Short Term Transactions
Prior to the Electricity Act 2003, the electricity industry recognized generation, transmission, and supply as three principal activities, and the legal provisions were woven around these concepts
With the enactment of the Electricity Act 2003, the transactions involving purchase and sale of electricity has been recognized as a distinct licensed activity. Recognition of trading as a separate activity is in sync with the overall framework of encouraging competition in all segments of the electricity industry
The Electricity Act 2003, laid down provisions for promoting competition in the Indian power market. Introduction of non-discriminatory open access in electricity sector provided further impetus for enhancing competition in the market
The open access regulations, inter-state trading regulations, power market regulations, etc., of the Central Electricity Regulatory Commission (Central Commission, or CERC) have facilitated power trading in an organized manner
Inter-state trading licensees (traders) have been undertaking trading in electricity since 2004 and the power exchanges started operating since 2008
The two power exchanges namely, Indian Energy Exchange (IEX) and Power Exchange India Ltd. (PXIL) started their operations in June 2008 and October 2008 respectively, and the third power exchange, namely Hindustan Power Exchange (HPX) started operations in July 2022
"Short-term transactions of electricity” refer to the contracts less than one year for the following trades:
- Electricity traded under bilateral transactions through Inter-State Trading Licensees (only inter-state trades)
- Electricity traded directly by the Distribution Licensees (also referred as Distribution Companies or DISCOMs)
- Electricity traded through Power Exchanges
- Electricity transacted through Deviation Settlement Mechanism (DSM)
Table below captures trend in short-term transactions (Source: CEA / CERC )
For 2023-24, total short-term transactions amounted to 218.2 Billion Units (BU), out of total generation of 1,739.1 BU, or 12.5%
The short-term transactions for the year comprised 41 BU through Traders, 28.9 BU as Direct Bilateral, 121.5 BU through Power Exchanges and 26.8 BU through DSM
| Year | Through Traders BU | Direct Bilateral BU | Through Power Exchanges BU | DSM BU | Total Short-term and DSM BU | Total Electricity Generation BU | Short-term as pct of Total Generation |
|---|---|---|---|---|---|---|---|
| 2023-24 | 41.0 | 28.9 | 121.5 | 26.8 | 218.2 | 1739.1 | 12.5 |
| 2022-23 | 33.8 | 31.3 | 103.0 | 26.3 | 194.3 | 1624.5 | 12.0 |
| 2021-22 | 39.5 | 20.6 | 101.5 | 25.3 | 186.8 | 1491.9 | 12.5 |
| 2020-21 | 26.7 | 16.8 | 79.6 | 22.9 | 146.0 | 1380.1 | 10.6 |
| 2019-20 | 30.0 | 28.2 | 56.5 | 22.6 | 137.2 | 1390.9 | 9.9 |
| 2018-19 | 47.3 | 19.2 | 53.5 | 25.1 | 145.2 | 1375.9 | 10.6 |
| 2017-18 | 38.9 | 16.8 | 47.7 | 24.2 | 127.6 | 1308.1 | 9.8 |
| 2016-17 | 33.5 | 21.4 | 41.1 | 23.2 | 119.2 | 1241.7 | 9.6 |
| 2015-16 | 35.4 | 24.0 | 35.0 | 20.8 | 115.2 | 1172.8 | 9.8 |
| 2014-15 | 34.6 | 15.6 | 29.4 | 19.4 | 99.0 | 1110.1 | 8.9 |
| 2013-14 | 35.1 | 17.4 | 30.7 | 21.5 | 104.6 | 1026.3 | 10.2 |
| 2012-13 | 36.1 | 14.5 | 23.5 | 24.8 | 98.9 | 969.3 | 10.2 |
| 2011-12 | 35.8 | 15.4 | 15.5 | 27.8 | 94.5 | 927.8 | 10.2 |
| 2010-11 | 27.7 | 10.3 | 15.5 | 28.1 | 81.6 | 852.3 | 9.6 |
| 2009-10 | 26.7 | 6.2 | 7.2 | 25.8 | 65.9 | 768.4 | 8.6 |
During 2009-10, total electricity generation was 768.4 Billion Units, while total short-term transactions were 65.9 Billion Units, thus share of short-term transactions was 8.6%
During 2023-24, total electricity generation was 1,739.1 Billion Units while total short-term transactions were 218.2 Billion Units, thus share of short-term transactions was 12.5%
During these 14 years, Total Electricity Generation has grown 2.26 times, whereas Total Short-term and DSM transactions have grown 3.31 times, and within that, Transactions through Power Exchanges have grown 16.88 times, thus the latter have accounted for bulk of the growth in short-term transactions
View the trends graphically