The purchase and sale of power in India have long been dominated by power purchase agreements (PPAs) that state-owned distribution companies (Discoms) enter into with power generators. The term of these PPAs is usually 20-25 years. Such long-term contracts are needed given the high capital and operational expenditure requirements of these projects. At the same time, many state Discoms have also begun to purchase power from energy exchanges to meet their short-term needs. On October 8, 2021, the Ministry of Power announced a plan to move to a market-based economic dispatch model by April 2022 on a pilot basis. This implies that more power would be purchased from electricity exchanges.
Against this backdrop, Aakanksha Joshi (Partner) and Pranaav Gupta (Associate) at Economic Laws Practice (ELP) have co-authored an article titled ‘Coming, forward trading in energy exchanges’ for BusinessLine. In their article, Aakanksha and Pranaav discuss the challenges of trading electricity via a stock exchange. They further elaborate on different types of electricity contracts that are traded on these energy exchanges. The article also highlights the risk of regulatory collision between the CERC and SEBI, leading to price fixation being a concern.
Read the detailed article here: https://bit.ly/3Egcb3L