Trading on a Power Exchange:

Indian Energy Exchange

Company Snapshot

Market Share: 98%

Average daily trade: ~100,000 MWh

High Participation: 4300+

3800+ Industries I 40+ Discoms (all) I 380+ Generators

Competition

LiquidityTransparency

IEX Market SegmentsDelivery-based Contracts

Day-Ahead Marketsince June,08

10-12 AM biddingEach 15-min block , 0.1 MW min NOC required

Term-Ahead Marketsince Sep,09

Day-Ahead Contingency – Another window 3-11pm

Intra-Day - for the same day, delivery from 04:00 to 24:00

Daily- for rolling seven days (delivery starting after 4 days)

Weekly- for 1 week (Monday-Sunday)

Renewable Energy Certificatessince Feb,11

Coming Soon… Energy Saving Certificates

Green Attributes as CertificatesSellers : RE generators not under feed in tariffsBuyers: Obligated entities1MWh equivalent to 1 REC

Auction Continuous

ELECTRICITY

CERTS

Contract Specifications

Delivery

Auction Type

Contract Unit

Day Ahead Market

Next day

Closed Auction

15 minute

1. Intra-day Contracts

0400-2400 Hrs same

day

Continuous Trading

Hourly

2. Day Ahead Contingency

For next day

Continuous Trading

Hourly

3. Daily Contracts

From 4th

day to next 7 days

Continuous Trading

Block of Hours

4. Weekly Contracts

For next week

Open Auction

Block of Hours

ELECTRICITY

Term Ahead Market (TAM)Day Ahead Market (DAM) Renewable Energy Cert’ (REC)

REC Market

Next day

Closed Auction

1 Cert’

DAM Trading Process

Bidding MatchingReview corridor

and funds availability

Result Confirmation Scheduling

Bids for 15-min each or block

bids can be placed

MCP &MCV

calculated

Corridor availability and funds

verified

Collective transaction

confirmation by NLDC

Final Schedule sent to RLDC

for incorporation

Final ACV and ACP

calculated. Market

splitting if congestion

10:00 am to 12:00 pm

12:00 pm to 1:00 pm

1:00 pm to 2:00 pm

3:00 pm 5:30 pm 6:00 pm

Market Place Functionality(DAM)

Bids are validated,

accepted and

Matched

Bid entry

Receipt of Nodal RLDC

Acceptance by IEX

Financial Settlement

Reports are

generated

Prov. Format-1

& Format-2

generated

electronically

& sent to

Members

IEX applies to

Nodal RLDC

Information

dissemination

Market Place Functionality(TAM)

Member obtains SLDC Clearance

Member sends the SLDC Clearance to IEX

Margins are

collected

Bid Types

• Bids for each 15 min can be entered

• Varying price and quantum pairs

• Allow partial execution

Single/Portfolio Bid

• Relational Block Bid for any 15 min

• Mother or child bid

• No circular links

• No partial execution

Block Bid

BID MATCHING

Open/Closed Auction

Orders accumulated during call phase (no matching)

Orders matched after call period

Orders are used for calculation common price

i.e. Equilibrium Price.

All successful orders matched at Equilibrium

Price.

Continuous Trading

Price-time priority based continuous matching

The highest Buy order & lowest Sell order gets the

priority

If the prices are same then priority is given to the time

of the order received.

Understanding of Single Bid

Buy Bid: One or more quantity-price pairs at which theparticipant is willing to buy thecorresponding quantity ofelectricity and are submittedindependently for each deliveryperiod i.e. 15 mins

Sell Bid: One or more quantity-price pairs at which theparticipant is willing to sell thecorresponding quantity ofelectricity and are submittedindependently for each deliveryperiod i.e. 15 mins

0 1 1.1 2 2.1 2.5 3 3.1 4 4.1 5 --- --- ---- 20

20 20 20 20 20 20 20 10 0 0 0 0 0 0 0

60 60 60 60 50 40 40 40 40 40 20 20 20 20 20

40 20 0 0 -40 -60 -80 -81 -120 -120 -120 -120 -120 -120 -120

120 100 80 80 70 60 60 50 40 40 20 20 20 20 20

0 0 0 0 -40 -60 -80 -81 -120 -120 -120 -120 -120 -120 -120

120 100 80 80 20 0 -20 -21 -80 -100 -100 -100 -100 -100 -100

Price Tick (Rs.)

Portfolio A, MWBid Quantum by different portfolios

Total Sell Quantum received, MW

Total Buy Quantum received, MW

Net Transaction, MW

Portfolio B, MW

Portfolio C, MWP

rice

MW

Market clearing

price (MCP)

Market Clearing Volume (MCV)

Supply

(Sell)Demand

(Buy)

Volume

2.5

60

Model Price Calculation algorithm

Understanding of Block BidA block bid is used for the procurement or sale of power which is specific to a block of hours (e.g. base

load, peak or user defined). A block bid can either be a buy order or a sale order for a block of hours.

Either all hours of the block order are jointly successful or all of these block hours are jointly rejected.

A block bid is selected if the

block hours.

bid price is better than the average system price of power in respective

Example of Sell Block Bid:-

System Price:-

Selection Criteria:- A sell (respectively buy) bid is said to be selected if the submission price of the bid

is below (respectively above) the average system price.

Result for 1st Block Bid-

E5 at 5000 for 50 MW Sell is at below price than Average Price of Rs. 5875.90; hence will be selected.

Result for 2nd Block Bid-

E6 at 7000 for 50 MW Sell is at above price than Average Price of Rs. 5875.90; hence will be rejected.

Algorithm of Price Calculation

• Step 1: Unconstrained Solution (w.r.t. Transmission Capacity)

- Find MCP and MCV; Demand=Supply on aggregated net curve.

• Step 2: After receiving the actual ATC, examine bid area for

bottlenecks.

• If a bottleneck is found, the market is split in two partial calculation

area: Source (surplus) and sink (deficit).

• A new ACP is found in both source and sink.

- Surplus Lower ACP than MCP

- Deficit Higher ACP than MCP

• Each partial calculation area is examined for bottlenecks in the same

way.

• When no more bottlenecks are found internally in the calculation area,

the recursion stops.

Congestion Management

SR WR

S150 MWRS 8000

B150 MWRS 8500

S150 MWRs 8/u

B150 MW

RS 8.5/u

B2150 MWRS 9000

B2160 MWRs 9/u

S240 MWRS 8500

S240 MWRs 8.5/u

S350 MWRS 7500

S350 MWRs 7.5/u

B1100 MWRs 6/u

S180 MWRs 9/u

B330 MWRs 8/u

B330 MWRS 8000

Deficit100 MW

S180 MWRS 9000

B1100 MWRS 6000

S2120 MWRS 8000

S220 MWRs 8/u

S3100 MWRS 5500

S2100 MWRs 5.5/u

Surplus100 MW

Required Flow

100 MW

Congestion Management

SR WR

S150 MWRS 8000

B150 MWRS 8500

B2160 MWRS 9000

S240 MWRS 8500

S350 MWRS 7500

B1100 MWRS 6000

S180 MWRS 9000

B330 MWRS 8000

Deficit100 MW

S220 MWRS 8000

S2100 MWRS 5500

Surplus100 MW

Allowed Flow

20 MW

Surplus20 MW

Highest Seller getting rejectedLowest Buyers getting rejected

Deficit20 MW

Illustration of Price Matching and

Market Splitting

•

•

Two regions have been considered i.e. ER and SR.

Four Sellers and Two Buyers in a 15-Min Block are taken with following Bid Scenario: -

200 MW @2000 100 MW@3000 100 MW @3000 100 MW@4000

100 MW @3000 300 MW @4000

Quantity (MW) Price (Rs./MWhr)

ER Seller-1 200 2000

ER Seller-2 100 3000

SR Seller-1 100 3000

SR Seller-2 100 4000

SR Buyer 300 4000

ER Buyer 100 3000

BuyerBuyer

SR REGIONER REGION

SellerSellerSellerSeller

(200,2000)

Understanding Price Matching

ER Seller-1200 MW@

2000/MWhr

ER Seller-2100 MW@

3000/MWhr

SR Seller-1100 MW@

3000/MWhr

SR Seller-2100 MW@

4000/MWhr

SR Buyer300 MW@

4000/MWhr

ER Buyer100 MW@

3000/MWhr

(200,2000)

(400,3000)

(200,2000)

(400,3000)

(500,4000)

(300,4000)

(200,2000)

(400,3000)

(500,4000)

(200,2000)

(400,3000)

(500,4000)

(300,4000)

(400,3000)

Market Clearing Price (MCP)= Rs. 3000/MWhrMarket Clearing Volume(MCV)= 400 MW

2998

2999

3000

3001

3002

3003

3004

3005

150 200 250 300 350 400

Total Buy (MW) Total Sell (MW)

Demand-Supply intersection with high resolution

REQUIREMENT OF CORRIDOR FROM NLDC

Net Required Flow- 200 MW

Demand and Supply gap in two regions

regions hence a common MCP is derived.

get balanced by unconstrained flow between the two

200 MW 100 MW 100 MW 0 MW

100 MW 300 MW

BuyerBuyer

SR REGIONER REGION

SellerSellerSellerSeller

SR

Net Demand300

Net Supply 100

Net 300-100 =200

ER

Net Demand100

Net Supply 300

Net 100 – 300 = -200

Constraint Solution (Market Splitting)

Congestion was reported by NLDC from ER to SR corridor and flow is constrained to 100MW.Due to flow constraint, system will “Split” the market in to two regions i.e. Deficit (SRRegion) and Surplus region (ER Region),and will again run the calculation chronology forboth the regions separately considering the flow constraint and will derive the ACP and ACV.

Flow Towards SR of 100 MW

SR-DeficitRegion

Price(Rs./kWh) 0 999 1000 1999 2000 2999 3000 3001 3999 4000 4001 6000 8000 10000 20000SR Seller-1 0 0 0 0 0 0 -100 -100 -100 -100 -100 -100 -100 -100 -100

SR Seller-2 0 0 0 0 0 0 0 0 0 -100 -100 -100 -100 -100 -100

SR Buyer 300 300 300 300 300 300 300 300 300 300 0 0 0 0 0

Net (Buy-Sell) 300 300 300 300 300 300 200 200 200 100 -200 -200 -200 -200 -200

ER-SurplusRegion

Price(Rs./kWh) 0 999 1000 1999 2000 2999 3000 3001 3999 4000 4001 6000 8000 10000 20000

ER Seller-1 0 0 0 0 -200 -200 -200 -200 -200 -200 -200 -200 -200 -200 -200

ER Seller-2 0 0 0 0 0 0 -100 -100 -100 -100 -100 -100 -100 -100 -100

ER Buyer 100 100 100 100 100 100 100 0 0 0 0 0 0 0 0

Net (Buy-Sell)100 100 100 100 -100 -100 -200 -300 -300 -300 -300 -300 -300 -300 -300

TAM Market Segments

Open Auction Continuous

Continuous Continuous

CONTINUOUS TRADING PROCESSTWS Screen

Pending Buy Order Pending Sell Order

Buy 10 MW @ Rs 4500/MWh Sell 15 MW @ Rs 5500/MWh

Sell 15 MW @ RS 5500/MWhBuy 10 MW @ Rs 4500/MWh

Trading Engine

Buy 10 MW @ RS 4500/MWh Sell 15 MW @ RS 5500/MWh

TWS Screen

Pending Buy Order Pending Sell Order

Buy 10 MW @ 5000/MWh

Sell 15 MW @ Rs 5500/MWhBuy 10 MW @ 4500

Trading Engine

Buy 10 MW @ RS 5000/MWh

Buy 10 MW @ RS 5000/MWh

Buy 10 MW @ RS 4500/MWh

Sell 15 MWh @ 5500

TWS Screen

Pending Buy Order Pending Sell Order

Sell 15 MW @ RS 5000/MWh

Sell 15 MW @ 5500

Trading Engine

Sell 15 MW @ Rs 5000/MWh

Buy 10 MW @ 5000

Buy 10 MW @ 4500

Sell 15 MW @ 5500Sell 5 MW @ Rs 5000/MWh

Trade 10 MW @ RS 5000/MWh

Buy 10 MW @ RS 4500/MWH

Bid Modified

REC Mechanism

Procedure for ACCREDITION (Through State nodal Agency)

Procedure for REGISTRATION (Through Central Agency NLDC)

Procedure for ISSUANCE (Through Central Agency NLDC)

Procedure for TRADING & REDEMPTION(Through PXs)

Salient Features of REC Mechanism

Participation Voluntary

REC Denomination 1 REC = 1 MWh

Validity 1095 Days after issuance

Categories 1. Solar REC 2. Non-Solar REC

Trading Platform Power Exchanges only

Banking/Borrowing Not Allowed

Transfer Type Single transfer only , repeated trade of the same certificate is notpossible

Solar RECs Floor Price: Rs 1,000 /MWhForbearance Price: Rs 2,400/MWh

Non Solar RECs Floor Price: Rs 1,000/MWhForbearance Price: Rs 3,000/MWh

Penalty for Non-compliance ‘Forbearance’ Price (Maximum Price)

Price Guarantee Through ‘Floor’ Price (Minimum Price)

Trading at IEX

Trading Day Last Wednesday of every Month

Market Clearing Closed Double sided auction

Trading Time 1300-1500 Hrs

By 1530 HrsVerification by Central agency for Valid REC by cleared seller at IEX

By 1600 Hrs Central agency confirms REC

By 1630 Hrs IEX finalizes trade

By 1700 Hrs Buyer & Sellers informed to Central Agency

By 1800 Hrs Invoice raised (proof of REC trade)

Best Power Exchange in India – Enertia Awards ’14, ’13 &’12 – India Power Award 2014 – Power Business View Award 2014

Inc India Innovative 100 Award for ‘Innovation in Product and Technology’

Best Performing Power Exchange – Power Line Awards ’13 & ‘12

Leader in Market Development– India Power Awards ‘15

Thank Youwww.iexindia.com