ESCert Trading May, 2018
In this Presentation Introduction to Power Exchange ESCert Market- Key Features Trading in ESCert Market
Exchange: A Competitive ‘Market’ Transparent online market platform for delivery based trading Exchanges provide a efficient , competitive platform for price discovery and trading – Stock / Commodity/Energy Now, worldwide Power Exchanges are operating in almost 40 countries. Energy/Power exchanges in India started operations from 2008. Regulatory oversight of Central Electricity Regulatory Commission (CERC)
Company Snapshot 97% Market Share ~ 6000 MW average daily trade 5800+ Participants 3900+ Industries 70+ Commercial 50+ Discoms 400+ Conventional Generators 1500+ RE Participants Transparency Liquidity Competition Market Share-FY 18 (Electricity) Average Daily Trade- FY18 DAM
IEX Market Segments • Day-Ahead Delivery for next day • Market Price discovery: Closed , Double-sided Auction since June,08 • Intraday: For Delivery within the same day Intraday Market & Day- • Day Ahead Contingency: Another window for next day Ahead Contingency • Gate closure : 3 hours Round the clock since Jul’15 • For delivery up to 11 days Term-Ahead Contracts • since Sep,09 Daily Contracts, Weekly Contracts • Renewable Energy Green Attributes as Certificates • Certificates Sellers : RE generators not under feed in tariffs • since Feb,11 Buyers: Obligated entities; 1MWh equivalent to 1 REC • Energy Saving Certificates 1 EScert= 1 Mtoe( Metric Tonne Oil Equivalent) • Since 26 Sep,17 Trading Session on every Tuesday of the Week • Trading time :1300 hrs to 1500 hrs Auction Continuous
IEX Volume Growth : Strong trend line 50,000 Electricity Volume 46,214 45,000 40,576 40,000 Cleared Volume (MU) 34,397 35,000 29,270 28,363 30,000 25,000 22,811 20,000 14,415 15,000 12,712 10,000 6,214 5,000 2,616 0 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY18 Source: IEX Data (DAM+TAM) FY 09: from 27 Jun’08 - 31 Mar’09; Actual Volume of FY 2017 -18
Growing Participation from Industries 1000 1500 2000 2500 3000 3500 4000 4500 5000 500 0 Jul-08 Nov-08 Mar-09 Jul-09 Nov-09 Mar-10 Jul-10 Nov-10 Mar-11 Jul-11 Nov-11 Mar-12 Jul-12 Nov-12 Mar-13 Jul-13 Nov-13 Mar-14 Jul-14 Nov-14 Mar-15 Jul-15 Nov-15 Mar-16 Jul-16 Nov-16 Mar-17 Jul-17 Nov-17 Mar-18
Pan India Industry Participation Uttarakhand, Haryana, 472 125 Others, 300 Andhra Pradesh, Gujarat, 537 489 Tamil Nadu, 820 Rajasthan, 343 Punjab, 430 Telangana, 224 Karnataka, 250
Sector Wise Volume 7,000 6,561 6,256 6,000 Volume (MU) 5,000 4,000 2,945 3,000 2,568 1,830 2,000 1,612 1,000 661 576 404 202 148 0
ESCert Trading A market based mechanism to enhance cost effectiveness Perform form Achieve eve and Trade de (PAT) T) of improvements in energy efficiency in energy-intensive large industries and facilities, through certification of energy savings that could be traded
Chronology 2012 – 1 st PAT Cycle 2015 – Close of 1 st PAT Cycle 2016 – 2 nd PAT Cycle May, 2016- CERC regulation for Terms and condition for dealing in ESCerts Feb, 2017- CERC approval for procedures for transaction of ESCerts March, 2017- CERC order on fees and charges of ESCERTS Registry May, 2017- CERC approves IEX Rules & Bye-Laws September, 2017-Trading Started at IEX January,2018-End of Trading of PAT Cycle-1.
Sector wise count of DCs in PAT-1,PAT-2 & PAT-3 Sector Wise DCs in PAT-1,PAT-2 & PAT-3 Sl no. Sector DC Count PAT-1 PAT-2 PAT-3 1 Thermal Power Plant 144 154 37 2 Aluminium 10 12 1 3 Cement 85 111 14 4 Fertilizer 29 37 5 Iron & Steel 67 71 29 6 Pulp and Paper 31 29 1 7 Textiles 90 99 34 8 Chlor Alkali 22 24 9 Railways 0 22 10 Distribution Companies 0 44 11 Refinieries 0 18 Grand Total 478 621 116 Source-BEE
Stakeholders under the PAT scheme Trading State Administrator Verifier Trading Platform Registry Regulator Administrator Bureau of State Accredited CERC Energy Designated Energy PX POSOCO Efficiency Agency/SERC Auditor Eligible Entity Designated Consumers Registered with Registry
Salient Features of ESCert trading Compliance Mandatory PAT Cycle 3 Years Designated Consumers Target Entities Sellers DCs to whom ESCerts have been Issued Buyers DCs who have been entitled to purchase ESCerts Target 6.6 million toe for 1 st Cycle Mechanism Cap and Trade Self Retention Not Allowed for Group Companies As per Energy Conservation Act, 2001 Penalty (Linked to market value of oil equivalent
Salient Features of ESCert trading • 1 ESCert = 1 MTOE (Metric Tonne of Oil equivalent) ESCerts Trading Platform • Power Exchange only Trading Frequency • Weekly (Tuesday) Price Determination • Double-sided Closed Auction with Uniform Price Selection Principle • Price I Pro-Rata • Allowed for one consecutive cycle Banking Resale • Not allowed Cap & Floor Price • No Cap & Floor Price Redemption • First In - First Out principle Order Type • Single Bid Margin • 100% from Buyers
Trading on Power Exchanges Trading/Market Regulator (CERC) ESCerts Trade Member Client Registry Clearing Trade Member Banks CERC APPROVED ESCert Framework IEX Rules & Bye-Laws: Standardized Contract Specification
Trading Timelines TIME on trade day DETAILS Pre-trade Phase: By 12.00 Exchange to check initial margin for Members Order Accumulation phase (Bidding ) 13.00 -15.00 Order Accumulation Order Verification phase By 15.30 PX to send details of maximum offer placed by Sellers and buy bids to Registry By 16.00 Registry to send report confirming valid ESCerts available with participant Order matching and transaction finalization By 17.00 Market clearing price and Market clearing volume determination and publishing of transaction results on Exchange Terminal Settlement Phase By 17.00 Files to be sent by Exchange to banks for actual debits (Pay-in) By 11.00 Files to be sent by Exchange to banks for actual credits (Pay-out) (T+1) Delivery Phase By 17.15 Exchange to upload the confirmation report on D-CRM portal providing the final sell and buy volume of each participant. By 17.30 Registry to send the transaction approval acknowledgement to Exchange By 18:00 Exchange to send transaction report to each participant
Process flow for ESCerts trading Trading to be carried out on weekly basis every Tuesday. (In case of Bank Holiday: Next Working day) IEX Member Reports Confirmation & Sell Bid Shortages, if (13:00 to 4 any (by 15:00) 3 16:00) DC (Buyer) Power 1 Registry Exchange(s) Sell Bids DC (Seller) 2 for Buy Bid verification (13:00 to 6 15:00) (by 15:30) Confirmation Market 5 Report Clearance (by 17:15) (Volume & Price) by 17:00 Transaction Approval Acknowledgement (by 17:30)
Roles & Responsibilities of PX Formulate Rules and Bye Laws for Transaction of ESCerts on PX Develop IT Platform compatible with the PAT-Net portal and D-CRM for online transaction. Permit transaction of ESCerts only to the Eligible Entities. To determine MCP and MCV based on double sided closed Auction with Uniform Pricing principle Send reports for Transaction confirmation, pay-in and pay-out for Executed Transaction. Issue Purchase Certificate to the Buyers. Display ESCerts demand supply curves on the website
Double Sided Closed Auction SELL Price The perfectly liquid, frictionless market P* solution BUY Quantum 0 Q*
The Batching of Customer Orders O 6000 O Sell • Buy • O 5000 Price(Rs/ESCert) • • O 4000 • 3000 O How should these orders be integrated ? • O 2000 • 1000 10 20 30 40 50 60 Quantum(ESCerts)
Aggregate the Buy Orders • Individual buy order 6000 Cumulated buy orders • • (10) at the price or better 5000 Price(Rs/ESCert) • (10+20=30) • • 4000 • 3000 • (30+10=40) • 2000 • (40+10=50) • • 1000 (50+10=60) 10 20 30 40 50 60 Quantum(ESCerts)
Aggregate the Sell Orders 6000 O (40+10=50) o 5000 Price(Rs/ESCert) O (30+10=40) 4000 o o 3000 O (20+10=30) o Individual sell order 2000 o O (10+10=20) o Cumulated sell orders O (10) at the price or better o 1000 10 20 30 40 50 60 Quantum(ESCerts)
Match Aggregated Buy & Sell Orders Cumulated O 6000 Sell Orders • 5000 O • P* = 4000 4000 O Price(Rs/ESCert) • 3000 O • O 2000 • Cumulated 1000 Buy Orders 10 20 30 40 50 60 Quantum(ESCert) Q* =
Buy/Sell Order – screenshots
Market Snapshot Sell Bid Purchase Bid Cleared Volume MCP (Rs/ESCert) 1,200,000 1,400 1,200 1,200 1,200 1,000,000 1,000 1,000 1,000 MCP (Rs./kWh) 899 800,000 No. of Escerts 800 800 600,000 600 600 525 500 500 501 450 400,000 350 350 400 250 200 200 200,000 200 0 - 26 Data as on 31 st Mar’ 2017
Trade @ IEX
Options for dealing through Exchange Member - deals directly with Exchange DCs Electricity Traders Consultants/ Energy Auditors etc Client - deals through Member DCs
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