Changing The Power Landscape - Power Trading Companies in India

Changing The Power Landscape - Power Trading Companies in India

16 Apr 2022

Changing The Power Landscape - Power Trading Companies in India

India has climbed the ladder and reached the third spot in the list of the largest economies of the world when it comes to purchasing power parity. Power is a pivotal element in this journey of growth and welfare. The power demand is exponentially increasing, and the power trading companies are defining the new normal in this ecosystem. Support from the government also comes in the form of the real-time power market that aims to balance the power demands and carry out an optimal utilization of the resources.

Short term power trading

Historically, power trading happened in the form of long-term Power Purchase Agreements (PPA) typically lasting for 25 years. But the trends are shifting now toward short-term power trading PPAs. In the year 2019-20 short-term power trading recorded 137.16 billion units by volume representing 11% of the total power generated – compared to the 6.1% in FY 2009, this is indeed a significant shift in trends. This trend not only indicates power independence but also points toward the optimal utilization of resources.

Real-time market

Power trading companies in India got a big boon in June 2020, when India opened the real-time market for power trading. This means that both buyers and sellers get an hour's window before power delivery to bid for power on an organized platform. Industrial users and discoms would immensely benefit from this move. This new development takes the Indian power market to a superior position in the world, among a few other countries that can boost a real-time power market.

REC trading

A direct impact of the real-time market can be seen in the transactions of renewable energy certificates. The government is pushing for green energy and the commitment to eliminate fossil fuels by 2070 in line with this. The year 2019-20 saw 8.8 million REC transactions, more than double the figures for 2019-19. Real-time trading has enabled users to bid for power and get power supply all through the day with an interval of an hour. The gap between demand and supply has reduced a lot.

Market coupling

A new concept has been introduced called market coupling. If the bids are not checked and prices are not matched, then it can lead to the formation of power cartels, and that are controlling prices across the nation. Thus, the government has decided to collect bids from all parties involved in the power exchange and then determine the uniform market clearance price. These regulations will enable the government to trade power in a uniform and fair manner.

The above-mentioned practices are very exciting and can propel India on a new growth journey. But care must be taken concerning monitoring and surveillance of the power market. There is a lot of scopes through which these trends can be misused, and every induvial stakeholder should perform their roles diligently to ensure transparency. When executed in the right manner, India can soon become the power capital of the world!

With an overall team experience of 45 years in the Indian power sector, our array of services includes bespoke Electricity Regulatory advisory, energy portfolio management, Renewable Energy offtake & trade, open access services, and Renewable Energy Projects management, to name a few. Being one of the leading CERC (Central Electricity Regulatory Commission) approved power trading companies in India, Altilium is managing a trading volume of 5 Mus (million units) every quarter for its clients PAN India through spot market transactions and other open access modes (short-term/medium-term power supply). Let’s explore together! Do connect with us at hello@altilium.co.in

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