Hindustan Power Exchange Gets CERC Nod For India’s Third Power Trading Exchange

Highlights :

  • The long awaited entry of HPX, India’s third power exchange is nearing its end with this final approval.
  • The exchange is expected to provide a  robust alternative to existing options, even as it faces a formidable competitor in the efficient IEX.
Hindustan Power Exchange Gets CERC Nod For India’s Third Power Trading Exchange

The start of operations at India’s third power exchange, Hindustan Power Exchange (HPX) looks imminent, with final approval from the regulator, the Central Electricity Regulatory Commission (CERC) on June 27. CERC’s approval was under Regulation 28 of Central Electricity Regulatory Commission (Power Market) Regulations 2021 for approval of the technology to be used by the exchange.

This order marks the final step before the exchange can start operations. Promoted by BSE Group, PTC India and ICICI Bank, the Power Exchange is expected to be a strong player in the power trading sector in India, where the country hopes to achieve 25% share for exchange trade power by 2030.

The HP-DAM pricing has been established with a floor price of zero to mitigate any adverse impact on the integration of renewable energy in the national grid. Simultaneously, the forbearance price has been set at ₹20/kWh as per the Commission’s order dated 31.03.2023 in Petition 4/SM/2023 (Suo-Motu).

Commenting on the development, Naveen Singh, Vice President & Head, Business Development, Hindustan Power Exchange, said, ” With the CERC nod to introduce High Price contracts on HPX, we have been successful in delivering two new products for the Power Market within a short time-span of just one year of starting our business operations in July last year. Till date these high-price generators had just one option to sell power, that is through participation in the HP-DAM segment. With these new segments the generators can plan their power sale to interested buyers for up to 90 days, giving HP-generators sufficient clarity to plan their fuel procurement, logistics etc. This also ensures a level playing field across different market segments, gives more choice to the consumers and promotes competition.”

From it’s first application in September 2018 seeking grant of registration to establish and operate a Power Exchange to the Order dated 12.05.2021, when the Commission granted registration to the promoter company to establish and operate a Power Exchange , and now this final approval on the technology platform, HPX has gone through the whole approval process even as power trading has grown in the same period tremendously, under the leadership of market leader IEX and the second player, PXIL.

CERC also directed HPX to use the same Uniform Price Step Auction to run Daily Contracts and Weekly Contracts ,considering its merits over the Continuous trade Session in terms of transparency and efficiency in price discovery. The trading formats were specified as under.

Power trading rules

Key competitor and market leader by a margin, IEX has a robust ecosystem of 6,800+ participants located across 29 States and 5 Union Territories comprising of 55+ distribution utilities and 500+ conventional generators. It also has a strong base of 4400+ commercial and industrial consumers representing industries such as such as metal, food processing, textile, cement, ceramic, chemicals, automobiles, information technology industries, institutional, housing, and real estate, and commercial entities. It has been a listed firm since 2017. Among its key recent achievements, IEX has pioneered cross border power trading to take a step towards an integrated South Asian power market. IEX closed FY 22 with revenues of Rs 484 crores and PAT of Rs 308.6 crores.

PXIL (Power exchange India limited) has been promoted by NSE and NCDEX and has been around since 2008.

All three exchanges will offer trading in power, be it DAM (Day Ahead Markets), TAM, Intra day, day ahead, contingency and of course, REC’s and Ecerts.

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Prasanna Singh

Prasanna has been a media professional for over 20 years. He is the Group Editor of Saur Energy International