Trading of ESCerts on IEX - Knowledge Platform...MW) REC Projects Slowing Down Non Solar Capacity...
Transcript of Trading of ESCerts on IEX - Knowledge Platform...MW) REC Projects Slowing Down Non Solar Capacity...
Trading of ESCerts on IEX
Akhilesh Awasthy
Director (Market Operations)
Workshop by BEE on
ESCerts Trading and PATNet Portal
16th Dec 2015, IIC New Delhi
Company Snapshot
96% Market Share ~80,000MWh average daily trade
3400+ Participants 3000+ Industries
50+ Discoms (all) 300+ Generators
Competition
LiquidityTransparency
POWER EXCHANGE
Nation-wide voluntary access
E-trading
No counterparty risk
Robust Platform
Delivery Based contracts
Regulated by Central Electricity Regulatory Commission (CERC)
6 3
0 6
216 25
672 38
79 1
398 22 33 16
11 0
0 21 48
7 15
4 1
0 1
761 2
59 57
3 3 1 2
7 23
273 4
Consumer: 3044
Generator: 304
Participation at IEX
402 8
Industrial segments with IEX
Textile29%
Manufacturer15%
Metal 24%
Chemical9%
Auto Components
6%
Cement4%
Paper3%
Cotton1%
Others9%
Trading/Market Regulator (CERC)
Member
Client
Member
Trade
Trade
ESCertsRegistry
ClearingBanks
Trading on Power Exchanges
Why ESCerts Trading?
Plant-1 Plant-2 Plant-3
Init
ial
Init
ial
Init
ial
Ach
ieve
d
Ach
ieve
d
Ach
ieve
d
= 10Initial
SEC
= 5Target
SEC3
5
7
Trade ESCerts on PX
Abatement Cost
Rs 10000/toe Rs 15000/toe Rs 20000/toe
No ESCerts Market
With ESCerts Market
Total Cost of Abatement = (5*1000*10000)+(5*1000*15000)+(5*1000*20000)
= Rs 22,50,00,000
Total Cost of Abatement = (7*1000*10000)+(5*1000*15000)+(3*1000*20000)
= Rs 20,50,00,000
Savings to Economy =
(22,50,00,000-20,50,00,000) =
Rs 2,00,00,000
Assume 1 SEC ≈ 1000 toe
Achieve EE Savings with less cost to economy
ESCerts MechanismStart 2012
Compliance Mandatory
Obligated Entities Energy intensive industries from 8 sectors, 478 in total
Target 6.6 Mtoe for1st cycle, allocated on SEC basis for each plant
Mechanism Market based Cap and Trade
Banking Allowed till next cycle
Denomination of ESCert 1 toe
Issuance Ex-post based on Energy Audit (80% issuance for intra-cycle, every year)
Cycle span 3 yrs (2012-15 for 1st Cycle)
Market Place Multiple Power Exchanges, regulated by CERC
Trading Regulator CERC
Administrator & Scheme R’tor BEE
Central Registry POSOCO
Penalty As per Section-26(1A) of EC Act, 2001, to be decided by SDA
Regulatory approval for PXs to provide
ESCerts trading platform
1) CERC to notify PAT Trading Regulations/Order
2) Power Exchanges to submit respective Business Rules (by
including a Schedule for ESCerts) to CERC for approval, so as
to commence trading
Business Rules of IEX for ESCerts shall cover the following:• Price Discovery mechanism
• Contract specifications for ESCerts
• Risk Management mechanism
• Trading timelines
• Delivery, Surveillance and Clearing & Settlement
• Member & Client categories
Proposed ESCert Contract on IEX
Name of the Tradable Instrument: Energy Savings Certificate (ESCert)Underlying Energy Savings Attributes of 1toe of energy savings by
Designated Consumer allowed in Energy Conservation (EnergyConsumption Norms and Standards for Designated Consumers, Form,Time within which, and Manner of Preparation and Implementation ofScheme, Procedure for Issue of Energy Savings Certificate and Value of
Per Metric Ton of Oil Equivalent of Energy Consumed) Rules, 2012
Instrument Types ESCert denominated by Cycle (e.g. ESCERT-C12-15)Price Quotation INR/ESCertPrice tick 1 INRPrice Limits Not ApplicableVolume tick 1 ESCertMinimum Order volume limit: 1 ESCertTransaction Fee Specified by the exchange from time to time, upon approval
by the Commission
Matching Closed double-sided uniform price auctionTrading Cycle Once a month, Weekly trading from Jan’15 to Form -D
submission date (TBD)
Proposed Price Discovery Mechanism
• Closed Double-sided Uniform Price Auction
• Prerogative of respective Power Exchange to define its
own matching rules, and notify the same through
Business Rules
• IEX will utilise the matching engine used for REC
mechanism, all the matching principles to remain same
as that of REC
Flow of ESCerts trading
ESCerts Registry
Trading Timelines
TIME on TRADE DAY DETAILSPre-trade Phase:
By 12.00 Hrs • Exchange to check Initial Margin of MembersOrder Accumulation phase (Bidding)
13.00 Hrs to 15.00 Hrs • Order AccumulationOrder matching and trade finalization
By 15.30 Hrs • Exchange to send details of maximum offer placed by Sellers to Depository
By 16.00 Hrs • Registry to send Exception report intimating any exceptions (excess Sell)
By 16.30 Hrs • Finalization of trade results after removing defaulters’ orders• Exchange to inform participants about trade results
By 17.00 Hrs • Exchange to inform Registry, the details of successful buyers and sellersSettlement Phase
By 17.00 Hrs on T Day • Files to be sent by Exchange to banks for actual debits(Pay-in)
By 11.00 Hrs on T+1 day(next bank working day)
• Files to be sent by Exchange to banks for actual credits (Pay-out)
Delivery PhaseBy 18.00 Hrs on T Day • Registry to debit ESCerts in Sellers’ Accounts and credit the same to Buyers’
AccountsBy 18:00 Hrs O T Day • Exchange to raise invoices to each participant as proof of transfer of
ESCerts.• Reports shall be sent to all successful Members
Proposed Risk Management Mechanism
• Risk management mechanisms shall be designed by respective PX
and shall be notified through Business Rules
• A Member or a Client, as applicable, is allowed to transact in a
contract only when he maintains the requisite Margin, including any
additional Margin, as specified by PX
• On IEX, Member will be allowed to place a purchase order in
ESCerts against cash amount made available (Margin Money),
equivalent to 100% of the order value. Sell orders are permitted
irrespective of margins
• Exchange has the right to impose penalty on defaulting Member,
who short-sell ESCerts in excess of available ESCerts in his
Registry account, as decided from time to time
Surveillance, Delivery and C&S
• Surveillance: In order to ensure market integrity and to avoid
market abuses, the Exchange will use various on-line and off-line
surveillance tools like:
– Validation of orders
– Price & Volume movement monitoring
– Price rigging, concentration, price manipulation and other market abuses
The PX shall have the right to take appropriate actions in such
cases
• Delivery: Delivery of ESCerts shall be as per the Regulation/Order
issued by Commission and in pursuance to the BEE Rules, 2012.
• Clearing & Settlement: Clearing House of PX will monitor and
perform all activities relating to funds settlement, margining,
managing the settlement guarantee fund, and other relevant
matters
Members & Clients of IEX
• All the existing Members and Clients of the Exchange are eligible to trade
ESCerts on the Exchange Platform of IEX. However, Exchange can also
notify a separate category of Member & Client who can participate only in
the ESCerts market segment. Different terms and conditions for Members
of the Exchange shall be defined in the Business Rules.
• Member trading in ESCerts shall be governed by Regulation 26 of CERC
(Power Market) Regulation-2010, The BEE Rules-2012 for ESCert trading,
and the CERC Regulations (yet to be notified).
• Only Designated Consumers who are notified by BEE shall be permitted to
become Members/Clients of PX for ESCerts trading
• Fees and Charges levied by PX on Members & Clients for ESCerts trading
shall be as notified by respective PX from time to time
REC Vs ESCerts Scheme
REC ESCert
Cycle 1 year 3 years
Life of Cert’ 365 days (second time extended to 1095 days)
Closure of second Cycle (> 3 years)
Target State specific set by SERC, for Solar and Non-Solar
Plant/DC specific, set by GoI
Unit 1MWh equivalentRenewable Attribute
1 ToeEnergy Conserved
Buyers Obligated Entities (Discoms, CPPs and OA Consumers)
Designated Consumers falling short of Target
Sellers Qualified Renewable Generators Designated Consumers surpassing Target
Banking No Yes (1 Cycle)
Multiple Trading No (Once traded renders Extinguished) ---
Floor Price Yes (Solar: Rs 3,500 /MWh,
Non-Solar: Rs 1,500/MWh)No
Forbearance Price Yes (Solar: Rs 5,800 /MWh,
Non-Solar: Rs 3,300/MWh)No
Regulator CERC (Trading) & SERCs (Compliance) BEE(Scheme) & CERC(Trading)
Penalty SERCs SERCs
Trade Synopsis of RECs
-
1,000
2,000
3,000
4,000
0
200,000
400,000
600,000
800,000M
ar'1
1
Sep
t'1
1
Mar
'12
Sep
t'1
2
Mar
'13
Sep
t'1
3
Mar
'14
Sep
t'1
4
Mar
'15
Sep
'15
Market C
learing P
rice
(In R
S/REC
)N
o. o
f R
ECs
Trad
ed
Non-Solar REC Prices & VolumeIEX-Volume PXIL- Volume Price @ IEX Price @ PXIL
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
0
20000
40000
60000
80000
100000
May
'12
No
v '1
2
May
'13
No
v'1
3
May
'14
No
v'1
4
May
'15
No
v'1
5
Market C
learing P
rice
(Rs/R
EC)
No
. of
REC
s tr
aded
Solar REC Prices & VolumeVintage
Multiplier
Over Supply of RECs
2015
1175
491 444
0 62307 197
0
500
1000
1500
2000
2500
FY 11-12 FY 12-13 FY 13-14 FY 14-15
Cap
acit
y R
egi
ste
red
(M
W)
REC Projects Slowing Down
Non Solar Capacity (MW)
Solar Capacity (MW)]
0
0.2
0.4
0.6
0.8
1
Ap
r '1
2
Sep
t'1
2
Feb
'13
July
'13
Dec
'13
May
'14
Oct
'14
Mar
'15
Au
g'15N
um
be
r o
f R
ECs
(Cro
res)
Non-Solar RECs
Buy Bid
Sell bid
Traded
0
0.05
0.1
0.15
0.2
0.25
May
'12
Oct
'12
Mar
'13
Au
g'13
Jan
'14
Jun
e '1
4
No
v'14
Ap
r'1
5
Sep
t'1
5
Nu
mb
er
of
REC
s (C
rore
s) Solar RECs
Sell Bid
Buy Bid
Traded
RECs (as on 15.12.2015)
RECs Issued 2.88 Cr
RECs Traded + Redeemed 1.15 Cr
Inventory 1.73 Cr (60%)
NAPCC proposes 10% of generation by 2015 from Renewables, which amounts to 104.51 BUs
Trade @ IEX
Entities eligible for Membership:
Inter-State Generating Stations (ISGS)
Distribution Licensees
State Generating Stations
IPPs
CPPs and IPPs
(with consent from SLDC)
Open Access Customers
(with consent from SLDC)
Electricity Traders / Brokers (Including REC & ESCerts)
Designated Consumers (For ESCerts)
Who Can become Members of IEX ?
IEX Membership Types
Proprietary Member
Right to trade and clear on its
own account
who can trade ESCerts on its own behalf and also its companies provided the ownership remains the
same
Professional Member
Trade and clear on behalf of its
Clients
NO CREDIT /FINANCING
Electricity Traders
Trade and clear on behalf of its
Clients
CREDIT /FINANCING
ClientsEligible Designated Consumers
Financial Requirements (For REC Membership)
FeesProfessional & Proprietary &
Electricity Trader(Full Payment Option)
Proprietary member (Light Payment
Option)
Admission fee Rs. 10,00,000 Rs. 5,00,000
Interest Free SecurityDeposit
Rs. 5,00,000 Rs. 2,50,000
Annual SubscriptionFees
Rs. 2,00,000 Rs. 1,00,000
Processing Fees Rs. 10,000 Rs. 10,000
TOTAL Rs. 17,10,000 Rs. 8,60,000
Exchange Transaction Rs 20/REC Rs 30/REC
Client of Exchange (Proposed)
Requirements to become a Client of a Member
Annual Client / Portfolio Subscription Fees of IEX
Rs. 20,000
Member’s Fee Decided by respective Member, as guided by CERC Power Market Regulations’2010
Exchange Transaction Fee Rs 20/REC (TBD for ESCert)
*All Designated Consumers registered with Central Registry are eligible to become a Client for ESCerts Trading.
How to Move Ahead…
Become Member or Client (of a Member)…options
• Rs 8.6 Lacs +3p/kWh transaction fee
• Rs 17.1 lacs + 2p/kWh transaction fee
• Client @ 0.2 Lakh p.a
Technical Requirements
• As specified by CERC/BEE for ESCerts
Connectivity with Exchange can be done in two ways
• Internet Immediate
• Leased Line
Start Trading
Best Power Exchange in India – Enertia Awards ’14, ’13 &’12 – India Power Award 2014 – Power Business View 2014
Inc India Innovative 100 Award for ‘Innovation in Product and Technology’
Best Performing Power Exchange –Power Line Awards ’13 & ‘12
India Power Awards ‘15 & ‘09
Thank You for your attentionwww.iexindia.com