Power exchanges can trade contracts for up to 3 months now

Power exchanges will be able to trade contracts for up to three months after approval by the Central Electricity Regulatory Commission (CERC).

The approval is expected to bring historic change to power markets, as a significant portion of bilateral trade is expected to shift from bilateral contracts to power exchanges.

Of the 660 electricity tenders between January 2020 and April 2022, 396 tenders (60%) were for monthly electricity purchases.

“This indicates a preference for monthly contracts among stakeholders,” CERC said.

An increased share of electricity trading on exchanges is desired worldwide for a deep and competitive market structure.

Experts said the move would allow state-owned electricity companies to block short-term electricity supply for up to three months on power exchanges at a better and transparent price.

“This decision is very positive. Through the exchange, price discovery would be competitive and payment issues would be resolved,” an expert said.

“Approval is granted for daily contracts, weekly contracts, monthly contracts and one-way contracts (based on reverse auction methodology) to be traded on the petitioner’s exchange,” CERC said in an order. on a request filed by the


Last year, the Supreme Court settled a decade-long jurisdictional dispute between CERC and the Securities & Exchange Board of India, paving the way for the introduction of longer-term delivery contracts on power exchanges , which are currently limited to 11 days. The Department of Energy had said the order would deepen the electricity market to 25% volume by 2024-25 from the current level of 5.5% volume.

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