Power Exchange Case Study

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E NACHTMENT of Electricity Act 2003 paved the way for power sector reforms in India. Availability Based Tariff was implemented in India progressively from 2002-2004. Open Access in Inter State transmission system was introduced in 2004 which has led to development of bilateral power market in India. Subsequently, a need was felt to provide a platform where buyers and sellers can interact with each other to strike a deal. Accordingly, guidelines for establishment of power exchanges were issued by CERC in February 2006 followed by commencement of first power exchange in India in June 2008. The second power exchange started its operation in October 2008. The Business Rules and Bye Laws of the power exchanges are framed by the exchanges with the…show more content…
Voluntary Participation: Participation in power exchanges is voluntary and not compulsory unlike other countries. All the utilities in the country are free to opt any type of product. C. Social Welfare Maximization: The price discovery mechanism adopted in the Power Exchanges follow the principle of social welfare maximization. Neither buyer non seller receives any preferential treatment. D. Anonymous Bidding: Power Exchange trading is a non-co-operative game. All the market players place their bid on the electronic platform independent of each other. E. Risk Management: Managing risk of non-payment is one of the important functions of Power Exchange. Therefore, all the members are required to maintain adequate collateral margins in proportion of the trades being done. F. Standardized Contracts: The contracts traded on the Power Exchange are standardized contracts, terms and conditions of which are well known upfront to all the market players, thus reducing the transaction costs. G. Completely automated: Power Exchange platform is a fully automated platform. Every client is given a secured access to the trading portal to place bids, know the trade results and settle…show more content…
CONCLUSION Introduction of power exchanges in Indian Electricity Market has been one of the instrumental steps in development of vibrant electricity market. It has not only provided a platform for the market players to manage short term surpluses and deficits but also helped system operator in managing power system better as the deviations from schedule have reduced. X. ACKNOWLEDGMENT The author would like to thank Prof A Abhyankar for providing the opportunity to write a paper on “Working of Power Exchanges in India”. The author would also like to thank all the researchers and authors who have worked on Power Exchanges in India and shared their knowledge through papers and
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