The encyclopedia · Strategy & Leadership · Strategic decision · 2007–2024
India's power exchanges priced electricity daily and exposed the shortages
IEX opened India's first day-ahead power market in 2008, matching buyers and sellers in closed double-sided auctions with a uniform clearing price.
Indian Energy Exchange (IEX) · Power Exchange India Ltd (PXIL) · Central Electricity Regulatory Commission (CERC)
The solution
Before 2008, India's power buyers and sellers could not see each other on any single platform, so available power sometimes went undispatched while regions suffered shortages. In 2007 the Central Electricity Regulatory Commission issued guidelines for setting up power exchanges.
Two exchanges — Indian Energy Exchange (IEX) and Power Exchange India Ltd (PXIL) — launched in 2008 with a day-ahead market: double-sided closed bidding where buyers and sellers bid simultaneously and trades clear at a uniform price. Price signals from the auction made scarcity visible and directed surplus power where it was needed.
The market scaled: short-term electricity transactions grew from 65.90 billion units in 2009-10 to 218.22 billion units in 2023-24, and the exchanges added term-ahead contracts, renewable certificates and, later, real-time trading.
Why it worked
- Uniform-price double-sided auction made honest bids dominant.
- Daily price signals exposed regional scarcity and surplus.
- One platform aggregated liquidity that bilateral deals fragmented.
- The model expanded into renewables, term-ahead and real-time products.
What can be applied
Give a fragmented market one transparent auction and price discovery does the coordination that administrators could not; the market then grows its own instruments.
Aftermath
By 2021-22 the exchanges supported renewable energy certificates, real-time markets and cross-border trade with Nepal and Bhutan; a third exchange, HPX, launched in July 2022, and the short-term market had grown to a 218.22 BU annual volume by 2023-24.
Sources
- Trading Evolution: Indian power market development over the years
- Report on Short-term Power Market in India, 2023-24
spotted an error? The archive wants to know.