After reporting strong trading volumes on the debut trade, the National Stock Exchange has raised the target of power traded through its derivatives contracts to 400-500 billion units (BU) for the current fiscal.

Harish Ahuja, head – sustainability, power/carbon markets/electricity derivatives, listing business (IPO) & social stock exchange at NSE, said: “Earlier, we felt the 240 billion units being traded in the short-term power spot market will come to futures markets for hedging, subject to some regulatory approvals and more clarity. After Monday’s response, we may also witness 400-500 BU coming to futures markets.” He noted that this target is dependent on the launch of quarterly contracts in a timely manner.

On Monday, 465.75 million units of electricity were traded through derivatives contracts on the NSE. Ahuja noted that some players had approached the NSE for weekly contracts. “We are planning to introduce quarterly and yearly contracts, and eventually, contracts for difference (CfD).”

The Multi Commodity Exchange of India launched electricity derivatives contracts last week and settled prices on the IEX. He said NSE volume weighted average daily ahead market (DAM) prices are not confined to one exchange, but all the three – Power Exchange India, Indian Energy Exchange and Hindustan Power Exchange.

“We understand the nuance of the power markets given our exposure to Power Exchange India since 2008. We do not see electricity derivatives only as commodity, but a building block for a developed country” Ahuja said.

The NSE has received encouraging feedback from distributors, big traders, mutual funds and FPIs, Ahuja said. “This is transformational as it will deepen power markets, and the volatility in spot prices of electricity will go down because of these derivatives instruments.”