CWE Price coupling

Austria AT price coupled to GE/CWE (no congestion)

BritNed / IFA GB in price Coupling

Nordic + Estonia Price coupling, also Poland via Swepol

NWE Price Coupling

Italy - Slovenia Price coupling

Mibel (Iberia) Price coupling

Czech - Slovak Price coupling

NWE project objective