As per the Sections 66 of Electricity Act, 2003, the Appropriate Commission shall endeavour to promote the development of a market (including trading) in power. The Power exchange is a Market Infrastructure Institution that provides a fair and competitive market place for trading in electricity.
There are two power exchanges in India, which were set up in the year 2008.
- Indian Energy Exchange Limited (IEX)
- Power Exchange of India Limited (PXIL)
All Discoms, Generation utilities including IPPs, Traders and Open Access consumers spread across the country, actively participate in the exchanges to meet their power requirements. A robust payment security mechanism adopted by the Power exchanges has led to no default or delay in payment.
Power Exchanges have also played key role in supporting revival of stressed thermal power plants (without PPAs) by providing them a platform to sell power though Power exchanges. Competitive price discovery takes place at the power exchanges in India. The power exchange transactions are around 3.5% to 4% of total generation.