NSE to launch monthly electricity futures in next 2-3 weeks

NEW DELHI, June 26:
The National Stock Exchange (NSE) on Thursday said it will launch electricity futures contract – a product which will allow power buyers, sellers, traders, industrial and retailers to manage price risks – in the next 2-3 weeks.
“We have all approvals in place…we are talking to all stakeholders. Our internal team is fully prepared…within 2-3 weeks we will announce the launch date,” NSE head of sustainability, power, carbon markets and listing Harish K Ahuja said.
The monthly contract will be available throughout the year, he said, adding, it will commence on the first business day of every month and expire a day before the contract ends.
To promote the product, NSE Chief Business Development Officer Sriram Krishnan said the exchange plans to waive off transaction charges on trading of electricity futures contracts for the first six months after launch.
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. (PTI)

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