IEX commences CBET to expand market beyond India

Nepal, Bangladesh and Bhutan will be among the first beneficiaries owing to the connectivity with the Indian electricity grid.

The Indian Energy Exchange (IEX) recently announced the commencement of the Cross Border Electricity Trade (CBET) on its platform. This is a first-of-its-kind initiative for the Exchanges to expand their power markets beyond India to the South Asia region towards building an integrated South Asian regional power market.

In a development following the notification of CBET Regulations by CERC in 2019 and the recent notification of CBET Rules in March 2021 by the Central Electricity Authority (CEA), NTPC Vidyut Vyapar Nigam Ltd (NVVN) has secured approval from the CEA, for Nepal’s participation in the day-ahead market on the Exchange.

Currently, the cross border trade with neighbouring countries for India stands at about 18 BU conducted through the medium to long term bilateral contracts. As per the CEA and CERC, as of date, India imports 8.7 BU from Bhutan and exports 2.37 BU and 7 BU to Nepal and Bangladesh, respectively. The power trade with these countries is expected to increase to about 40 BU by FY22 and 70 BU by FY27 according to a study by IRADe. While the macro-economic growth in the South Asia region has been one of the strongest in the world, the region has been confronting with challenges related to power demand-supply balance and the low per capita power consumption.

S N Goel, Chairman & Managing Director, IEX, said, “We are immensely delighted to welcome Nepal as the first country to commence the cross-border electricity trade in our day-ahead electricity market. With a large installed power generation capacity base of 382 GW and peak demand of about 185 GW, India is a power surplus country. We have a unique opportunity to lead the regional power market development and make efforts towards enhancing the energy access and security amongst the neighbouring nations in the region.”

Speaking on the occasion, Mohit Bhargava, CEO, NVVN/ED (RE)-NTPC, mentioned, “India is centrally placed in South Asia region and shares boundaries with several countries in the region. Due to its unique location as well as sound electricity infrastructure, we must lead in energy cooperation and development of the market in South Asia, regional transmission infrastructure development as well as facilitate efficient utilisation of the energy resources for the cross-border entities. Nepal is the first country to avail the benefit of buying day ahead power from power exchange through NVVN. This is a new beginning in the South Asian region. NVVN with vast experience in power trading also has extensive expertise in cross border power trading. About 61 per cent of the total power exported to Bangladesh and 54 percent to Nepal is through NVVN wherein besides trade, NVVN also facilitates the settlement of grid operations and other related technicalities. We also aspire to work closely with Bhutan and Myanmar in future.”

IEX is working closely with PTC, NVVN, and all other designated nodal agencies for CBET to facilitate inter-country power trade through the Exchange Market.

The power prices discovered at IEX provide the most competitive benchmark as well as provide valuable signals for the value chain. The competitive power prices transparent and flexible in power procurement, besides the seamless and error-free market operations are IEX’s robust value proposition which will be imperative in building the regional power market at a large scale.