The Indian Energy Exchange (IEX) on Monday announced the commencement of cross-border electricity trade (CBET) on its platform.
This is a first-of-its-kind initiative for the exchanges to expand their power markets beyond India to the South Asia region towards building an integrated South Asian regional power market, IEX said in a statement.
In a remarkable development following the notification of CBET Regulations by CERC (central electricity regulatory commission) in the year 2019 and the recent notification of CBET Rules in March 2021 by the Central Electricity Authority (CEA), NVVN (Vidyut Vyapar Nigam Ltd, a trading arm of NTPC) has secured approval from the CEA, for Nepal’s participation in the day-ahead market on the Exchange.
"The Indian Energy Exchange, India’s premiere energy marketplace, is pleased to announce the commencement of the Cross Border Electricity Trade (CBET) on its platform,” the statement said.
Currently, the cross-border trade with neighbouring countries for India stands at about 18 BU (billion units) conducted through the medium to long term bilateral contracts.
As per the CEA and CERC, as on date, 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 FY22 and 70 BU to FY27, according to a study by IRADe.
While the macro-economic growth in the South Asia region has been one of the strongest in the world, the region has been confronting with challenges related to power demand-supply balance and the low per capita power consumption.
S N Goel, chairman and managing director, IEX, said, "We are immensely delighted to welcome Nepal as the first country to commence the cross-border electricity trade in our day-ahead electricity market.”
"With a large installed power generation capacity base of 382 GW and peak demand of about 185 GW, India is a power surplus country," Goel added.
"We have a unique opportunity to lead the regional power market development and make efforts towards enhancing the energy access and security amongst the neighbouring nations in the region," he said.
Mohit Bhargava, CEO-NVVN / ED (RE)-NTPC mentioned that "India is centrally placed in South Asia region and shares boundaries with several countries in the region”.
Due to its unique location as well as sound electricity infrastructure, "we must lead in energy cooperation and development of market in the South Asia, regional transmission infrastructure development as well as facilitate efficient utilisation of the energy resources for the cross-border entities," Bhargava noted.
Nepal is the first country to avail the benefit of buying day ahead power from power exchange through NVVN, he said adding that this is a new beginning in the South Asian region.
NVVN with vast experience in power trading also has extensive expertise in cross-border power trading, Bhargava said.
"Sixty-one percent of total power exported to Bangladesh and 54 percent to Nepal is through NVVN wherein besides trade, NVVN also facilitates the settlement of grid operations and other related technicalities. We also aspire to work closely with Bhutan and Myanmar in the future.”
IEX is working closely with PTC, NTPC Vidyut Vyapar Nigam Ltd (NVVN), and all other designated nodal agencies for Cross Border Electricity Trade to facilitate inter-country power trade through the Exchange Market.