Monthly electricity futures made a strong debut on the National Stock Exchange (NSE) on Monday, with more than 8,100 contracts being traded up to a little after 7 p.m. The total value traded was Rs 177.24 crore.
In fact, as of 2 p.m., contracts recorded more than 4,000 lots, representing more than 200 million units of electricity. A press release from the NSE on Monday afternoon noted that the first trade opened at ₹4,430/MWh. “As of the reporting time, the price is trending around ₹4,364/MWh, reflecting healthy participation across participants, including power generators, discoms, large industrial consumers and market intermediaries,” the release said.
Monthly electricity futures contracts will enable buyers and sellers of power and also traders in electricity to hedge themselves against price volatility.
As of 7:03 p.m., the 50 MWh contract traded at Rs 4,365, compared with Rs 4,249.16 of the same unit in the spot market. “This launch provides a transparent, risk-managed platform for participants to hedge electricity price volatility, support long-term power planning, and contribute to India’s broader energy transition goals,” the NSE release said.
Volumes are higher than those for electricity futures contracts traded in the last two trading sessions on the Multi Commodity Exchange of India (MCX). On the MCX, electricity futures contracts started trading last week. Monday’s data for the exchange was not updated at the time of going to press.
On July 10, 2,606 contracts were traded on the MCX for a total value of Rs 57.52 crore, while on July 11, 1,633 contracts were traded for Rs 36.41 crore.
Both the exchanges have said that the segment will not immediately contribute meaningfully to the business, and that the focus, right now, is on building the market.
Sriram Krishnan, chief business development officer of the NSE, said on a television channel that the idea was to be a multi-asset exchange offering all products on the same platform so that it is easy to deal with these products from a user standpoint. “Also, it provides great efficiency in terms of margins.”
An industry expert noted that the trading on the NSE offered the advantage of participants being able to utilise margins better since all transactions would be settled within one exchange and clearing corporation.
Ashishkumar Chauhan, MD & CEO of the NSE, had said during the launch that plans were underway to gradually introduce contracts for other long-duration electricity derivatives such as quarterly and annual contracts.