IEX REC Market: An Overview March 2019 For Public Use In this - PowerPoint PPT Presentation

IEX REC Market: An Overview March 2019 For Public Use

In this presentation Introduction to Indian Power Market Product Portfolio Trading Mechanism Market snapshot Participation Volume Price Trade @ IEX

Power Supply situation in the Country Energy Available Installed Capacity Peak Met (Excluding RE Gen.) Year (at the end of FY) ( MW ) (MW) (MU) 2011-12 1,99,877 1,16,191 8,57,886 2012-13 2,23,344 1,23,294 9,11,209 2013-14 2,43,029 1,29,815 9,59,829 2014-15 2,67,367 1,41,160 10,30,785 2015-16 2,98,060 1,48,463 10,90,713 2016-17 3,26,848 1,56,934 11,35,332 2017-18 3,44,002 1,64,066 12,01,528 2018-19* 3,49,288 1,77,022 11,37,607 • During the last 8 years, capacity has increased at a CAGR of 8 % i.e. from 199 GW to 350 GW, peak demand met increased at a CAGR of only 6% Installed capacity has grown at a faster pace compared to demand Source: CEA 3 Till Feb 2019

Indian Power Market Development trend Spot trading on Exchanges OTC Markets Multi Buyer/Seller Single buyer/seller Improved liquidity and Efficiency

Indian Power Sector Snapshot FY 2009 FY 2019* Long Term/Medium Term 93.86% 87.8% -Long term - PPA >=25 years - Medium term >1 year Short-Term (upto 1 year) 6.1% 12.2% 0.4% Exchanges 4.3% Through traders 3.2% 4.3% Direct Bilateral 0.5% 1.6% Unscheduled Interchange 2.1% 2.0% Source: Percentage as per CERC Report on Short Term Power Market (Till December ‘18)

6 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 Ecert= 1 Mtoe( Metric Tonne Oil Equivalent) • Trading Session on every Tuesday of the Week s ince 27 Sep’17 • Trading time 1300 hrs to 1500 hrs Auction Continuous

7 Company Snapshot 98% Market Share 6400+ Participants 4000+ Industries 50+ Discoms 500+ Conventional Generators 1650+ RE Participants Transparency Liquidity Competition

What benefits does the power exchange provide? Nation-wide voluntary access Delivery Based E-trading contracts No counterparty Robust Platform risk

9 IEX Volume Growth : Strong trend line 60,000 Electricity Volume 52,241 50,000 46,214 Cleared Volume (MU) 40,576 40,000 34,397 29,270 28,363 30,000 22,811 20,000 12,712 14,415 10,000 6,214 2,616 0 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY18 FY 19 Source: IEX Data (DAM+TAM)

Intra ra Day REC Product Portfolio

Product Segments Day Ahead Market Trade for the following day (DAM) Contracts for every 15 min, closed auction • Intraday From 3 Hrs ahead to Term Ahead 11 days in advance • Day Ahead Contingency • Daily Market (TAM) 4 types of • Weekly contracts Trade green attributes of electricity Renewable Energy Certificates (RECs) 1 REC = 1 MWh of green energy

Contract Characteristics TERM AHEAD MARKET Contract Day Ahead Intraday Day Ahead Daily Weekly Characteristic Market Contracts Contingency Contracts Contracts From 4 th day 0400-2400 Delivery Next day For next day For next week Hrs same day to next 7 days Closed Continuous Continuous Continuous Auction Type Open Auction Auction trading trading trading Block of Hours Block of Hours Contracts 15 min Hourly Hourly (Fixed) (Fixed) All Days; All Days; Wed & Thurs; Trade All Days All days Availability 1500-2300 1200-1500 1200-1600 Pay in: T+1 Pay in: T+1 Financial Pay-In- D-1; Pay-In- D-1; Pay-In- D-1; Settlement Pay Out – D+1 Pay Out – D+1 Pay Out – D+1 Pay out: T+1 Pay out: T+2 T = Trade D = Delivery

DAM and TAM Trading Timeline

Trading Mechanism

Features of Day Ahead Market A closed double-sided anonymous auction for each 15-min time block for the following day N1 N3 The intersection between the aggregated sale and purchase curves defines the market clearing A2 N2 N2 price (MCP) A1 E1 W1 W3 13 Bid area defined W2 E2 Congestion Management through market splitting S1 and determining Area Clearing Price (ACP) specific to an area S3 S2 Bid types: Portfolio Orders or Block Orders S2 Minimum bid=Re.1 for 0.1MWh 13 Bid Areas Minimum Price & Volume Step = 0.1p * 0.1 MWh

Understanding exchange mechanism Bidding and Matching Risk Management Congestion Management Treatment of losses and charges

DAM trading process Review corridor Bidding Matching and funds Result Confirmation Scheduling availability 10:00 am to 12:00 pm to 1:00 pm to 3:00 pm 5:30 pm 6:00 pm 12:00 pm 1:00 pm 2:00 pm MCP Bids for Corridor Final ACV Collective Final 15- min &MCV availability and ACP transaction Schedule sent each or calculated and funds confirmation calculated. to RLDC for block bids verified Market by NLDC incorporation can be splitting if placed congestion

Bid Types • Bids for each 15 min • Relational Block Bid can be entered for any 15 min • Varying price and • Mother or child bid quantum pairs • No circular links • Allow partial execution • No partial execution Single/Portfolio Block Bid Bid

DAM-Single Bid

DAM-Block Bid Rules for bid linking : • A bid (bid B) can only be linked to one other bid (bid A) • Both bid A and bid B must be of same type, i.e. sale-sale or purchase-purchase. • Bid A and bid B can span any set of hours independently of each other • Bid A and bid B can have any bid price independently of each other.

Matching: Model Price Calculation algorithm (Example for a sample 15-min) Price Tick 0 1 1.1 2 2.1 2.5 3 3.1 3.5 3.8 4 4.1 5 7 9 12 14 17 19 20 Portfolio A 20 20 20 20 20 20 20 10 7 4 0 0 0 0 0 0 0 0 0 0 Portfolio B 60 60 60 60 50 40 40 40 40 40 40 40 20 20 20 20 20 20 20 20 Portfolio C 70 70 70 70 70 60 50 50 50 50 50 50 50 10 10 10 10 10 10 10 Portfolio D 40 20 0 0 -40 -60 -80 -81 -85 -100 -120 -120 -120 -120 -120 -120 -120 -120 -120 -120 Portfolio E 0 0 0 0 0 -40 -50 -50 -50 -50 -60 -60 -90 -90 -90 -90 -90 -90 -90 -90 Portfolio F 0 0 0 0 0 -20 -20 -20 -20 -20 -20 -30 -40 -40 -40 -40 -40 -40 -40 -40 Total Buy, MW 190 170 150 150 140 120 110 100 97 94 90 90 70 30 30 30 30 30 30 30 Total Sell, MW 0 0 0 0 -40 -120 -150 -151 -155 -170 -200 -210 -250 -250 -250 -250 -250 -250 -250 -250 Net Transaction, 190 170 150 150 100 0 -40 -51 -58 -76 -110 -120 -180 -220 -220 -220 -220 -220 -220 -220 MW 20 Demand (Buy) Supply (Sell) 18 16 14 12 10 8 6 4 MCP: Rs 2.5 2 0 0 50 100 150 200 250 300 MCV: 120 MW

Congestion Management SR WR S3 S1 Deficit Surplus B2 B3 S2 S1 B1 B1 S2 S3 50 MW 50 MW 150 MW 30 MW 40 MW 80 MW 100 MW 100 MW 120 MW 50 MW RS 7500 RS 8000 100 MW RS 9000 100 MW RS 8000 RS 5500 RS 6000 RS 8500 RS 7000 RS 9500 RS 8500 Required B2 Flow 160 MW S3 S2 Rs 9/u 100 MW 50 MW 100 MW Rs 7.5/u Rs 5.5/u B1 S1 S2 50 MW 50 MW 20 MW RS 8.5/u Rs 8/u Rs 8/u S2 B1 S1 B3 40 MW 100 MW 80 MW 30 MW Rs 8.5/u Rs 6/u Rs 9.5 Rs 7/u

Congestion Management SR WR Deficit Deficit Surplus Surplus 100 MW 20 MW 100 MW 20 MW Lowest Buyers getting rejected Highest Seller getting rejected B2 Allowed 160 MW Flow RS 9000 S3 S2 20 MW 50 MW 100 MW RS 7500 RS 5500 B1 50 MW S1 S2 RS 8500 50 MW 20 MW RS 8000 RS 8000 S2 B1 S1 B3 40 MW 100 MW 80 MW 30 MW RS 8500 RS 6000 RS 9500 RS 7000

Term Ahead Market 24

TAM Market Segments Open Auction Continuous Continuous Continuous 25

Types of Contracts • Weekly and Daily – FBA -- Firm Base – 24 Hrs – FNT -- Firm Night – 8 Hrs (0-7 & 23-24) – FDY -- Firm Day – 11Hrs (7-18) – FPK -- Firm Peak – 5 Hrs (18-23) • Day Ahead Contingency and Intra-Day – Hourly ( DAC-24 hrs & Intraday-04-24) Region Specific Contracts 26

Trading of Intra-day Contracts Trading Hour Trading Hours:19.5 (00:30-20:00) 13-14 15-16 2-3 3-4 4-5 5-6 6-7 7-8 8-9 9-10 10-11 11-12 12-13 14-15 0:30-1 1-2 16-17 17-18 18-19 19-20 Delivery Hours:20 (04-24) 4-5 5-6 6-7 7-8 8-9 9-10 10-11 11-12 12-13 13-14 14-15 15-16 16-17 17-18 18-19 19-20 20-21 21-22 22-23 23-24 Contracts available for delivery on the same day 27