Power trading yet to power up
Amritha Pillay 26 July 2010

Power trading on the two power exchanges in India has been stagnant for the past six months. Volumes are expected to increase, only if more states agree to participate in the open access system.

While, the prices of merchant power traded have been volatile at India's two power exchanges, growth of volumes on both the exchanges has been stagnant. The volumes in June on both exchange has been around in the same range as in January.

According to the monthly volume data available with Indian Energy Exchange (IEX), 7,23,403.16 MWh was the total volume traded on the exchange in January 2010. In June 2010, the total volume traded was 7,48,388.58 MWh, with a month-on-month (m-o-m) change of a mere 3%. In July so far, volumes declined.

Similarly, the total monthly volume traded on Power Exchange India Ltd (PXIL) has remained stagnant for the past six months. In January 2010, around 1,44,009MWh was traded on the power exchange. In June 2010, around 1,44,434.3 MWh was traded on the exchange. The m-o-m change for January and June volumes is less than 1%. PXIL's volumes too declined in July.

The total volume of power traded on IEX showed a decline in February and March at -9% and -14% m-o-m, respectively compared to their previous months. The exchange has witnessed a rise in May and June at 5% and 26% respectively over the immediate previous months.

In PXIL volumes declined by -15%, -30% and -8% respectively in March April and May compared to their immediate previous months. In June volume growth was positive in both the exchanges.

The stagnant trend in volumes has been attributed to various reasons. According to sources from IEX, the fall in March was due to the fact that more power was being supplied through long-term contracts.

On the other hand, more states have been allowing open access since April, which has triggered a rising trend from April onwards. States like Andhra Pradesh and Tamil Nadu allowed their industries open access during this period. Active participation from Punjab, which allowed open access earlier, was also noticed April onwards.

While the growth in volumes have been stagnant over a period of six months, officials from IEX are positive that volumes are bound to increase over a period of time, as both the market as well the power sector are evolving. Volumes are expected to increase, if more states agree to participate in the open access system.

IEX is the country's first power trading exchange, which started operations in June 2008, followed by PXIL which started operating from October 2008. IEX has been far ahead in terms of volumes with a monthly average of 6,45,829.397 MWh traded in the last six months against 1,21,077.814 MWh traded on PXIL for the same period.

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