Currently, two energy exchanges in India, the Indian Energy Exchange and Power Exchange of India Ltd, are operating under the guidance of the CERC. Surprisingly, the development of an electricity market is the responsibility of regulators, in accordance with Section 66 of the Indian Electricity Act, 2003. This piece aims at understanding the legal provisions governing these exchanges and the best way forward for them to achieve the best possible fair trading of power.

Keywords: Energy exchanges, IEX, PXIL, Electricity trading


The concept of trading through an exchange allows traders to determine the right market price and the best consumer or seller for trade. Power exchanges or platforms for trading energy were constituted to increase competition and transparency in such markets. Hence, it can be said that power exchangesincrease market transparency and reduce counterparty credit risk. Today, there are approximatelythirty-six power exchanges in operation. 

The ratification of theIndian Electricity Act 2003 (Act) has made electricity trading a separate and distinct activity in India. Over-the-counter transactions allowpower market participants to sell or purchase electricity from these respective energy exchanges or from power traders who are registered with the Central Electricity Regulatory Commission (CERC). At present, in India, two energy exchanges are functioning with guidance from the CERC, i.e., the Indian Energy Exchange (IEX) and Power Exchange of India Ltd. (PXI). Interestingly, in accordance with Section 66 of theIndian Electricity Act, 2003, the regulators are responsible for the development of power market in India.

Overview of the IEX and PXI 

TheIndian Energy Exchange (IEX) is India’s first and largest power and electricity exchange. It commands a market share of over98 percent of the traded volume in power, as well as a broad participant base of over 6300. IEX facilitates effective price discovery and allows players by providing an automated trading platform for the physical delivery of electricity, trade in energy contracts, Renewable Energy Certificates (RECs), and ES Certs (Energy Saving Certificates). The exchange platform improves India’s electricity market’s accessibility and transparency, as well as the speed and efficiency with which trades are executed. The CERC has sanctioned and controlled IEX from its inception on 27 June, 2008.

It is pertinent to note that PXI is our country’s first institutionally endorsed power exchange, providing innovative and different solutions to improve the Indian power markets. The National Stock Exchange of India Limited (NSE) and the National Commodity and Derivatives Exchange Limited (NCDEL) are partners in PXI. West Bengal State Electricity Distribution Company Limited, Gujarat Urja Vikas Nigam Limited, Power Finance Corporation Limited, Madhya Pradesh Power Trading Company Limited, JSW Energy Limited, GMR Energy Limited, and Tata Power Trading Company Limited are among the other parties involved. PXI’s distinctive combination of local insights and world context helps its stakeholders in ensuring to make better-informed business and investment decisions, moreover, improve the regulation of power markets, and shape policies and projects thereby assisting in the creation of the power market that India deserves.

Legislative Landscape

The Act is India’s primary piece of legislation governing the generation, transmission, distribution, trade, and use of electricity. It also establishes a complex framework of bodies to monitor the activities under the Act. The primary objectives of the Electricity Act are:

  • As a means of promoting competition.
  • In order to protect the interests of the consumers who are involved in the Electricity trading.
  • Ensuring supply of electricity to all areas, as well as tariff rationalisation.
  • Providing policies that are transparent in the interest of efficiency. 

Under the Act, the setting up of a market for electricity is upon the regulators to carry out. Accordingly,Section 76 of the Act establishes the constitution of the CERC, which is responsible for regulating the tariffs of central generating stations as well as all interstate generation, transmission, and electricity supply. Furthermore, at the state level, there are several State Electricity Regulation Commissions whose primary functions are to ascertain bulk and retail tariffs to be charged to customers, as well as to regulate intrastate transmission operations between states. 

In 2010, thePower Market Regulations were issued by the CERC to govern transactions involving power trading on IEX and PXI. However, in February 2021, the CERC notified thePower Market Regulations, 2021 (2021 Regulations). These 2021 Regulations supersede the previous regulations of 2010. The 2021 Regulations have increased access to the power market by introducing trade through the over-the-counter platform. Among other changes, the 2021 Regulations also note market oversight to be an objective, which includes detecting and preventing market manipulation. The2021 Regulations also initiated market coupling, or the disclosure of a uniform market-clearing price for the real-time market (RTM) or day-ahead market (DAM); optimal use of transmission system; and maximisation of surplus value after accounting for all bid types and generating a simultaneous seller-purchaser surplus.

Current Environment 

At present, the IEX and PXI operate in the following markets: 

  • TheDay-Ahead-Market (or DAM as mentioned above) is a physical power trading market for deliveries commencing at midnight for any/some/all fifteen minute time blocks in the next twenty four A mutually closed auction bidding mechanism determines the prices and quantum of power to be traded. The transactions are carried out following the Central Transmission Utility’s (PGCIL) ‘Procedure for scheduling of collective transactions,’ the CERC (Open Access in Inter-State Transmission) Regulations, 2008 (CERC 2008 Regulations).
  • TheTerm-Ahead-Market (TAM) offers a range of products that allow power players involved to buy and sell electricity on a term basis for up to eleven days ahead of time. The transactions are conducted according to the PGCIL’s ‘Procedures for Scheduling of Bilateral Transactions’ issued as part of theCERC 2008 Regulations.
  • TheGreen Day Ahead Market provides for an anonymous and double-sided closed collective auction in renewable energy. For most exchanges, the clearing occurs in a sequential order, first with the renewable segment, which has a must-run status due to transmission corridor availability and then moving on to the conventional segment.
  • Following CERC authorization, As a new market segment for trading renewable energy, theGreen-Term Ahead Market (G-TAM) was established. This new market category includes contracts such as Green-Intraday, Green-Day-ahead Contingency, Green-Daily, and Green-Weekly. Green-Intraday, Green-DAC, and Green-Daily contracts are traded continuously/spot, while Green-Weekly contracts are traded using a double-sided open auction procedure.CERC Power Market Regulations, 2010;CERC 2008 Regulations; andCERC Indian Electricity Grid Code Regulations, 2010 govern the operations. 

Further, when trade was initiated with Nepal in its Day-Ahead Electricity Market on 17 April 2021, IEX pioneeredCross Border Electricity Trade (CBET). This is an attempt to expand the Indian power market in order to create an integrated South Asian power market. For starters, grid-connected south Asian countries, including Nepal, Bhutan, and Bangladesh, will be able to join in IEX’s Day ahead Market and Term ahead Market. As grid connectivity expands to additional southern countries, the market will grow even more. There are numerous advantages to having integrated south as a power market, with improved energy accessibility and security, Competitive power prices, and an Integrated Power Market that is transparent and efficient in optimising resources. The Cross-Border Electricity Trade operations is governed by the Central Electricity Regulatory Commission’s Cross Border Trade of Electricity Regulations, 2019.

The Central Electricity Regulatory Commission established theRenewable Energy Certificate (REC) framework to make it easier for state utilities and obligated organisations to purchase renewable energy, especially those in states with limited renewable energy resources. The REC framework aims to establish a nationwide market for renewable energy generators to recuperate their costs. One REC equals one megawatt-hour of electricity generated from renewable sources. 

Under the scheme ofPerform Achieve and Trade, as part of the National Mission for Enhanced Energy Efficiency, PXI began trading ES Certs, or energy saving certificates, a regulatory instrument to reduce specific energy consumption in energy-intensive industries, with an associated market-based mechanism to improve cost-effectiveness through certification of excess energy savings that can be traded.

Therefore, the analysis above indicates that both the entities startedRTM trading in June 2020 to meet global standards and facilitate real-time trade. The RTM is structured as a half-hourly market, with forty-eight auction sessions lasting fifteen minutes each. The auction sessions are held in even-numbered hour blocks, with delivery typically beginning one hour after the close of the trade session. 

Further, both exchanges also facilitate green energy trading, which is definitely a forward-looking move, given the global shift to renewable energy resources. In fact,IEX also provides a value-added services platform for green generators. With the introduction of ES Certs and other tools to indicate energy saving, the exchanges provide indications of enterprises that value energy efficiency and not just energy output/generation, a welcome step given the environmental changes the world is currently facing. Having indicators to assess how ‘green’ an entity also helps in inculcating a mindset of valuing green efficiency amongst consumers and persons viewing the indexes to obtain an indication of a company’s worth. 

Therefore, in other words, both entities have adapted well to the changing market scenarios and aim to keep up with new facets of energy trading.

Monopoly and Energy Exchanges

Today, IEX has an absolutemonopoly over the “order matching” and “price discovery” processes that take place at the exchange level. This indicates that for their orders to be matched and completed, both the buyer and the seller must be on the same platform (IEX or PXI). Electricity buyers are aware that all electricity sellers trade on the IEX rather than the PXI. Even if buyers are ready to pay a premium price for power, they will be unable to do so on PXI due to a lack of sellers they may wish to purchase from.

Similarly, the sellers are aware that most buyers attempt to purchase electricity on the IEX. If the sellers desire to sell on PXI, they may be unable to sell the entire quantity they desire, even if the price is lower than on IEX.

In order to address this, the CERC has introducedmarket coupling, which will undertake “order matching” and “price discovery” through an independentMarket Coupling Authority. This simply implies that there will be greater price and output transparency between the exchanges. In fact, theMD of PXI has commented and welcomed the move by stating that “a competitive marketplace can thrive on a strong foundation of an enabling market structure like market coupling, fair rules that allow competition to thrive and ensure ease of participation on various marketplaces.” However, it is yet to be seen whether the introduction of the Market Coupling Authority reduces the role and importance of IEX in this market.

Way Forward

It is worth noting that IEX has a98 percent market share in terms of electricity traded volume and a diverse registered participant base of over 6300. IEX traded6,540 million units of power volume in May 2021, achieving9 percent year-on-year growth despite the continuation of Covid-19 lockdowns and cyclonic disturbances that impacted overall power demand in the country. Therefore, its presence is stronger than that of PXI. Given that the Act entrusts the regulator to promote competition in this market, the size and importance of IEX over PXI appear stark and worth reflecting upon. The 2021 Regulations and their aim to introduce market coupling and over-the-counter trading may further increase transparency in energy trade across these platforms. 

Interestingly, the CERC has authorised the registration ofICICI Bank-led Pranurja Solution Ltd,  PTC and BSE to launch the country’s third power exchange. Hopefully, introducing a third exchange backed by strong names may pave the way for a more competitive market for power exchanges in India and bring about further transparency and optimal power utilization. 

Given that India is likely to have an energy surplus of 6.4 percent and a peak surplus of 9.1 percent for the year 2021-22, according to the Central Electricity Authority’s recentLoad Generation Balance Report, this is a welcome move to ensure the best possible utilization of the energy generated in India in the most transparent and competitive manner.


The views, thoughts, and opinions expressed in the article belong solely to the authors, and not necessarily to their employers, organizations, committees or other groups or individuals to which they are affiliated.

About the Authors  

Ms. Raveena K Sethia is an Associate at Shardul Amarchand Mangaldas.

Mr. Shreeyash U Lalit is an Advocate at Supreme Court of India.

Ms. Aribba Siddique is a 3rd year student at Amity Law School Kolkata, and is an Associate Editor at IJPIEL.

Editorial Team 

Managing Editor: Naman Anand   

Editors-in-Chief: Akanksha Goel & Jhalak Srivastav   

Senior Editor: Muskaan Singh 

Associate Editor: Aribba Siddique

Junior Editor: Joseph Antony Paddikala

Preferred Method of Citation 

Raveena K Sethia, Shreeyash U Lalit and Aribba Siddique, “Power Exchanges in India – Overview and Way Forward” (IJPIEL, 22 December 2021).  


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