Journey of IEX

India Energy Exchange Ltd., or IEX, is the first as well as the largest power exchange in India and enjoys a market share of over 90% as of September 2023. The company came into existence as as a public limited company on March 26, 2007 in Maharashtra. In 2009, it commenced trading in the day-ahead market (DAM). In 2010, the company registered its first industrial consumer. It thereafter began operations in the term-ahead market (TAM) as well. In 2011, the exchange allowed trading in renewable energy certificates (RECs). By 2014, the daily average cleared volume on IEX touched 79 million units (MU)/day. In 2016, that number touched 93 MU/day, and the highest cleared volume in a day crossed over 136 MUs. Trading of energy saving certificates (ESCerts) on its exchange commenced on September 26, 2017. The company came out with its IPO in October 2017. The IPO comprised only an offer for sale. The stock debuted on the BSE in the same month at a discount of 9.09% compared to the IPO price. IEX also partially owns Indian Gas Exchange (IGX), an associate company.

Business Segments

IEX has been licensed by the Central Electricity Regulatory Commission or CERC for spot trading in electricity as well as the trading of Renewal Energy Certificates (REC) and ESCerts. The transparent platform enables efficient price discovery and increases the accessibility of the power market in India. As of September 2023, IEX has 7,300+ registered participants from across the country, including 1,800+ renewable energy generators. They include distribution companies, electricity generators, and thousands of open-access consumers. The consumers come from a wide variety of commercial and industrial sectors such as metal, textile, food processing, cement, automobiles, ceramic, chemicals, IT, real estate, and commercial entities. Some of the key markets where IEX offers trading include:

1. Day Ahead Market (DAM)– This involves trading electricity on a 15-minute block basis a day prior to the delivery of electricity. The bids submitted by buyers and sellers are matched electronically via a double-sided auction mechanism with a uniform market clearing price.
2. Green Day Ahead Market- The Green Day Ahead Market facilitates anonymous, double-sided closed collective auctions in renewable energy in a day-ahead setting. Categories for bids include Solar, Non-Solar and Hydro.
3. Term Ahead Market (TAM)- This involves trading electricity for a duration of up to 11 days. Participants can purchase electricity via contracts for the same day, for the next day through day-ahead contingency, and on a daily basis for rolling seven days through further daily contracts.
4. Renewable Energy Certificate (REC)- The REC market facilitates generators of renewable energy to get RECs for the renewable energy they produce. These RECs can then be sold through the exchange.
5. Energy Saving certificates (ESCerts)- ESCerts are tradable certificates under the Perform, Achieve, Trade (PAT) Scheme of the Bureau of Energy Efficiency (BEE). Unlike RECs, these certificates signify achievements in energy efficiency, especially in large energy-intensive industries.

Key Personnel

• Mr Satyanarayan Goel, Chairman and MD

Mr Goel has been the CMD of the company since February 19, 2021. Earlier, he was the MD & CEO of the Company in 2014-29 and a Non-Executive Chairman in 2019-21. He has experience spanning over 40 years in different areas of the power sector, such as power generation, transmission, power trading, regulatory affairs, and cross-border trade, among others. He was actively involved in the policymaking process behind the Enactment of Electricity Act, 2003, Tariff-based Bidding Guidelines, Tariff Policy, National Electricity Policy, Open Access, etc. Before joining IEX, he had worked at PTC India Limited and NTPC Limited. He studied Electrical Engineering at NIT Rourkela and got his MBA from the Faculty of Management Studies, New Delhi.

Corporate Actions

• Bonus Shares

IEX had announced bonus shares at a 2:1 ratio with the ex-bonus date on December 03, 2021.

• Buyback

In February 2019, the company conducted a buyback of its shares.

• Stock Split

Indian Energy Exchange has split the face value of its shares once, from ₹10 to ₹1, with the stock going ex-split on October 19, 2018.

Management Outlook

IEX expects the demand for power to only grow in the coming years. In the past, the demand for electricity bounced back post-pandemic. In fact, electricity consumption grew by 9.5% in FY 2023. The major factors behind this rising demand include rising income levels, urbanisation, expanding housing schemes, and government initiatives to improve electrification in rural areas. The expansion of the manufacturing and service sectors is expected to help boost the demand for power as well. Finally, in the long run, the government’s initiative to add electric vehicles (EVs) in mainstream transportation to reduce carbon emissions will help increase the demand for power over the years. Increased demand for power may create an increase in the price of power, leading private companies to take the help of IEX to ensure efficient power-related transactions.