Cross border electricity trade begins in spot markets

By: |
April 20, 2021 3:00 AM

According to sources, Nepal started the cross-border power purchase through the spot market on April 17, booking one million units through the ‘day ahead market’ (DAM) trading mechanism.

“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,” S N Goel, chairman and managing director, IEX said.“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,” S N Goel, chairman and managing director, IEX said.

The Indian Energy Exchange (IEX) on Monday said it has commenced cross border trade on its platform, marking the maiden initiative for Indian exchanges to expand their markets beyond the country.

According to sources, Nepal started the cross-border power purchase through the spot market on April 17, booking one million units through the ‘day ahead market’ (DAM) trading mechanism.

To enable cross border electricity trade, the Central Electricity Regulatory Commission had revised regulations in March 2019 after the power ministry issued fresh guidelines for cross-border trade in December 2018, where it had removed certain restrictive riders and paved the way for electricity trading in the more attractive DAM.

“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,” S N Goel, chairman and managing director, IEX said.

As much as 8.2 billion units (BU) has been supplied to Nepal, Bangladesh and Myanmar in the first eleven months of FY21 through the medium to long term bilateral contracts. According to preliminary estimates by sector experts, power trade with these countries is expected to increase to about 40 BU by FY22 and 70 BU to FY27. Bangladesh is the largest buyer of Indian power.

As per regulations, are required to participate in power exchanges only through Indian power trading entities. Nepal used the DAM to buy electricity from power exchange through NTPC Vidyut Vyapar Nigam (NVVN). “About 61% of total power exported to Bangladesh and 54% to Nepal is through NVVN wherein besides trade, NVVN also facilitates the settlement of grid operations and other related technicalities,” Mohit Bhargava, CEO of NVVN said, adding that

“We also aspire to work closely with Bhutan and Myanmar in future”.Ties between India and Pakistan have been frozen since a suicide bombing of an Indian military convoy in Kashmir in 2019 traced to Pakistan-based militants that led to India sending warplanes to Pakistan.

Later that year, India’s prime minister withdrew Indian-ruled Kashmir’s autonomy to tighten his grip over the territory, provoking outrage in Pakistan and the downgrading of diplomatic ties and suspension of bilateral trade.

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