A first for India: IEX starts cross-border trade in electricity

The Indian Energy Exchange (IEX) on Monday commenced cross-border electricity trade (CBET) on its power trading platform, a first for India. This will help the exchange expand its power markets beyond India to the South Asian region. The company said it will lead towards building an "integrated South Asian regional power market”.

The government-designated nodal agency for CBET is NTPC Vidyut Vyapar Nigam (NVVN), a fully owned trading arm of NTPC. The company has secured approval from the Central Electricity Authority for Nepal’s participation in the day-ahead market on the exchange.

In 2018, the Union Ministry of Power had issued guidelines for import/export (cross-border) of electricity. It provided a policy framework for CBET. The guidelines stated that for export of coal-based power, only imported coal or spot eauction of coal or coal obtained through commercial mining would be used.

A year later, the Central Electricity Regulatory Commission gave its approval for new regulations of CBET, thereby making trade of electricity to neighbouring countries more seamless. These included setting up of a nodal agency for bilateral trade of electricity, monitoring and planning by central agencies, and similar technology interface at both ends.

Mohit Bhargava, chief executive officer, NVVN said, “Nepal is the first country to avail of the benefit of buying

day-ahead power from the energy exchange through NVVN. This is a new beginning in the South Asian region. With its vast experience in power trading, NVVN has extensive expertise in cross-border power trading. We also aspire to work closely with Bhutan and Myanmar in the future."

NVVN currently exports power to Bangladesh and Nepal, and facilitates the settlement of grid operations and other related technicalities.

Currently, the CBET with neighbouring countries stands at about 18 billion units (BUS) conducted through mediumand long-term bilateral contracts.

India imports 8.7 BU from Bhutan and exports 2.37 BU and 7 BU to Nepal and Bangladesh, respectively. The power trade with these countries is expected to increase to about 40 BU by 2021-22 and 70 BU by 2026-27, according to a study by Integrated Research and Action for Development (IRADE), said IEX in a statement.

"While macroeconomic growth in the South Asia region has been one of the strongest in the world, the region has been confronting challenges related to power demand-supply balance and the low per-capita power consumption," said IEX.