“Green market has a strong potential”

Electricity trading platform Indian Energy Exchange (IEX) has recently started trading of renewable energy through Green Term Ahead Market (GTAM) contracts on its platform. This development, being considered as a watershed moment for the energy ecosystem, is crucial for integration of renewable energy in the energy consumption mix. In an interview with EPR, Rohit Bajaj, Head, Business Development at IEX talks about this critical development in the renewable energy space, new market segment and its functioning along with its future scope.

What will be the impact of the introduction of GTAM on the energy sector?
The launch of green markets on the IEX platform is a landmark development for the expansion of the renewable energy portfolio in India and in realising the country’s vision to become a sustainable energy economy. It will act as a key enabler in effective integration of renewables in the energy mix and accelerating India’s path to achieve the set target of installed renewable capacity of 175 GW by 2022 and 450 GW by 2030.

Green markets will support buyers and sellers by providing them a pan-India access to trade renewable energy in the most competitive, flexible and efficient manner. With the advent of green market, the renewable power generators will have an additional avenue to sell their power in the market which have been till now largely sold under long and medium-term contracts. The green market will encourage green generators to adopt part market and part PPA models. In the future, we are also likely to see generators create merchant capacity solely for the purpose of trading through the exchange market.

Most importantly, obligated entities such as distribution companies, industries, captive power producers and open access consumers will be able to fulfil their RPO compliance in a much more flexible and integrated manner. So far, Renewable Energy Certificates (RECs) was the only route for obligated entities to meet their RPO commitments but now they will have an exclusive separate market to meet their short term energy as well as RPO compliance demand. This market will work in parallel with REC market and will in fact supplement the RECs market which is presently facing a sell-side constraint due to which many distribution utilities and consumers are unable to meet RPO even if they wish to do so. This will also cater to changing preferences of bulk C&I consumers as many consumers are committed to 100 percent renewable electricity to accelerate change towards zero carbon grids.

How do you think GTAM caters to the current market requirements?
With the increasing penetration of renewable energy, a robust green market framework is required to address the intermittency issues linked with green power adoption. With the adoption of green market, the distribution utilities and generation companies will benefit through flexibility to buy and sell power in 15-minute contracts and for any duration through exchange. It would not only improve accessibility factor from the buyers’ side but also provide a wider platform to sellers by ensuring optimum demand-supply equilibrium. The recently launched real time electricity market coupled with the green market will enable real-time balance which is so critical with increasing share of the renewable energy in the mix to ensure optimal utilisation of the available resource. The growing focus and share of renewable energy underline the relevance and importance of the power markets more than ever before.

How will the participants be able to trade on the platform?
The market participants will be able to trade in four types of GTAM contracts as approved by the regulator. These include Green Intra-day contracts, Green Day-ahead Contingency contracts, Green Daily contracts and Green Weekly contracts. While we have already introduced Intra-day and Day-ahead contingency contracts, Daily and Weekly contracts will be launched soon. Like all other clients and members in the conventional power exchange market, registration with IEX is required to perform trade in the renewables segment too. The generators who want to sell renewable power will be required to obtain NOC from their respective state or regional load dispatch centres with the clear mention of energy source as solar or non-solar before they start selling renewable power on the exchange.

What is your expectation for the first year trade for green markets on the exchange? Any target volume?
As India aims to revive the country’s industrial and economic growth and strives towards building an “AtmaNirbhar Bharat”, the time has come to transition to an efficient power market model. We believe that green market has a strong potential and we see a great prospect for growth in the coming days. In just one month since the launch the traded volume on the market has crossed 25 MUs with highest of about 5 MU recorded in a day. This indicates an encouraging enthusiasm among the market participants.

At this point of time, it is too early to share numbers but we are expecting greater participation from distribution companies. As the new market segment will support states to sell their surplus renewable power on the exchange, therefore, renewable energy rich states such as Karnataka, Andhra Pradesh, Telangana, Tamil Nadu, Maharashtra, Rajasthan, and Gujarat are expected to become key drivers of this market. The platform will act as a market-based mechanism where renewable energy surplus and renewable energy deficit states can trade renewable energy and balance their RPO targets. GTAM is only a beginning and going forward we endeavour to introduce many new products and segments within the green market such as day-ahead contracts and long duration green contracts.

With the adoption of green market, the distribution utilities and generation companies will benefit through flexibility to buy and sell power in 15-minute contracts and for any duration through exchange.
Rohit Bajaj, Head, Business Development, Indian Energy Exchange (IEX)