Power Trading in India
ENERGY SECTOR STRUCTURES, POLICIES AND REGULATIONS
END-TERM PAPER
POWER TRADING IN INDIA
Submitted by: Swetabh (P101039)
Submitted to: Prof. Anupam Sircar Date: 14-Jan-2010
Background
Power trading inherently means a transaction where the price of power is negotiable and options exist about whom to trade with and for what quantum. In India, power trading is in an evolving stage and the volumes of exchange are not huge. All ultimate consumers of electricity are largely served by their respective State Electricity Boards or their successor entities, Power Departments, private licensees etc. and their relationship is primarily that of captive customers versus monopoly suppliers. In India, the generators of electricity like Central Generating Stations (CGSs), Independent Power Producers (IPPs) and State Electricity Boards (SEBs) have all their capacities tied up. Each SEB has an allocated share in central sector/ jointly owned projects and is expected to draw its share without much say about the price. In other words, the suppliers of electricity have little choice about whom to sell the power and the buyers have no choice about whom to purchase their power from.
The pricing has primarily been fixed/controlled by the Central and State Governments. However, this is now being done by the Regulatory Commissions at the Centre and also in the States wherever they are already functional. Power generation/ transmission is highly capital intensive and the Fixed Charge component makes up a major part of tariff. India being a predominantly agrarian economy, power demand is seasonal, weather sensitive and there exists substantial difference in demand of power during different hours of the day with variations during peak hours and off peak hours. Further, the geographical spread of India is very large and different parts of the country face different types of climate and different types of loads.
Power demand during the rainy seasons is low in the
END-TERM PAPER
POWER TRADING IN INDIA
Submitted by: Swetabh (P101039)
Submitted to: Prof. Anupam Sircar Date: 14-Jan-2010
Background
Power trading inherently means a transaction where the price of power is negotiable and options exist about whom to trade with and for what quantum. In India, power trading is in an evolving stage and the volumes of exchange are not huge. All ultimate consumers of electricity are largely served by their respective State Electricity Boards or their successor entities, Power Departments, private licensees etc. and their relationship is primarily that of captive customers versus monopoly suppliers. In India, the generators of electricity like Central Generating Stations (CGSs), Independent Power Producers (IPPs) and State Electricity Boards (SEBs) have all their capacities tied up. Each SEB has an allocated share in central sector/ jointly owned projects and is expected to draw its share without much say about the price. In other words, the suppliers of electricity have little choice about whom to sell the power and the buyers have no choice about whom to purchase their power from.
The pricing has primarily been fixed/controlled by the Central and State Governments. However, this is now being done by the Regulatory Commissions at the Centre and also in the States wherever they are already functional. Power generation/ transmission is highly capital intensive and the Fixed Charge component makes up a major part of tariff. India being a predominantly agrarian economy, power demand is seasonal, weather sensitive and there exists substantial difference in demand of power during different hours of the day with variations during peak hours and off peak hours. Further, the geographical spread of India is very large and different parts of the country face different types of climate and different types of loads.
Power demand during the rainy seasons is low in the