Indian Energy Exchange : IEX Bulletin

JANUARY 2023, ISSUE 36

IEX BULLETIN

IN THIS ISSUE...
Message from the Chairman and MD'S Desk	01
REGULATORY NEWS
CERC Issues Order on Deviation Settlement
	03
Mechanism
First Amendment to CERC Terms and
Conditions for Dealing in Energy Savings	03
Certificates Regulations, 2022
POSOCO Modifies Detailed Procedure for
	04
Implementation of REC Mechanism
Delhi High Court Issues an Interim Order in
	04
IWPA/ISMA Petitions
CERC Issues Directions to Power Exchanges
	04
in Petition No. 375
State Orders
PSERC Defines Single Renewable Purchase	05
Obligation Trajectory
WBERC Guidelines for Implementation and
Smooth Transition of State Level Accounts
	05
for Deviation Settlement Charges in View of
CERC DSM Regulations 2022
Telangana Discom Files Petition for
Determination of Additional Surcharge for	05
H1 FY 2024

DRIVING TRANSFORMATION IN ENERGY MARKETS

How IEX Is Leveraging Cloud to Innovate	06
and Meet Compliance Requirements
MARKET NEWS
Market News	08
TRADE INSIGHTS
Day-Ahead Power Market	10
Term-Ahead Power Market	10
Real-Time Electricity Market	12
Green Market	13

Message from the

Chairman and MD'S

Desk

"IEX is helping India achieve its sustainability aspirations"

Dear Friends,

As the year 2023 dawns upon us, I extend my heartfelt wishes to you and your loved ones for a fabulous year ahead. May the coming year be filled with peace, abundance, and good health for everyone.

The past year was momentous for India for more reasons than one. The economy made a remarkable rebound, surpassing UK to become the world's fifth largest economy and is now poised to become a 5 trillion-dollar economy in this decade.

India's G20 presidency is an unprecedented opportunity for the country to showcase its sustainability roadmap. This is complemented by India's National Statement at COP 27 that underlines the country's achievements in terms of far-reaching new initiatives in renewable energy, e-mobility, ethanol blended fuels, and green hydrogen as an alternate energy source.

India's power sector continued to witness significant developments in the last year as well, aimed at enabling the country to sustainably attain the status of a developed country by 2047. Electricity consumption during the calendar year 2022 grew around 9% on YoY basis, led by strong revival in economic activities. The total installed electricity capacity stood at 409 GW, of which about 41% is contributed by non-fossil fuel sources.

While the geopolitical headwinds had an impact on the supply side availability, the Indian energy sector resiliently adapted to

India's G20 presidency is an unprecedented opportunity for the country to showcase its sustainability roadmap.

the crises, helped by the proactive approach of the Government and Regulators.

Several regulatory and policy reforms continue to be implemented as part of the Government's thrust towards transforming the power sector in the country. Policy and regulatory initiatives such as Energy Conservation Act (Amendment) Bill 2022, Green Energy Open Access Rules, Reform-based result- linked power distribution scheme, Introduction of Long Duration Contracts, revised RPO trajectory, Market based Ancillary Service, General Network Access Regulations 2022 and the Grid Code, will go a long way in deepening the power market in the country. Similarly, the recently introduced REC Regulations will boost Renewable Energy Certificates' trading and put India firmly on track to achieve its green aspirations.

At IEX, we are supporting India's sustainability aspirations by offering renewable energy in the most flexible and efficient manner through our Green Market segments - Day-Ahead,Term-Ahead and Renewable Energy Certificates. With Nepal and Bhutan starting to trade power in India's day ahead market, we moved closer to achieving the vision of creating a robust regional power exchange in South Asia. Bangladesh is expected to join soon, leading to optimum utilisation of power resources in the region. The much-awaited Longer Duration Contracts was launched following the Regulator's approval, which will enable Discoms to procure power more efficiently.

Customer centricity is at the core of our existence. Our web-based bidding platform optimises the process of power procurement through personalised and deep data insights, and provides our customers secure, anytime-anywhere access to the trading system. It offers web-based financial reconciliation for online reconciliation of exchange-based transactions, and API- based automated bidding in the Integrated Day Ahead

Market and Renewable Energy Certificate segments. We also introduced value added services for renewable power producers to garner insightful forecasting services and solutions. In 2022, we introduced daily contracts of up to 90 days, weekly contracts for up to 12 weeks and monthly contracts extending to 3 months within our Long Duration Contracts segment.

IEX continues to fortify its position in the existing product segments and evaluate foray into adjacencies. Today, new products constitute nearly 40% of the total traded volume of electricity on the exchange. Encouraged by provisions in the Energy Conservation Act (Amendment) Bill 2022, IEX has formed a subsidiary company - International Carbon Exchange - to explore business opportunities in carbon market. In yet another initiative to lead by example, IEX recently became the first carbon-neutral Power Exchange in India. We continue to deepen the Gas market as well in the country, in line with the Government's vision to increase the share of Gas from the current 6% to 15% of the country's energy basket by 2030. In line with this, robust volume growth is expected for IGX over the next 5 years. I am delighted to share that we achieved financial breakeven within 1 year of launch of IGX. IGX achieved 121.5 lakh MMBtu trade volume in FY-22. I am pleased to note that it has already trebled the trade volumes in FY-23 YTD.

To achieve our goals, we continue to work closely with all our stakeholders to accelerate India's energy transition and build a safer, greener planet.

As we embark on the 15th year of operations, I would like to reiterate our commitment to build an efficient energy marketplace with technology and innovation at the core. This journey of transforming India's power markets could not have been possible without the proactive and conducive initiatives undertaken by the Government and Regulators. The support and guidance of our stakeholders and well-wishers have been invaluable for our achievements. I thank you all for the continued support and faith in this journey.

Once again, I wish you and your family a wonderful, healthy, and successful year ahead.

Best regards,

S. N. Goel

Chairman and Managing Director

2

REGULATORY NEWS

CERC Issues Order on Deviation Settlement Mechanism

CERC has issued an order dated 26.12.2022 in 16/SM/2022, giving directions in the interest of grid security w.r.t the Deviation Settlement Mechanism (DSM) implemented w.e.f. 05.12.2022. The key directions issued in the order are as follows:

• Normal Rate of Charges for Deviation- For a time block shall be subject to the cap of Rs. 12 per kWh, until further orders
• Charges for Deviation - In order to contain the trend due to combined effect of Over-Injection (OI) / Under- Drawal (UD) and ensure that the frequency remains within the operating band, the commission has decided as follows:
• • System frequency>= 50.05 Hz in a time-block:
    o The general seller other than Run of River (ROR) generating station or a generating station based on MSW (Municipal Solid Waste) -
  • • For OI- Shall be paid from the Deviation and Ancillary Service Pool Account at zero;
    • For UI- Seller shall be pay back to the pool for the shortfall against schedule at 50% of the reference charge rate

• • 1. In case of Under- Drawal buyer shall be paid back from the Pool Account at zero, for deviation by way of under-drawal in such block;
  • System frequency<= 49.90 Hz in a block: The general seller other than an ROR generating station or based on MSW shall be paid back from the pool at 150% of reference charge rate
• To come into effect from 00.00 hours of 28.12.2022 and remain in force until further orders by the commission in this regard

First Amendment to CERC Terms and Conditions for Dealing in Energy Savings Certificates Regulations, 2022

On 7 December 2022, the Central Electricity Regulatory Commission (CERC) issued the First Amendment to Terms and Conditions for Dealing in Energy Savings Certificates Regulations, 2022. The amendment defined the following:

• New term 'Floor Price' defined- Minimum price at which Energy Savings Certificate to be traded on the Power Exchanges
• Floor price for ESCerts to be fixed at 10% of price of one metric tonne of oil equivalent of energy consumed as notified by Central Government

3

POSOCO Modifies Detailed Procedure for Implementation of REC Mechanism

In December 2022, POSOCO modified detailed procedures for implementation of Renewable Energy Certificate mechanism in compliance of CERC REC Regulations, 2022. The procedural details highlighted are:

• Eligibility-
• • REGS (Renewable Energy Generating Station) participating in I-DAM and selling energy in the conventional segment of I-DAM in case of uncleared bids in RE segment of I-DAM. Such energy eligible for issuance of

  REC

  • REGS not scheduling energy due to regulation of access to power in case of non-payment of dues as per LPSC Rules 2022 and selling energy directly or through an electricity trader or in the PXs, provided that such energy is not used for RPO compliance. Energy from such regulated capacity shall be eligible for issuance of REC
• New terms 'Advance accreditation'/'Advance registration' defined-
• • Above referred REGS can get itself accredited/registered under "Advance accreditation/registration". RPO to be considered based on the schedule power and deviation from schedule to be adjusted with RECs
• Fee provided-
• • One-timeaccreditation processing fees Rs. 10,000
  • One-timeaccreditation charges Rs. 30,000
  • Annual charges for accreditation Rs. 10,000
• The REC certificate to be issued by trader/PX to have "Source of origin"
• Definition of 'Hydro' aligned with MOP order dated 22 July 2022 & 19 September 2022

Delhi High Court Issues an Interim Order in IWPA/ISMA Petitions

Trading in the RECs issued prior to 31 October, 2022 to be suspended for a period of 6 weeks

CERC Issues Directions to Power Exchanges in Petition No. 375

On 26 December, 2022, CERC issued the following directions to IEX/Power Exchanges in petition no.375/MP/2022. The significant highlights of the direction being:

• Mechanism for upcoming REC session on 28 December, 2022 - Price discovery and matching methodology in the REC market on Power Exchanges shall continue to be based on double sided closed bid auction mechanism, subject to final orders in this petition. Mechanism of pro rata allocation based on buyer's preference as proposed by IEX may be followed by the Power Exchanges to allocate cleared RECs among the buyers
• Enabling REC registered projects for participation in Green Markets (viz. GDAM, GITD, GDAC & GTAM)- Central agency has modified the detailed REC procedure wherein, the energy sold by RE capacity registered under REC mechanism in any conventional market (DAM/RTM/ TAM) at Power Exchange shall be eligible for issuance of RECs and in case the energy is sold in the Green Market by such RE capacity then no such RECs

4

will be issued against such energy sold in the Green Markets at Power Exchanges

• Increasing frequency of REC sessions on PX- Central Agency to examine the issue and to take-action based on public consultation
• Reverse Auction Contract of RECs- Power Exchanges to submit detailed proposal in this regard after public consultations which to be examined subsequently through separate proceeding
• Comprehensive report to be submitted by IEX and NLDC by 15 January 2023 on the interim mechanism
• IEX to seek public comments on the Petition

State Orders

PSERC Defines Single Renewable Purchase Obligation Trajectory

Punjab State Electricity Regulatory Commission (PSERC) in its Renewable Purchase Obligation and Compliance Regulation dated 12 December 2022, defined single renewable power purchase obligation trajectory for all obligated entities.

FY 23-24

FY 24-25

FY 25-26

FY 26-27

FY 27-28

FY 28-29

FY 29-30

RPPO

27%

30%

33%

36%

39%

41%

43%

• Power from all hydro power plants to be considered for fulfilment of RPO
• Solar/wind with storage will be considered for RPO fulfilment
• RE generated by non-obligated entities under gross metering, net billing and net metering will qualify towards RPO compliance of Discom
• RE power purchase from PX by obligated entity shall be counted towards RPO compliance

WBERC Guidelines for Implementation and Smooth Transition of State Level Accounts for Deviation Settlement Charges in View of CERC DSM Regulations 2022

On 6 December 2022, the West Bengal Electricity Regulatory Commission (WBERC) issued guidelines for deviation settlement charges in view of CERC DSM Regulations 2022. The significant highlights of the guidelines are as follows:

• SLDC to consider 15-minute time block wise "Normal rate of charges for deviation" determined under CERC DSM regulations, 2022
• SLDC to consider "State Volume Limit" as 100 MW, in line with limit for higher charges specified for Buyers in CERC DSM regulations, 2022
• For imposing additional penalty of deviation when frequency is below 49.85 Hz or above 50.10 Hz the "Normal rate of charges for deviation" of respective time block will be considered
• This order shall come into effect from 00:00 hours of 5 December 2022

Telangana Discom Files Petition for Determination of Additional Surcharge for H1 FY 2024

The Telangana Discom has filed a petition for levy of additional surcharge on open access consumers at Rs. 9.86 per unit for H1 of FY 2023-24.

5