Hindustan Power Exchange Commences Operations, Becomes India’s Third


Hindustan Power Exchange (HPX): Hindustan Power Exchange (HPX), the third power exchange in the country was launched recently.

Key Points:

  • It is backed by BSE and Power Trading Corporation (PTC).
  • PTC India and BSE Investment hold 25 percent each in HPX, while 9.9 percent is held by ICICI Bank.
  • The other two exchanges in the country are the Indian Energy Exchange (IEX) and Power Exchange of India Ltd (PXIL), while IEX holds 98 percent almost monopoly on the total traded power.
  • According to the statement, the exchange will initially offer trading in Term Ahead Market, Green Term Ahead Market, and Renewable Energy Certificates.
  • It will steadily increase its product portfolio and provide a wide range of contracts to address the demand of different segments of the electricity market.
  • The introduction of HPX will give a definite push to the development and progress of spot trading in electricity.”

Why was the need for a third power exchange felt?

  • The need for a third power exchange has been felt for quite some time now by the buyers and sellers for optimized price discovery and better efficiency in power purchase.
  • HPX will be a seamless platform that has been built on the same technology, which makes the Bombay Stock Exchange the fastest exchange in the world.
  • It will provide the market participants a platform with multiple avenues for trading and hence manage their power portfolios efficiently.
  • The matching engine of the exchange is procured from one of the best technology providers in the world, which is also the technology provider for power exchanges in Europe.
  • Almost 90 percent of India’s electricity is traded via bilateral contracts lasting for 20 years or more between power generation companies and state utilities.
  • These contracts do not provide the flexibility to sector participants to take advantage of market conditions at different times.
  • The module of price discovery has been created along the lines of European power markets and their platform will ensure minimal or no manual intervention.
  • It will challenge the monopoly of existing platforms soon.

Significance:

  • Power Exchanges provide the market participants a platform with multiple avenues for buying-selling of power and hence manage their power portfolios efficiently.
  • Further, more variable power output from wind and solar plants is set to push short-term trading of energy, thereby giving more options to both buyers and sellers.
  • The Indian power sector is at the cusp of a massive energy transition where the share of renewable energy is steadily rising in India’s power generation mix,
  • The HPX will play a pivotal role in bridging the gap between demand and supply and providing trading at an optimized cost.

 


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