State-run PTC India will enter the electricity derivatives market, which is scheduled to begin from April 2022. The Power Ministry has announced a plan to move to a market based economic dispatch (MBED), through which it aims to enhance competition in the power sector with the objective of lowering the cost of electricity to consumers.
The power trading company said it is gearing up for derivatives and financial products in the dynamically evolving electricity sector. PTC recently conducted a kickstart programme for its core senior executives on the soon to be launched electricity derivatives. The exercise was to onboard the PTC team for becoming an active participant in an upcoming market segment, the company tweeted.
With the settlement of a decade-long pending matter on regulatory jurisdiction of electricity derivatives, the ecosystem is set for commodity exchanges like MCX, NCDEX, etc to introduce financial products in electricity derivatives, the company said.
“These instruments would enable the power sector participants to hedge their risks of power procurement/supply along with the ability to capitalise on the volatility in power prices. Introduction of this segment will attract increased participation from various stakeholders like Gencos, Discoms, among others, resulting in deepening of the power market,” it added.
Faculty of Management Studies (FMS) Professor Pankaj Sinha conducted a special tailor made brainstorming session during the week-long programme, which was attended by a cross-functional team at PTC India.
The Power Ministry, in an earlier statement, had said it is widely recognised that an essential next step in reforming electricity market operations and in moving towards ‘One Nation, One Grid, One Frequency, One Price’ framework is to implement MBED in the day-ahead horizon, initiated by the Central Electricity Regulatory Commission.
MBED will ensure that the cheapest generating resources across the country are dispatched to meet the overall system demand and will thus be a win-win for both the distribution companies and the generators and ultimately result in significant annual savings for the electricity consumers.
MBED will also ensure that the cheapest generating resources across the country are dispatched to meet the overall system demand and will thus be a win-win for both the distribution companies and the generators and ultimately result in an estimated annual savings in excess of ₹12,000 crore for the electricity consumers.
February 08, 2022