The Functioning of the Indian Energy Exchange
IEX operates as an automated trading platform, facilitating the physical delivery of electricity and two types of certificates, namely, Renewable Energy Certificates and Energy Saving Certificates.
The platform boasts over 6600 participants from 29 states and 5 Union Territories who are eligible to purchase electricity. The electricity is traded through various product segments:
- Spot Market: This is a market for immediate physical delivery of electricity. It allows for deliveries for any or all 15-minute intervals in the 24 hours of the next day, starting from midnight. The price and quantity of electricity are determined through a double-sided closed auction bidding process.
- Forward Market: Participants can buy or sell electricity on a term basis for a duration of up to 11 days ahead.
- Green Energy Certificates: This facilitates transactions in environmental attributes. According to the exchange;
- Green energy generators can opt to receive these certificates in lieu of the green attributes of their generation. These certificates can then be sold by these generators through IEX.
- Entities obligated to purchase green energy - distribution companies, captive plants, and open access consumers may choose to purchase these certificates to meet their Green Purchase Obligation (GPO).
- Energy Efficiency Certificates: Also known as EECerts, these are tradable certificates under the Perform-Achieve-Trade (PAT) Scheme.
- The PAT Scheme was initiated in 2012 by the Bureau of Energy Efficiency (BEE), Ministry of Power. According to the Ministry, “The PAT scheme is a regulatory instrument to reduce specific energy consumption in energy-intensive industries, with an associated market-based mechanism to enhance the cost-effectiveness through certification of excess energy saving which can be traded.”
IEX: Vision and Mission
The IEX is committed to providing competitive, transparent, and reliable access to sustainable energy. It aims to create marketplaces that leverage innovation and technology in line with its mission to deliver affordable, reliable energy to consumers.
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Membership Categories in IEX
IEX offers three categories of membership:
- Individual Members: Eligible entities include:
- Inter-State Generating Stations (ISGSs)
- Distribution Licensees
- State Generating Stations
- Independent Power Producers (IPPs)
- Captive Power Plants (CPPs) & IPPs with consent from State Load Despatch Centre (SLDC)
- Open Access Consumers with consent from SLDC
- Trading Members: An entity with a valid and subsisting Interstate Trading License from the Central Electricity Regulatory Commission (CERC) is considered an eligible entity.
- Professional Members: Entities that do not fall under the categories of individual or trading members. Such entities cannot trade on their own behalf but can act on behalf of their clients. They are also not allowed to clear contracts on the Exchange for such clients.
Note: The following can be the members of the IEX:
- Sole Proprietorship Firm
- Registered Partnership Firm
- Private Limited Company
- Public Limited Company
- Government Entity
- State Electricity Board
IEX's Regulatory Body
The Central Electricity Regulatory Commission (CERC) regulates the Indian Energy Exchange. CERC is a statutory body with quasi-judicial powers. The Power Market Regulations 2010 are among the various regulations that govern IEX.
Candidates should familiarize themselves with the above-mentioned aspects of the Indian Energy Exchange for their UPSC preparation.
For more articles and resources for UPSC preparation, check the links below:
