How will FDI in power exchanges help improve electricity supply and distribution

The government recently permitted foreign investment up to 49% in power trading exchanges. This included a foreign direct investment component of 26%. The move is expected to strengthen power exchanges, enhance availability of electricity and improve its distribution. Here’s how:

WHAT ARE POWER EXCHANGES?

Power exchanges are online platforms that help generators and consumers come together and discover prices based on the demand-and-supply mechanism. India has two operating exchanges: Financial Technologies promoted India Energy Exchange, which owns about 93% market share, and Power Exchange India Ltd, which is jointly promoted by NSE and NCDEX. The two exchanges trade 2% of the total 800 billion units generated in the country. Two more power exchanges have been proposed: National Power Exchange, a joint venture of NTPCBSE 1.03 %, NHPC, PFC and TCS, and another by Ahmedabad-based Marquis Energy Exchange.

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