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EVOLUTION OF POWER TRADING/EXCHANGE IN SOUTH ASIA NEPAL-INDIA POWER TRADING EXPERIENCES

EVOLUTION OF POWER TRADING/EXCHANGE IN SOUTH ASIA NEPAL-INDIA POWER TRADING EXPERIENCES. TRADING OF ELECTRICITY IN MARKETS. MARKETS FOR ELECTRICITY. Why Markets for Energy ( Electricity) Fossil fuels : Traditional Sources of Domestic / Ind. Energy But fossil reserves are depleting

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EVOLUTION OF POWER TRADING/EXCHANGE IN SOUTH ASIA NEPAL-INDIA POWER TRADING EXPERIENCES

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  1. EVOLUTION OF POWER TRADING/EXCHANGE IN SOUTH ASIA NEPAL-INDIA POWER TRADING EXPERIENCES

  2. TRADING OF ELECTRICITY IN MARKETS

  3. MARKETS FOR ELECTRICITY • Why Markets for Energy ( Electricity) • Fossil fuels : Traditional Sources of Domestic / Ind. Energy • But fossil reserves are depleting • Electricity is most convenient form of Energy • Mismatch in Demand and supply of electricity • Need for Economic, optimal and innovative use of electricity • Market mechanism is a solution to this • Problems in developing a market of Electricity • It is intangible commodity • ( cannot be shown and delivered at market place) • It is to be consumed the moment it is generated • It needs direct hardware connection up to consumer

  4. TRADING OF ELECTRICITY IN MARKETS • Inspite of problems • Markets are developed and electricity is tradedthere • Purchase of a commodity and its resale is trading • Drivers of trading • Availability of commodity • Surplus of a commodity in one region • Deficit of same commodity in another region • Price arbitrage in two regions • Complementing attributes of commodity

  5. TRADING OF ELECTRICITY IN SAARC REGION • Physical Connectivity • India and Bhutan grids interconnected • Nepal and India:14radial links of 11 kV, 33 kV and 132 k V • No other two countries have physical interconnections • to enable the cross border transaction of power • Existing level of cross border power transactions • Bhutan and India: India net importer • Nepal and India : Nepal net importer of about 800 MU • Bangladesh and India: Bangladesh will import soon • Market situation • India has domestic market in operation including Energy • Exchanges, no other operating domestic market

  6. INDO-NEPAL POWER EXCHANGE Phase 1 Sixties and Seventies of 20th century Purpose Supplying power to Nepalese localities neighboring project sites River treaties Implementation of Koshi and Gandak River Treaties Construction Supply Used to electrify neighboring Nepalese localities Instrumentality Joint Committees for River Treaty also for Power related issues

  7. INDO-NEPAL POWER EXCHANGE Phase 2 Eighties of 20th Century Purpose • Supplying power to Nepalese towns • neighboring the Indo-Nepal border • but not connected to Nepalese Grid I • Indian grid in bordering Indian towns • Through many such points Power from • Nepalese towns near such Indian towns • 11 k V or 33 k V lines extended Power to • Indo- Nepal Joint Commission • Commission mainly dealt water issues Instrumentality

  8. INDO-NEPAL POWER EXCHANGE Phase 3 P E C Era ( Nineties, first decade of 21st century) Purpose S Meeting supply deficit in areas connected to INPS Reasons I Deficit owing to slow Generation augmentation C Understanding Increased Ex. volume to supply parts of INPS radially. Instrumentality • Increased volume more technical issues • Assignment of power related functions of • Joint Commission to PEC • PEC principle for Tariff : cost of generation

  9. INDO-NEPAL POWER EXCHANGE Phase 4 • Trading in asynchronous radial system • ( Later of first decade of 21st Century) Purpose Introduction of Power Trading Reasons I • Paradigm shift in Indian Power Sector • Power market evolved • Large volume of flexible power became a • problem for system Understanding • PEC Volume limited to 50 MW • Additional requirement could be sourced • through trading Solution Accessed short term market through PTC

  10. INDO-NEPAL POWER EXCHANGE Phase 5 • Future trading in synchronous system Purpose • Full scale accessibility in the market Reasons • Radial system not suitable due to poor l.f. • Trading through CTU point better than STU • Trading volume limited due limited • capacity of X- border transmission facility Understanding • Construction of 400 k V X- Border line • Synchronization of two grids Activity Construction of 400 KV D-M Line initiated

  11. ACCESSION TO REGIONAL TRADING Regional Market Supply to bordering towns Supply to River Treaty Project neighborhood

  12. Years of Trading experience in Phase4 1 5 4 3 2 1

  13. OUR EXPERIENCES IN TRADING Phase 4 • Trading in asynchronous system Legal approval • 8th Meeting of PEC held in KTM from PTC Initiative • Thanks to PTC to convince us Trading be it • with very small volume of 5 MW • Doubt about being trading member in • Indian market I In-house Decision • Confusion and inertia about trading • Usually for new initiative in public • utilities, it is gain collective risk individual Start of Trading • First short term trading agreement signed • Difficult to convince that prices are best

  14. FIRST YEAR OF TRADING 2008/09 Contract details • Product/Volume: RTC, 20 MW • Period : January to April 4 months • Base Tariff : IRs 4.54 at delivery point PTC Performance I • PTC Performance as Trader was excellent • Seller WBSEDCL also performed excellent NEA Performance • As purchaser performed as per contract • Did not default in payments Impression • Trading is possible in radial system also • We can trade without difficulty

  15. FIRST YEAR OF TRADING 2008/09 Scheduling • Daily schedule on hourly basis to PTC • PTC then submit to NRLDC same day L/C • Long process, acceptance of terms and • banks relation first time Provisional bills I • Weekly provisional bills, understanding • Recording L /C drawl for provisional bill Monthly Bill • Final monthly Bill received adjusting all • But still UI is for future/ SO pays it later Energy Balance REA / RPC • Monthly Energy Balance on regional basis • Also has UI balance First charge meter balance • Special case : Same Meter, two energies • Trading energy as first charge energy

  16. FIRST YEAR OF TRADING 2008/09 Contingencies • System Contingencies addressed in bills Emergency • Long hour emergencies also addressed Shut downs I • Under drawl due to line shut downs • addressed UI settlements Pool balance • Takes time, a difficulty in closing L/C L/C updates • L/C is updated but delayed settlement of • UI Makes it difficult to close immediately • after cessation of contract. Reconciliations Can be done only after UI Settlement

  17. FIRST YEAR OF TRADING 2008/09 UI Balance • In favor of NEA Impact of UI • Absence of Balancing Market as problem • UI forced to serve balancing market • Effective Tariff less than the Contract Implementation I • Very smooth as if it was not first time Disputes • None Overall impression • Encouraged for trading

  18. SECOND YEAR OF TRADING 2009/10 Contract Details • Product: RTC • Volume : 20 MW +25 MW • Period : January to March 3 months • Base Tariff : IRs 4.50 delivery point PTC Performance • PTC Performance as Trader was excellent • Seller WBSEDCL also performed excellent NEA Performance • As purchaser performed as per contract • Did not default in payments Impression • Trading at more than one point • Multiple products delivery from same pts. • More familiar /comfortable with trading

  19. THIRD, FORTH AND FIFTH YEAR Third Year Year 2010/11 Contract Details • Product: RTC • Volume: 20 MW • Period: Jan to April • Base Tariff: IRs 6.70 Fourth Year Year 2011/12 Contract Details • Product: RTC • Volume: 15 MW • Period: Jan to April • Base Tariff: IRs 4.35 Fifth Year Year 2012/13 Contract Details • Product: RTC • Volume: 15 MW • Period: Jan to April • Base Tariff: IRs 4.30

  20. SIXTH YEAR OF TRADING 2013/14 • Sixth Year • Year 2013/14 • Contract Details • Product: RTC • Volume: 30 MW • Period: Dec ‘13 to April ‘14 • Base Tariff: IRs 3.75

  21. CONCLUSION • Within 5 years buyer’s market turned to seller’s market • Prices in trading market went down • Ultimately we as off takers got benefitted • To increase the trading volume we have transmission bottlenecks • We wish to enter the DAM through IEX but the transmission • UI as problem, for transparency it is to be convinced that all UI Reports are System Generated

  22. OUR EXPERIENCE • Know the market • Have reputed trading agency that has : • larger pie in trading market • multiple contracts at same time • Other suppliers in case of failure of your seller • Keep eye on price forecasting in market • Hunt the market in time • Money value of time is money value of product • Get best value of money • Use real time facilities but good guess in advance

  23. ULTIMATE OF THE TRADING EXPERIENCE

  24. All things are difficult before they become easy.

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