India’s National Stock Exchange (NSE) will open trading of monthly electricity futures from July 14, the bourse operator said on Tuesday, weeks after securing regulatory approval for launching the contracts.
A futures contract will allow the purchaser to secure power at a fixed price at a later time. Experts have said the move to launch such contracts could help struggling power utilities improve their finances.
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Currently, Indian utilities rely heavily on long-term power purchase agreements (PPAs) spanning up to 25 years for baseload requirements, supplemented with short-term purchases through power exchanges for peak demand.
The Multi Commodity Exchange of India (MCX) has also received a similar approval from the Securities and Exchange Board of India (SEBI).
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