PTC India gets CERC nod to set up third power exchange
Launch likely by next FY after PTC complies with market regulations
The Central Electricity Regulatory Commission (CERC) has approved setting up of a third power exchange platform in the country, floated by PTC India along with BSE Investments and ICICI Bank. CERC, however, has asked PTC India to comply with power market regulations before the regulator grants registration.
India has two power exchanges — Indian Energy Exchange (IEX) and Power Exchange India (PXIL). Power exchange facilitates over-thecounter sale and purchase of power via different types of contracts — day-ahead, term-ahead, renewable energy certificates, and recently introduced real-time electricity market. IEX has a lion’s share of 95 per cent in the day-ahead contracts market.
PTC India Executive Director and Group Chief Risk Officer Rajiv Malhotra said the company was confident of meeting all the required regulations in the stipulated eight weeks. “Thereafter, following the directives of CERC, we can look at operationalising the exchange in another eight-nine months, effectively next financial year,” said Malhotra.
PTC India, along with BSE Investments and ICICI, floated Pranurja Solutions in 2019 as a power exchange platform and applied for grant of registration to CERC. During the public hearing of the matter, stakeholders, including the existing two exchanges, raised concerns on the shareholding pattern of Pranurja.
PTC India and BSE Investment hold 25 per cent each in Pranurja, followed by 9.9 per cent held by ICICI bank. Other shareholders are Greenko Energies (5 per cent), Jindal Power (2 per cent), Meenakshi Power (5 per cent), and six others.
“We have a certain shareholding pattern that we have assured the Commission we will meet. It pertains to Regulation 19 of the Power Market Regulations, 2010, which have to be met before or during the actual operations of the exchange. So, we move forward after a compliant shareholding pattern,” Malhotra said.
Pranurja will be granted registration after meeting the stipulated shareholding. According to the Power Market Regulations, in eight weeks, if PTC and BSE become members of the exchange, then they have to reduce their shareholding to 5 per cent. The new power exchange comes at a time when the over-the-counter power market is in the middle of new developments. While PXIL faced financial challenges and is trying to reinvent itself, the launch of the real-time electricity market and increasing interest of states is creating new opportunities.
At the same time, the power ministry recently allowed electricity to be traded like other commodities with forward contracts and derivatives. This would pave the way for the power exchanges to have longer duration power sale-purchase contracts, which is limited to 11 days.
“Our decision to come into the exchange space is not strictly a financial investment but a strategic one. We want the exchange credit space to grow so that the over-thecounter space also grows and goes beyond just one type of contract which is day-ahead,” said Malhotra.
Experts said with new types of power contracts coming in, the new exchange could take advantage of it. “There has been a marked shift in the power purchase trend with states preferring short-term and medium contracts over long term power purchase agreements. With real-time electricity contracts coming in, more states are getting interested in the exchange driven purchase,” said a senior sector executive.