Harish K Ahuja, NSE’s Head of Sustainability, Power, Carbon Markets and Listing, said, “We have all approvals in place. We are in touch with stakeholders and our team is fully prepared. We will announce the launch date soon”
The product is aimed at helping power buyers, sellers, traders, industries, and retailers manage electricity price risks. Representational Pic/File
The National Stock Exchange (NSE) on Thursday announced that it will launch monthly electricity futures contracts in the next 2–3 weeks, reported the PTI.
The product is aimed at helping power buyers, sellers, traders, industries, and retailers manage electricity price risks.
Harish K Ahuja, NSE’s Head of Sustainability, Power, Carbon Markets and Listing, said, “We have all approvals in place. We are in touch with stakeholders and our team is fully prepared. We will announce the launch date soon,” according to the PTI.
Once announced, the contracts will become active within a few days.
The contracts will start on the first business day of each month and expire the day before the end of the contract period. These will be available all year round, as per the PTI.
To encourage trading, the NSE will waive all transaction charges for the first six months, said Sriram Krishnan, Chief Business Development Officer at NSE.
Each electricity futures contract will cover 50 MWh (equivalent to 50,000 units of electricity). Prices will be based on the 30-day weighted average spot price from three power exchanges – Indian Energy Exchange Ltd, Hindustan Power Exchange Ltd, and HPL Electric and Power Ltd.
The lot size of the one-month electricity futures contract will be 50 MWh, which is equivalent to 50,000 units of electricity in one contract.
The price will be decided by taking the 30-day weighted average spot price of the three energy exchanges -- Indian Energy Exchange Ltd, Hindustan Power Exchange Ltd and HPL Electric and Power Ltd.
The monthly electricity contracts will have 50MWh as the trading unit, Re 1 per MWh as tick size and the maximum order size of 2,500 MWh.
Besides, the NSE is exploring a contract for difference (CfD) that enables renewable projects to achieve stable revenue.
Last month, NSE received approval from the Securities and Exchange Board of India (Sebi) to launch monthly electricity futures contracts.
India's journey toward achieving its net-zero emissions target demands substantial investment, estimated at over USD 250 billion year-on-year till 2047 as per the Niti Aayog report.
By 2030, renewable energy sources such as solar and wind are expected to contribute over 50 per cent of the nation's installed power capacity.
A robust and dynamic electricity derivatives market is essential to attract this scale of climate finance from both domestic and global investors.
NSE was the first stock exchange in India to establish an electricity exchange, launching Power Exchange India Limited (PXIL) in 2008. Our strong understanding of both spot and derivatives markets uniquely positions us to build an integrated and liquid electricity derivatives market.
(with PTI inputs)
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