KOGood evening, everyone, and welcome to the Analyst Meet of Indian Energy Exchange. I, Aparna Garg, would be anchoring the event today. With us from management side, we have Mr. S.N. Goel, Chairman and MD of IEX. We have Mr. Vineet Harlalka, CFO. We have Rohit Bajaj, Head Business Development. We have Amit Kumar, Head Customer Initiatives and New Product Initiatives. We have Sangh Gautam, the CTO of the company, Samir Prakash, CHRO, and Mr. Rajesh Kumar Mediratta, MD and CEO of IGX. We would be beginning with the opening remarks from Mr. Goel. I now invite Mr. Goel for the opening remarks, followed by a presentation by Mr. Rohit and other management from IEX.
We are already one among the top five economies in the world. For the fiscal year 2023, India is expected to have a robust GDP growth of 7.4% as per the IMF projections. The revival of economic activities has led to a significant increase in electricity consumption and during FY 2022, the electricity consumption was about 1,374 billion units, which is 8.1% growth on a year-on-year basis. During the first quarter of this year, the electricity consumption grew by almost 18%, which is record high. The increasing focus of Government of India on electrification from electrical cooking to electrical traction and electric vehicles, and also ensuring 24/7 supply to all the consumers. This will contribute significantly to increase in consumption of electricity in the country.
This presents a huge opportunity for the electricity sector, which is expected to grow at a rate of more than 6%-7% for this decade, at least. As we know, India aims to become carbon-neutral economy by 2070 and more than 15% of non-fossil fuel clean energy by 2030. This commitment has paved the way for massive transformation in the energy sector. Our honorable Prime Minister, in his address to the nation, announced the launch of National Green Hydrogen Mission to accelerate plans to generate carbon-free fuel from renewable, with an aim to achieve self-reliance in energy by 2047. The country is also witnessing faster adoption of electric mobility, which will help increase demand of electricity while addressing the pressing challenge of air pollution. Electric storage is expected to be commercially viable in the near future.
The increase in the proportion of renewable in the overall energy mix will change the way energy is traded in the country today. Renewable capacity is going to be distributed all over the country and could range from kilowatt to gigawatt. An individual who is maybe a seller sometime when he has the solar power on the rooftop, may be a buyer in the evening hours. For doing transactions with these entities who are scattered throughout the country, it is only possible through a market-based approach. In India as well, government has taken cognizance of this crucial role played by the energy markets. Keeping that in view, Government of India in the Draft National Electricity Policy has made a projection of increase in the spot market to 25% of generation share in the next three-four years.
The green market will also encourage RE-rich states to increase the capacity beyond the RPO obligations, because now these states will be able to sell the surplus power in the market. We also note that many of the IPPs now are considering to set up their green generation capacities, partly through PPA and partly through the market-based approach. In fact, in some of them are even considering to set up 100% capacity through the market-based approach. Market will serve as a catalyst for accelerating renewable generation capacity addition in the country. We have seen that developed countries with well-developed power markets such as European Union, U.K., U.S., have adopted market-based models such as contract for difference, sliding feed-in premium, et cetera, and are very successful in doing capacity addition through this model.
In such economies, power exchanges have played a crucial role in reducing cost of RE integration. Recently in U.K., they did fourth round of e-auction for renewable capacity addition through the market-based model. Almost about 11,000 MW capacity is now being added to the market-based model in U.K. under the fourth round. Including this fourth round, U.K. will be doing 30 GW of capacity addition through the market-based model, which shows that market-based route for large RE capacity addition has been successful and well accepted by the developers. Similar models have been adopted by Germany and many other countries across Europe. Recently, IEX along with SECI, we had appointed Deloitte to do a study to explore possibility of market-based renewable capacity addition options in India.
From the study, we note that a developer will be able to generate higher IRR by setting up capacity through the market-based model than through the PPA route. Deloitte did the study based on the marginal cost of power, and they did the price projections for the next 1five years. They found that market-based models, the IRR will be around a 20%. I'm sure these kind of studies will encourage IPPs to adopt this market-based route. Indian government and regulatory bodies have been proactively interacting with the key stakeholders of the industry to formulate policies that are favorable for the sector and will help deepen the power market within the country. Some of the recent developments include introduction of long-duration contracts, which was approved after almost about 11 years of jurisdiction issue. They were approved in the month of June.
We have already launched the long-duration contracts. Ancillary services regulations, which will be done through the market-based approach. National Open Access Registry, Connectivity and General Network Access Regulations. Discussion on GNA started sometime in 2013, I believe. Now in 2022, regulations have been issued, and it will get implemented shortly. Draft sharing regulations and draft grid code have been issued. This also will be finalized shortly. One thing good about all these initiatives is that these are more market-friendly. My colleague Mr. Rohit Bajaj will be discussing about this in his presentations. The cumulative effect of these regulatory initiatives is certain to benefit country's energy markets and will go a long way in creation of transparent, efficient, and secure power market in the country.
As an energy market pioneer, IEX continues to make significant contributions towards helping India build a sustainable, energy-efficient economy. We remain committed to our customers in procuring uninterrupted 24x7 power in the most competitive, flexible, transparent, and efficient manner. With the customer centricity at the heart of our operations, we are continuously working towards enriching the experience of our customers across all touch points, including registration, bidding, physical delivery, and financial settlement. We have introduced value-added services for renewable power producers to garner forecasting services and solutions for the top and paneled service providers. We have empaneled couple of service providers, which are international service providers. As a technology-led energy marketplace, we are continuously working towards leveraging technology innovations and automations to provide intuitive, seamless, and best-in-class solutions to the market participants.
With a comprehensive product portfolio to meet the diverse need of our customers, provision of data insights, member API across products, state-of-the-art technology, automation, and web portal will help us in creating true customer delight. Our technology offerings and customer experience initiatives will be discussed in detail in the upcoming presentations by Mr. Amit Kumar and Mr. Sangh Gautam. IEX continues to constantly innovate and introduce new products to meet the evolving needs of the market. Last year, we introduced Green Day-Ahead Market in October 2022, and this market has also seen significant participation from the participants. Last year, we also started the cross-border trade. With that, we have created a regional South Asia regional market in this region. Nepal and Bhutan have already started transactions, and Bangladesh is expected to join shortly.
I'm sure with this, these countries will be able to utilize the energy resources in a most optimum manner. It gives me immense pleasure to share that our Indian Gas Exchange has achieved financial break-even in the first full year of its operation and continues to grow every quarter. In line with the ambition of Government of India to increase consumption of gas from 6% to 15% by 2030 in the overall energy basket of the country, government and PNGRB are taking many initiatives to deepen the gas market in the country because they believe that this kind of increase in the gas consumption can be achieved only through a liquid gas market. They have now initiated the process of rationalization of transportation tariff. Government has proposed to set up a transport system operator, which will manage the entire gas infrastructure.
They have intent to bring even gas under GST. I'm sure these initiatives will further deepen the gas market in the country. We are closely working with the government at various levels to help India become a market-led gas-based economy. My colleague, Mr. Rajesh K. Mediratta, will talk about gas exchange in detail. Our honorable Prime Minister has set an ambitious target to make India developed country by 2047. This aspiration, coupled with greater penetration of electricity and focus on renewable, provides an enormous opportunity to the country's gas markets, exchange markets. As the electricity consumption is expected to grow at a rate of more than 6% in this decade, at least for the next 8 to 10 years, coupled with reluctance of DISCOMs in getting into long-term PPAs, we expect power market to deepen further.
As India's power market matures, we will evolve with it to meet the changing requirement of the customers. I'm delighted to share with you that we are now working on new products such as ancillary market, cross-border bidding, capacity market. Similarly, there is a huge opportunity in the gas market. The massive transformation in the global and Indian energy sector has created several opportunities for the IEX, and we are exploring new marketplaces. With the enactment of Energy Conservation Act 2022, which talks about the carbon market in the country, now Government of India is considering to create a mandatory carbon obligation.
that will provide the opportunity for us to set up a carbon exchange in the country. We have also appointed a consultant to suggest us about the different opportunities which are available in the carbon space, and we are active in this also. Further, Ministry of Coal is also considering to bring market framework in the coal sector. In fact, they have appointed consultant to suggest framework for introducing, for setting up a coal exchange in the country. We are actively interacting with the Ministry of Coal, and for we are looking forward to their regulatory and policy support for setting up first coal exchange in the country. With the launch of new products, investment in technology and innovation, customer-centric activities, we expect to achieve a growth rate what we have done in the last five years, which is about 20%.
I am sure in the future also we should be able to achieve this. I would like to conclude by saying that while we have come a long way since we started in 2008, there is still a lot more to be achieved. With this, I would like to conclude and thank you all for your presence. Thank you again.
Good evening, everyone. Thank you, Goel, sir, for very detailed overview of the company. Moving forward, I'll be walking you through the business update as well as policy and regulatory and also new initiatives that IEX is undertaking. Another 30 to 35 minute, I am going to cover these two different topics. Moving on with the electricity value chain, as we are moving towards sustainable energy economy, energy transition is undergoing, and we are expecting major change to happen in next 7-8 years. If we compare ourselves vis-à-vis what today vis-à-vis what we are projected to be doing in 2030, energy mix is going to change in a very, very big way. Today, almost 51% of the total electricity, total installed base is coal-based, and going forward this number would be close to 30% only.
Because all future capacity addition that we are going to do, 85% of that energy is going to be coming from renewable or hydro resources. You can see here that today we are 160 GW of installed capacity. In the total energy basket of 400 GW, this number is going to increase to 506 GW, then the total installed would be 817 GW in 2030. Majority of this addition is going to be on the renewable side, and this is going to give many new opportunities for power sector also. Talking about transmission, we have seen huge investment in the recent 5-7 years. Today, there is absolutely no congestion in the country. We 99.9% of the time we have one nation, one grid and one price across the country.
Area clearing prices has no meaning. It has lost its relevance. We are anchoring more investment here. We are creating green corridors. This is for the purpose of evacuation of green energy within the states, and we are further developing our regional, interregional corridors. Today, we have more than 110 GW of interregional capacity, which is helping, which is enabling the market framework where customers are confident that whenever they need power, there is enough corridor availability, they can be able to buy power from the power markets. On the DISCOM side, reforms are underway. We have achieved certain things. Lot more things we have to achieve in times to come. Still the AT&C losses are little on the higher side. It is at 21%. Our target is to bring it down to 15% in next few years.
We are also working on increasing collection efficiency. Till the time we have better collection efficiency, the issue of outstanding dues will continue. We have more than INR 202.5 lakh outstanding due as on today. Government has taken lot many initiatives in this particular area. There is very recent one, about one and a half year back when the liquidity infusion scheme was launched by Government of India, wherein all the old debts, they were clubbed and then they are converted into EMIs. All distribution companies are given four years time to pay that in the form of EMI.
These things are going to yield very good results, and we believe that with this better performing distribution company, more efficient distribution company, the power purchasing capacity of these companies will improve and power market will eventually gain from these, all these aspects. The recent development where Electricity (Amendment) Bill, 2022 is being proposed, the main point of that particular amendment is we want to introduce competition in the licensee area on the distribution company side. We want multiple licensee in the same area. We want to provide choice to the consumer. This is also one very important step wherein we believe that going forward with this being in place, distribution company will be more commercially sensitive. They would be in a position to take very prudent decision as far as buying of power is concerned.
80% of their total cost is power procurement cost, and this will also help power market to evolve further. On the demand side, we believe that electrification today is seen as a number one decarbonization lever. Whether it is about traction, cooking, EV, we have plans in place where we want to increase electric, electricity consumption in the country. So far in last five years, starting FY 2017 up to FY 2022, we have seen growth, generation growth or demand growth of 3.8%. It has been growing at a CAGR of 3.8%. As the economy is set to grow at 8% in the next few years, and then there are projections that demand is expected to grow more because of core sector increasing or the points that I have mentioned, cooking or transitioning to the newer technologies.
We believe that, and in fact, these studies are available. Deloitte has done this study where they have projected between FY 2023 to FY 2030, growth rate is going to be at a CAGR of 6%. Till now we have been growing at a 3.8%. This is going to accelerate and going forward it is going to be 6%. There are various reasons to believe. In fact, if I talk about that study which Deloitte has done, till FY 2027, they have gone by GDP forecast and there is a strong correlation between electricity demand and GDP forecast. 90% factor is there, which they have considered. Beyond FY 2027, CEA projections are available, which is about 4.8%-4.9% year-over-year. Those have been considered.
If you include everything, then you will get to this 6% growth number, which we are expecting in the next few years. Now let's also see how the different segments within power markets have been behaving in the past. We have compiled last five years data and this table represent last year data where out of the total generation of 1,321, 86% was the contribution of long-term PPA. 14% was contributed by short-term. Within this 14% short-term overall market, 7.7% was the contribution of power exchanges. Now today, power exchange has emerged as the main player, the major segment within the short-term market. Earlier it used to be 34% of the total short-term market. Today it is more than 55% of the overall segment.
There is another segment which is for bilateral, where it is direct transactions between distribution company and these, some of these transactions are also through trader. That together comprises 4.5% and the remaining is DSM, which is nothing but overdrawal from grids, which is contributing close to 2%. Now if you see growth rate of last five years, the generation has been growing at a rate of 3.8%. Against this short-term market has registered close to 10% growth. Within the overall generation in the country, short-term market is gaining more importance. People are shying away from long-term PPA. They are relying more on the short-term market. That is why this growth is high.
If we see within this short-term market, exchanges are the one which has been growing at a very fast pace of 20%. Today exchanges have emerged as a most preferred option among all the participants, whether it is open access consumer, whether it is distribution company, whether it is IPPs who are relying on this market to dispatch their surplus power. All of them are dependent on power exchange. They are finding it most appropriate market to dispatch or to buy. This is the reason why this growth rate has been very significant. If I compare the growth rate, last five-year growth rate of 20% vis-à-vis overall generation growth, which is 3.8%. Three point eight percent growth resulted into 20% growth of the exchange market, exchange contribution.
This has been really at a very fast pace. Talking about the ecosystem exchanges. As you are aware, we started exchange in 2008, 14 years of operation till now, and we got listed in 2017. We are ISO certified in terms of quality, environment or security. The overall market share that this number is for last year. Last year our market share in DAM and RTM was 99.9%. In fact, RTM this was 100%. It was 99.8% something in DAM and together it was 99.9%. Overall market share, if I include DAM, TAM, RTM, green market, everything, then this number was at 94.2%.
Overall electricity market share of IEX was 94% and we have been growing at a CAGR of 13.33% since inception, which is 2008. Last year we did 102 billion units, out of which 96 billion units was electricity. 6 billion units was certificates. In the peak hours we have done trading of more than 20,000 MW in certain hours, certain blocks. About our consumer base, we have a very robust consumer base. More than 7,000 clients are registered with us. All the distribution company, more than 4,000 bulk consumer, they are consuming more than 1 MW at any point in time. Together they are participating. Every day we have huge participation coming from both buyer as well as seller.
There are 200-300 generators who are participating, 700-800 buyers who are there for every time block. The result is discovery of competitive price as exchange provide very flexible option for procurement of power. Energy mix is changing. Last year, FY 2022, majority. In fact if I look back three-four years back, almost 95% of the electricity was through day-ahead market only. Now within last 2-3 years as we introduced many products, this number has, is evolving now. FY 2022, 64% was day-ahead market. Then another significant component is RTM market, which contributed about 20%. Together they were 84%. We had term-ahead market, which is about 5% and then green market doing another 5%. This is the energy mix.
If I talk about first five months in this fiscal, we have seen further change here. Now the dependence on day-ahead market has gone down slightly. The number is less, little less than 50%. It is at 48%. RTM has, we have seen another 35% growth in first five months in RTM segment, which we started in June 2020. It is just little over two years old segment that we have seen tremendous growth in this particular real-time market segment. Together they are 48% plus 20% more than 75%. Then TAM is 21% and 6% is, sorry, 7% is coming from green market. We have various types of auctions which are there. If I talk about day-ahead market, we have, or close or the real-time market.
These are exactly similar in terms of auction mechanism. Both have closed double-sided auction. In Term-Ahead Market, we have DAC component, we also have intra-day component. In these two components, we have continuous matching. The auction mechanism is continuous matching. The third auction that we have is for weekly and daily segments, which is open auction that we have introduced contracts. In the monthly and in the all weekly going forward, we have. Yesterday, we launched weekly segment up to 12 weeks in advance. All these segments have open auction mechanism. There is one more segment, which is any day single-sided. This is another way of procuring power, which is similar to DEEP portal, where we have reverse auction. Various forms of auctions are there. Moving on, talking about our market share.
Last year, our total market share in electricity segment was 94.2%, which comprises of DAM, again, 99.9% RTM. We did about 20 billion units with 100% market share. TAM, we did 10 billion units, and market share was 56%. Then green, again, it was 78%. TAM, we have seen drastic increase in TAM quantum last year, and this increase was because of one important factor, which was in the month of November 2020, one new regulation was released. The CERC notified one new regulation, which is called Open Access Sharing Regulation. Now, in this particular regulation, in day-ahead market and in all the collective transaction, which is day-ahead market and real-time market, there is a provision of charging of transmission charges from the generator side.
If you are a generator, if you are selling power in this particular segment, you have to pay transmission charge. Average transmission charge today in the country is in the range of INR 0.40-INR 0.60, depending on state. It can be 50, 55. Every state has got different number. If you are a IPP situated within a state, you are selling in this particular segment, you have to pay these charges. Now, same regulation provided one more provision wherein they said, if you are doing bilateral transaction and the counterparty is a distribution company, then as a IPP, you don't have to pay this charge. You don't have to pay transmission charge, which is again, as I mentioned, average is about INR 0.50. Some discrepancy was created between the two segments.
All of a sudden, it has become little easier or little cost-effective for IPPs to transact more in the term-ahead market. Because of this particular provision, we have seen there was increase in TAM transaction last year. TAM transaction grew more than 100%, and this was the only factor which was responsible for this growth. Because otherwise, all the distribution company in the country, they prefer day-ahead market because this is the market where there is a real price discovery. In term-ahead market, it is in DAC segment, what I am explaining to you, where this INR 0.50 avoidance is there. There is no discovery. It is on the basis of continuous matching. Sometimes participants, they use reference price of day-ahead market and then do this transaction. This, after November 2020, we have started to see this component started to increase.
Last year this was major, which was about 10 billion units in the year. If I talk about this year, first five months in this particular year, March to April to August, this number has further increased. You can see this. Last complete year it was 10 billion units. This year in the first five months it is 10 billion units. The reason is the avoidance of transmission charge, number one. There is one more reason now. In between, what happened, there was huge scarcity of power supply. There was not enough supply available. There was too much demand. More so in case of peak times, which is in the evening hours. Mid-peak time every day, we are getting so much buy bids. There is so little sell. Many of these participants now, they wanted to secure energy.
What they started to do, they are doing transaction off the market. These are bilateral transactions where transactions are agreed off the market, and then they are coming to the market and settling this on the basis of day-ahead market reference price. These two aspects have affected this particular segment, and we have seen the massive increase in volume in the DAC segment, which is day-ahead contingency, where trading is done today for tomorrow's delivery. Otherwise, the purpose of DAC market is you are participating in the day-ahead market. For some reason, you have quoted lower price. Now you want to have second option where you want to increase the price and participate again. This was the purpose of DAC market.
Now, since because of this particular regulation where there is avoidance of transmission charge, many participants have started moving to this particular segment and taking advantage of 40-50 paisa. This was the reason where we have seen increase in the volume in this particular transaction. If I talk about this year, five months ago, our market share is 85.6%, 86%, and this is less than last year and the major culprit here is term ahead market, particularly DAC segment, where the value provided by all the exchange is same. There is no much differentiation there. Everybody, you can go to any of these platform, do this continuous matching and buy power. If I talk about July and August. Why July and August?
Because July was the month, initial few days, when the third exchange was also introduced, also started operations. Our market share in these two months is 89%. Here also if you see DAM and RTM, it is close to 100%. TAM is one segment where we are, our market share is 43%, and this 43% is considering that there are three different exchanges operational now. Let's see the market trend. We have captured last four years here, and if you see FY 2020, represented in red color, you will see a straight line. FY 2020 was a year this was before COVID, so this was absolutely a normal year. You can see that as we have huge capacity, our peak demand even today is close to 215 GW. Capacity is more than 400 GW.
That time also, capacity was much more than peak demand. There was ample coal availability, and throughout the year prices were close to INR 3. In fact, FY 2020 average price was INR 3.01. In FY 2021, it further dropped. Initially, you will see in the initial months up to October, when there was complete lockdown on account of COVID in FY 2021, prices were below INR 2.50 also in certain months. Average price in FY 2021 was INR 2.82, and this was the year when we registered more than 30% growth in our electricity segment. Why this growth was there? Because many of these distribution companies, there was no deficit in the country. Everybody had resources enough to meet that small demand which was there after the lockdown. Why this growth was there?
Because some of these active distribution companies, they were participating in the market to replace their costlier power. There was a cheap power available in the market. They were optimizing, they were buying and backing down their own generating station. Last year also, this trend continued because initially, if you see April, May, June, July, the prices were about INR 3 or less than INR 3. There was huge opportunity for distribution companies to buy and optimize. After that, suddenly we started to realize that demand increase was more than expected, number one, because of economic revival. Second thing that we started to witness was there was a coal shortage. Initially, it was little. After that it went to be acute coal shortage because this was the time none of the imported coal-based plants were operational.
In the month of October, when government decided that plants like CGPL, plants like Adani Mundra, some settlement is to be done because we do not have enough resources available, we are dependent on imported coal. The directions were given to these plants to start generate and then we have seen correction in the prices. November, December, January, February generally are the lean months and during these months prices came down again to sub-4 INR level. It was around INR 3.50 in all these months. This year again, when the demand started to increase in the month of March, April, these are again the months when the renewable generation is very less in the month of March, April. In fact, wind generation or hydro generation, it starts to pick somewhere in the end of May.
These initial months, our dependence on thermal generation is very high. This time also we were facing coal shortage. As a result, there was not enough supply available. There was more demand which resulted into very high prices. Average price till now is INR 6.76. One thing, one trend you can see very clearly here, this is we are seeing softening in the prices. First month it was INR 10. Why it was ten? Because the cap was introduced. CERC came out with a regulation that in fact from first of April, INR 12 cap on any given time block was introduced and average price was INR 10. Subsequently, you can see that there is lot of correction in the prices. Price is a function of demand and supply. We always
In fact, the purpose of exchange is to match demand and supply and then discover the price. You can see here the months where the prices are high. Red is representing average purchase, which is buy and blue is sell. There are couple of three, four months when there is so much buy and so little sell and the result is prices were very, very high. Otherwise, if you see before that when the prices were INR 3 or INR 2.83 there was enough sell available, very little buy. Let's see what were the reason why this price increased, in fact went up to such a high level. We know that geopolitical activities have affected it. The entire Europe, the gas supplies are impacted. They have started buying coal. There is lot of pressure on the coal prices.
Coal prices HBA index you can see here it is at 322 level in the month of August. If I compare it with year before it was just $131. More than close to 200% increase in imported coal price. HBA may not be a true reflection because today there are multiple different GCV coals which are available but still if you see those, even if you compare variable cost of those different variety of coal you will find that none of these imported coal-based plants are able to generate at less than INR 6, INR 7, INR 8 depending on their location, depending on their time of purchase. All these plants generation cost is very high. Other thing that has impacted us is our dependence on imported coal is very less.
More than 90% of our coal-based requirement is met by domestic coal itself. In domestic coal side what we have seen is there is e-auction quantity was reduced for certain time blocks. Government intervened. In fact, they started supplying more power under PPA. Where there was PPA available they started it to increase that. Ministry of Power, Ministry of Coal, Railways, all of them were working together. Wherever there were pit head plant they increased those supply and in the process merchant plants were suffering because not enough coal was coming to e-auction platform. They were not in a position to buy and generate which has resulted into less supply on the exchange platform.
Third important thing is the e-auction price which used to be, last year average if you see before sudden increase in the month of October, average premium over notified price used to be about 20%-30% only. This time what we have seen, this premium has gone up to 354% in the month of August. Now we are seeing some correction. In fact, last time auction we have seen it is coming down to 200% off. It has come down to 200%. All in all, on an average basis, if you see there has been massive increase in the premium because people were comparing it with the imported coal and then they were buying this coal at a very, very high price.
Same was the trend in case of spot LNG, where people two years back, many generating station, coal gas-based generating station, they were sourcing gas and were generating. This year they could not do so because their variable cost is more than INR 25-INR 30. These were some of the factors which affected our supply, sell side constraint, we call it sell side constraint, which impacted our sell at exchange platform. If you see only the demand side, this particular year we have seen growth of 18% on the demand side, but our cleared volume is not growing in the same proportion because there was not enough sell available. This is classic one graph which I want to explain to you. You can see here green color is representing sell bid.
We have compared one particular day of two years, 28th July. This left side is 2021 and right side is July 2022, same day. You can see here throughout the day there was ample supply available. These are 24 hours. All these time blocks or all these hours there was more sell available. Green is representing sell. Red is representing buy here. You cannot see buy because entire quantum got cleared. The red is overshadowed by brown color because entire quantum, whatever was there, got cleared. This is price. Blue color, what you are seeing here is price. You can see this. This is varying between INR 2-INR 4. So on an average, the price was INR 3.20. None of the time block it went beyond INR 4. Same day this year, what happened?
There was enough sell during the solar hours. You can see during the daytime green is there. You can clearly see there is much, so much quantum available. Some other hour, particularly in peak hour and also morning hour, red is representing buy here. Buy was so much, it was much more than sell. Why this sell was not there? Because IPP, those who are earlier selling or distribution companies, those who are earlier seller, they do not have enough coal availability and hence they were not participating. This has resulted into price going up. Price went in the peak hours up to INR 12. Similarly, you can see during the day hour also, it went up to INR 7. Less sell, more buy, except for the solar hours. This has resulted into sudden increase in price.
At this particular price point, there is no optimization potential. All those who are desperate buyer, those who just want to buy to meet their requirement, they are participating. The point that I shared with you, the demand increased by 18%. This 18% increase is only on account of deficit, not on account of optimization. Because all those who want to optimize, they have not started participating now because they will see the price. If the price will come down at some point in time, they will decide and then they will participate. They will start to participate. Sorry. Now things have started to improve and there are so many trends which are available. In fact, if you see on the right-hand side, we are seeing lot more improvement in the coal inventory.
In the month of September 2021, when the price peaked, average inventory at power plant level was only 4 days. Today, this number has increased to 11, particularly in the month of August. There is visibility in place. There is certainty in place. Coal production in the first 4 months increased by 27%. Coal dispatch to power plants increased by 21%. Generally, monsoon months are the months where we see the production goes down. This year there is no major impact. In fact, in the month of August, in the month of July, we have seen 12% increase in the month of July. In the month of August, we have seen 9% increase. All these are pointing. These sectors are pointing only one thing, that going forward, we can expect little more coal availability.
With better coal availability, plants will start and situation is going to improve. There are some more initiatives taken by government. Wherever captive mines are there, they have made certain amendments. Now captive mines are allowed to sell up to 50% of their annual production in the market. They can sell that. Commercial mine, commercial mining, we have already allocated for 36 blocks. A couple of them have already started production. Some more will start to produce in times to come. These are some short to medium term initiatives, which we feel that if we sail through another couple of months, then the situation will be much better going forward because all these things will ensure that there is enough supply. On the price trend also you can see the prices have come down drastically. We have compared both day ahead market as well as RTM price.
Starting from 10 it has come down to close to INR 5. Major correction there as well. What we can conclude here is, the outlook is looking positive now. There is improvement in coal production and higher inventory will result into increase in supply. Once you have increase in supply, prices are expected to soften. Once the prices will start to soften, we can have, optimization will come into play as the round-the-clock power will be available. Open access clearance has come down drastically. In fact, as compared to last year, this has come down by 60%. This number will also start to increase as the prices or the supply will improve. Implementation of GNA, the point that I discussed, which has caused major impact. There has been some shifting away from day-ahead market.
The day-ahead, the GNA regulation has been finalized. It is there. Final regulation has come. There is one more regulation which is responsible for this particular aspect, sharing regulation, open access sharing of charges regulation. This is also in a draft stage. We are expecting this also to get finalized and notified in next 1-two months. Once these are implemented, then we will see the quantum increase, which has happened, which has moved away from day-ahead market or RTM market and gone to DAC market will again come back to day-ahead market. These are some of the things which we are started to see now, and this is the real things which are going to happen. With this, we are hopeful that the trend that we were witnessing earlier will again be there. Some other tech
Some other things which we have been doing in the past and we continue to do now also, just to increase the liquidity because government, they also want to increase liquidity as per the adopted National Electricity Policy, they want it to be 25% in next 3-4 months. These are certain things which we can do to ensure that this should happen. The CFD mechanism for RE capacity addition, the point explained by S.N. Goel, where we have done detailed study. We are hopeful that it is in a very advanced stage. Government is taking it very seriously. The pool is being created. Once we have pool in place, some capacity addition will surely happen through this particular market segment. Merchant RE capacity, there are talks going on. Some capacity they will be keeping for merchant.
In fact, in the recent storage tender, they kept 40% of the capacity only for the purpose of merchant capacity, which means that you have to take this capacity to market and dispatch it as per the commercial consideration. Unallocated power is there with the central generating station. This should ideally come to the market, and if this comes to the market, this is also a sizable quantity. This will increase the liquidity on the sell side. Once you have liquidity on the sell, there are people who are taking this power. Both buy as well as sell side will come to the exchange brand, exchange platform. This thing has the no renewal of existing PPA. The regulation is already there, so nobody is. These are not perpetual PPA now. The tenure is over.
You have to come out of that PPA, and then you are free to sell this power. Ideally, what we are advocating is, ideally, after the completion of the tenure, everybody should essentially come to the market because your debt return period is over. Your fixed charge is already gone. It has been settled. You should ideally come to the market and then start trading this power on the basis of your marginal cost. There would be times where your recovery would be very high. In fact, this advocacy we are doing with generating stations also, government also, distribution companies also, so that the both side liquidity can be done. Aggregator is another beautiful concept which is available globally. We in India have only traders. Today, traders are not allowed to take position to aggregate the demand of various small consumer.
This is one thing which we have been discussing with various agencies, and we are hopeful that in times to come, this will also get implemented. This will be more relevant when we are going to implement green open access. Because if you are going to have a consumer as small as 100 kW, it is always better to have an aggregator who can do or take position for 50, 60 or 5-10 consumers at once and then do that settlement after doing taking that position. Generators, including renewable, can buy from the market for promoting efficiency. Till now, what we are doing is we are doing optimization only on the buy side.
If you start to allow generator to take the decision of either generate or buy, ideally, generator should be allowed to take decision whether I want to generate or I want to buy from the market. There are times when the variable generation cost of generating station is more and market prices are low. They should be allowed to shut down their unit, buy, and start to fulfill their commitment. This is another area where we have been working. Gross bidding we have discussed in the past also. It is nothing but voluntary Market-Based Economic Dispatch, voluntary MBED. There are a lot of issues in implementing MBED. States have their own set of concerns. If you allow this on voluntary basis, because 80% of the saving can be accrued by just doing optimization of 20% generating station in the country.
You don't have to go for entire MBED, you can start with 20% of these generating station and then start to realize the positive results and then further extend it. Coal allocation for merchant capacity, the entire issue that we have discussed till now, there is no coal availability with merchant power plants. They are dependent on either re-auction or imported coal market to buy this. If we start to give some coal to these generating stations, then the supply can be little better and such situation can be avoided completely in future. A capacity market is another thing where a lot of discussions are underway. In fact, resource adequacy requirements are being frozen now. Every state will have to adhere to this resource adequacy. For the purpose of having enough resources, they have to enter into a contract to secure capacity.
Now, exchange, this will provide opportunity for markets to introduce capacity, number one, and that energy will also come to the day-ahead market. This will help us in two different ways. One is having capacity contract and second is increasing liquidity in the day-ahead market. Moving on to policy and regulatory update. Deepening of the market has been one of the major agenda of the ministry and, introduction of suitable mechanism, including capacity market, which they have mentioned in the Draft National Electricity Policy. The point that we have already discussed, competition, competitive procurement for distribution company through exchange, which is again one of the major agenda of the Electricity (Amendment) Bill, 2022, where they want to introduce competition. This is going to be, one development which is going to be very favorable for the markets.
Energy Conservation (Amendment) Bill, 2022, which has recently come, this has given roadmap for establishment of carbon markets. This is another area where we are very positive. We are working very aggressively, and we see there is a need of number one, there is a compliance market which should be there. The current REC and ESCert market, which is not completely representing carbon, but going forward, we can have one market where this can also get subsumed and then they on top of it, there could be many more things which can be part of compliance carbon market. There could be opportunity in various other opportunity in carbon ecosystem, different financings, schemes within that, and then there could also be a voluntary carbon market.
All these things are there across, in Europe, in U.S., many other geographies, this is there. We are hopeful that in India also there is a huge case and we will have very dynamic market. Draft Electricity (Amendment) Rules, where the concept of central pool mechanism is introduced and also resource adequacy guideline. Again, the same thing. Again, in all the new developments, resource adequacy thing is coming very, very prominently, which means that capacity market is not very far away. Electricity derivatives, again, we have discussed multiple times in the past, but this is also in very advanced stage now, both SEBI as well as CERC, the Joint Working Group, they are working. Almost the contracts are already there in place. We expect that another two, three quarters, this will also get introduced.
Some other positive regulatory updates like late payment surcharge related matter. Now, this is very important. You cannot have sustainable system in place if you stop paying. You have to pay. In this particular thing, what they are saying is today they are only paying for exchange. When they are buying power from exchange, they are paying, but there are so many other contracts where they don't have to pay. Sometimes when we discuss with distribution company, they say, "We prefer short-term bilateral contract or long-term contract because there is no payment obligation. We can always defer this payment." We are very positive. If this gets implemented, all the contracts are at same level. You have to pay wherever you are buying power. You cannot do deferment of payment beyond a certain time.
In that case, exchange will gain more importance. Exchange will get more preference because if I have to pay there also, then I would go to a platform which is most competitive, where the cost of procurement is less. That way, this, we see this as a very positive thing. Then GNA regulation, which I mentioned, that duplication of charges, the issue that we are facing today, will get sorted out with the implementation of sharing of interstate transmission charges and losses regulation, which we are expecting in another two, three months. Green Energy Open Access will open doors. In fact, this will create a new market. Today, when we talk about 4,500 registered customers, these are all bulk consumers. Their contract demand is 1 megawatt and above.
If I reduce 1 megawatt to 100 kilowatts, there would be lakhs of more customers who would become eligible to participate in the market. We are seeing this as a major development and the concept of aggregator will also come. Everybody who is consuming significant amount of electricity should come to the market platform. New ideas, we have covered some of these. In fact, renewables through markets, it has two components. One is pool-based, second is merchant. The point that we have already discussed, one thing coming out very clearly on the basis of study, IRR realization can be much more than the present competitive tariff that is being discovered. INR 2.10-INR 2.20. Here it could be much more than that. Why it could be much more than that? The demand is set to grow.
You can have hybrid model also going forward. You can have wind, you can have solar, you can have supported by energy storage. The very detailed study has been done by that. If anybody is interested, we are more than keen to share this study with you. Carbon markets, we have discussed. It has various components in it. Coal exchange is one area where we are hopeful that, the kind of thing we have done in case of gas, similar, initiative we can take in coal, and we could be the front runner in this particular, new initiative. There are other, many other opportunities, including virtual PPA. This particular model is very, very common in, many other places, including Europe, U.S., where corporates are taking position. They are entering into a bilateral contract, but they are only taking green attribute.
Between A and B, there is a contract for 5 MW or 10 MW renewable power. B will be giving this green attribute of 10 MW to A, and rest of the thing he will be selling in the market, which means electricity he will be selling in the market. Similarly, A will be meeting his requirement, power requirement by buying from the market or DISCOM or anywhere. All these places, both the entities, which is buyer and seller, will utilize market or other areas to meet their or dispatch their power requirement, and they will be doing settlement on the basis of green attribute being getting transferred. This model is also very popular in India. Also, this has started and we are expecting this will also enhance liquidity in the exchange market. P2P trading is also being done in various places.
Many so many pilots have been done. In India also there is 1 pilot, 2, 3 pilots, one done in Delhi, Tata Power, one done in UP. We also have partners here, Powerledger, IGS, ISGF. Together with these partners, we have bid for one such pilot in Greater Noida Authority. We are working in this area also and we are very positive going forward. This will also create new market-based mechanisms. Green hydrogen battery energy storage system. These are again new things where we are watching these developments very closely and try to figure out where market play very important role. Green hydrogen is again like something like gas, where you can always trade on exchange platform, number one. Then if you have to generate RE or Green hydrogen, then you need RE power.
Exchange could be one place where you can source this power and then convert it into hydrogen. Auto bidder solutions are there. Globally, it is very popular where you have a battery storage, you want to buy from the market when the prices are lowest, and you want to sell in the market when the prices are highest. In our case, if you say during the daytime, the solar hours prices are lowest. In the peak hour it is high. There is so much delta available. If you have a storage plant, you can always utilize this delta and then your realization can be much better than this. Just to summarize, last two slides. The thing that we have discussed already, there is growth potential from the existing market.
The new product that we introduced starting 2020, first thing that we introduced in June 2020 was Real-Time Market, which has been doing exceptionally well. Year on year, we are seeing 30, 35, 40% sort of growth. This we see there. It has tremendous potential going forward. As the renewable proportion in the country, as the energy mix will change, this segment is set to grow. This will see the greater heights. Green segment, in fact, we launched GTAM and GDAM. GDAM we started very recently in October 2021. This also has got immense potential. Till now, the participation is only from distribution companies. Some of these distribution company like Karnataka, AP, Telangana, they have surplus renewable power. They are meeting their purchase obligations. Still they have surplus. They are selling this power in the market.
Going forward, we see a lot more participation coming from merchant generators. There are a couple of merchant generators, those who have participated, and they have realized the value of it. They have been selling power at INR 7, INR 8, INR 9 and have got very good realization. This is another segment. We consider this at a very nascent stage. This has lot more potential. Going forward, this is going to be the one major segment that we have. Cross-border has started really well. Nepal initially started only buying subsequently. Today, we have got 365 MW of capacity registered with us from Nepal, and on daily basis they are selling 7 to 8 million units.
This is very big support to us because this is the time when we need around the clock power and all these hydro generation generators are selling RTM power, around the clock power, supporting us in a big way. This has to go further. In fact, Bhutan, Nepal already registered. Going forward, we will have Bangladesh also. Bangladesh has got tremendous potential, much more than Nepal and Bhutan. Longer duration contract, we in fact have introduced all the different segment, whether it is monthly, whether it is weekly. Transactions have started to happen. Forward monthly transactions have happened recently. There are four, five contracts which got executed. There are many contracts which got executed for next two week or next to next week. Reverse auction, we have done 24 reverse auction in the past, in last two and a half month.
We have not seen many LOI get signed, many power being off-taken because the price discovered today is very high. Why price discovered is high? Because many of these generating companies, they don't have certainty of coal supply. They are quoting INR 9, INR 10, INR 11. Distribution companies are not willing to buy at that price. As far as acceptability of the market is concerned, it is immense. There is a lot of participation. 24 reverse auctions in two and a half months is an achievement in itself. Ancillary market, gross bidding that we have discussed. Launch of derivatives will also provide hedging opportunity, which will increase liquidity in the market. Capacity market is another area which we are very positive about. RE capacity addition through exchange, contract for difference, again, was something which was being discussed.
IGX, it is again at an initial stage. Robust volume growth is expected over next five year. Coal exchange, carbon market being explored. Other opportunity, we are open to any other opportunity in energy market. Spot market share is to increase significantly as per the regulation. All these regulations, in fact, if you see all these regulations, they talk about market, they talk about new segments, they talk about rationalizing of the transmission charge, the point we discussed. With these things in place, we expect that GNA means you are given certain quantity. Now you are free to buy from anywhere. Today, the system is you have taken LTA against some contracts. So you cannot go out of that contract and start procuring from elsewhere.
If you have GNA in place, as a state, you are entitled to draw 10,000 MW. It is for you to decide. You can easily go to exchange market and buy power. You don't have to pay transmission charges at all. This is one thing which is going to help market in a very big way. Coal supply is expected to increase. In fact, there are very decent targets taken by government, and we are hopeful that if half of these targets are met, then we will have enough coal in the country and the problem that we have faced last year and this year would not be there. Finally, we always maintain one thing, our growth is dependent on incremental demand of the country.
If you are getting incremental billion units, then large part of that billion units will get captured by exchange because no new long-term PPAs are being signed. Earlier it was SPPAs were signed on the RE side. Today, in fact, that has stopped. We are not seeing too much momentum there where states are entering into too many contracts, even for RE. The incremental demand, the growth which we are expecting, for last five years, this number was only 3.5, 3.8%, where we saw growth of 20%. Going forward, this number is going to be 6%. We are optimistic that this will give us even better growth. Thank you so much. That's all from my side. Amit Kumar.
Good evening, everyone. Thanks a lot, Rohit, for sharing details regarding the current business landscape, the future opportunity can be way forward.
I think the next topic is a good extension, because eventually, customer centricity will play a key role to ensure that, customers get the most value from our platform. If customers get the most value from our platform, then all the future opportunities and the policy developments that are favoring the short-term market and IEX power exchanges in general would ensure that we get the maximum benefit out of that. In this section, we'll talk about, how we look at customer centricity and what are some of the key areas that we have been working upon. Our view is that creating a customer-centric energy marketplace through efficient and state-of-the-art technology solution.
This is the key theme around which we work, and we do deep customer engagements to try and understand what are the various products and solutions and services that if we offer to customers, it will help them get more value from our platform. We look at using technology to build those products and solutions, because eventually technology-led products and solutions are more scalable in providing benefits to the customers. This is the central theme on which we work around offering experience solutions to our customers. Like if you look at the customers that come and trade on our platform, essentially they are having these four different interactions with our platform. If there is a customer who wants to come and trade on our platform, the first activity is they have to go through the entire registration experience.
Once the customers are registered, then there is the bidding activity that happens. There is a bidding experience that the customers will have. For the transactions that get cleared on our platform, eventually the physical delivery, which is the scheduling aspect, has to happen and the financial settlement also needs to happen. These are the four touch points which customers have day in, day out with our platform. Our view has always been how do we keep on innovating to provide more and more experience solutions and how do we improve the experience for each touch point. The idea is on the registration, we keep on focusing upon digital solutions, frictionless and making it very quick so that customers can have a very, very fast turnaround time in getting registered on our platform.
On the bidding activity, our focus is how do we make bidding a very, very easy activity for the customers, which is with very, very less manual effort they can place bids on our platform. We offer multiple product options to the customers. That is very important because during the different times of the year, different customers will have different needs, and those needs can be well met through different product bouquet of products. If we have a large set of contracts to offer to our customers, then it help them utilize our exchange more effectively for their power procurement needs.
Efficient price discovery, that is very, very important, and that is one of the reasons why you see in Rohit's presentation, if you have seen like our day-ahead market and RTM is almost 100%, day-ahead is 99.9%, because efficient price discovery is very, very important value additions that customers get from our platform. Data insights. For customers to be able to bid effectively on our platform, there are a lot of data inputs that will enable them to come up with an effective bidding strategy. We have built a data insights solution through our web-based platform, where we provide those details to our customers on click of a button. On scheduling, there is a lot of activity that we do to completely automate the entire scheduling process.
Real-time communication, because at times there will be schedule revisions that will happen. How we can build a very, very efficient real-time communication process, that is something that we work upon. With the launch of RTM and National Open Access Registry, the need to have a very, very tighter integration with analysis systems is very, very important to ensure that all the activities around scheduling can be really very efficiently done. That is something that we focus on the scheduling area and financial settlement. On-time payment. Our track record has been in the last 14+ years of our operations, we've always done on-time payment and something that we have maintained and we are proud of that. Robust risk management.
We have a very robust risk management plan in place, not only just for near term contracts, but also for the contracts like the long duration contracts that we have recently launched, which gives confidence to market participants that if they come and trade on our platform, there is a very, very robust risk management in place to take care of the transactions. Easy reconciliation, because eventually when customers are doing lot of transactions, they have to do reconciliation activities as well. How do we build solutions which can really provide easy reconciliation? The focus area is how do we continuously improve the experience on all the touch points. Rohit briefly talked about, in the way forward slide, some of the new products which are one of the growth drivers for our platform.
If you see, starting from 2020, every year we are launching multiple new products to provide a very extensive portfolio of products to our customers. 2020 we launched Real-Time Market and Green Term-Ahead Market. Last year we launched cross-border trade and Green Day-Ahead Market. This year we have launched the reverse auction with the LDC approval that we got. We have extended the weekly contracts, which was earlier for just near week. Now it is available for delivery up to 12 weeks, so customers can trade. We also launched the monthly contracts, which is again something that was approved as part of the LDC approval. Daily contracts, which was earlier available to just nine days, now it is available to 14. From this Friday onwards, it will be available for 19 days.
These are some activities that we keep on doing so that we keep on adding bouquet of products. If you see that these products are really helping drive volume growth. If you see in the last section, what we have mentioned is that these new products are contributing to almost 39% of the total volume on our platform. These are really helping customers utilize our platform in a more effective manner. Like I talked about the customer interaction touch point. Here we would like to give examples, some of the key activities that we have done for our customers. On ease of bidding, we have built the API-based automated bidding solutions for our customers.
There are multiple customers who have integrated the entire bidding process through our API-based, and they are taking advantage of this automated bidding solution. Just to give some data points. Like in our Real-Time Market, almost 40% of the cleared volume on the sell side actually is from members who are integrated through the API process and on the buy side, almost 30%. This is something which is really giving a lot of benefit to our customers, and we are constantly seeing new and new customers integrating their bidding solution using our API. With this, with the advantage that customers have got through RTM API solutions, we are now extending the API-based solution for other product segments also, so that customers can take advantage of automated bidding across all product segments.
We have also built bid creation tools. There are customers who may not have the right sufficient technology infrastructure in place to do the API integration. For them, how do we do ease of bidding? We have built a bulk creation utility which we give to our customers, which they can use to upload bids onto our platform with a very, very minimal effort. Integration with National Open Access Registry or POSOCO. This is something which has really made the whole bidding process very, very seamless, especially from a scheduling and reporting and the NLDC perspective. This is something which gives good experience. Auto carry forward uncleared bids.
This is something which helps customers that if they have placed bid in one product segment and if it is getting uncleared, they don't have to manually place that bid in another product segment if they want to take advantage of automatically carrying forward those bids. That is something that our platform offers for some of the product segments, and we will extend it to all the product segments in near future. Seamless DC to DR transition because we are a 24/7 exchange, so it is very, very important that our exchange is available no matter what. For that, a seamless DC to DR transition is very, very important to ensure a business continuity. Even if there is something happens on the DC side, then the DR can ensure bidding continuity for our customers.
This is something which is very important. We have also built web-based platforms to enable customers get many value-added services from that. There are data insights, as I talked about, which gives them insights on multiple data points around the volume trend, price trend, uncleared volume, how it is distributed from the clearing price, demand trend, underdraw, overdraw trend for states, trend around and comparison around price across product segments, comparison around DSM frequency, DSM rate with RTM. There are multiple valuable insights that customer get from this, which help them come up with effective bidding strategy. Digital onboarding experience, which is linked to the entire registration experience for the customers. Easy access to trade and operations report, which is linked to the whole scheduling related experience for our customers.
Financial reconciliation. Very, very easy one-click reconciliation through the web-based platform. Web-based bidding is something which we have already live for the long duration contracts, reverse auction and monthly. Very recently we have also made it for day-ahead and GTAM market, and subsequently we are going to make it available for all product segments. Easy user management access. This web platform provides ability to our members to provide access to various features, and without really having to control access for their own organization and also toward their clients, on their own and in a very secure manner. This is something again gives them a lot of flexibility, which helps them again get a lot of value from our platform.
These are some of the customer-centric activities that we have done and in the process of doing to ensure customers get the maximum value for our platform. We are going to continuously focus on doing more and more innovations around this. With that, I would like to thank you for patiently listening to the customer-centric initiative. I request Sunny to come and talk about the technology solutions, some of the focus areas that we are working upon. Thank you.
Thank you, Amit, for giving a background on the already customer-centric activities that we are taking. As Amit was talking about the technology statement that we had by creating a customer-centric, efficient and state-of-the-art marketplace. On the customer-centric activities, a lot of the things, I think Amit has already covered. I would like to say that in order to achieve all of these, we have an in-house team, and we are continuously working in order to make sure that they are using the state-of-the-art technologies like Angular, React, all the open source technologies to give a digital experience to our customers.
Even the ease of bidding part which Amit talked about, there also we are using, you know, the right kind of architecture. Whether it is service-oriented architecture or any redundancies that are needed, all of those, using our architecture, we are able to provide to our customers. We give a lot of focus on security. Being an exchange, it is of utmost importance to us. We are going to soon launch internally kind of a 24 by 7 security operating center, a SOC, which will monitor the, you know, security aspect, 24 by 7 for us.
I think we'll be one of the few companies which will have, you know, this kind of a setup, you know, in build. We also have worked with various agencies in order to create a cybersecurity framework within our company and all our policies, you know, that we have and all the developments that we are doing. We are following a very robust cybersecurity framework now, you know, in order to make sure that there are no leaks, that our platform is very, you know, secure. In terms of efficiency, Amit did talk about all the product segments, you know, that we have.
I'm not going to go into details, but I want to ensure that in order to build such a comprehensive product portfolio, we had taken up a kind of a re-architecture, I would say, in some manner, so that we can launch all these products in a very quick, you know, way. Right now, whenever we get any of the compliance requirements, we are able to fulfill those requirements very quickly because we have such an architecture available so that we can launch contracts in a very seamless manner. We have taken automation very seriously inside. We have now started using RPA, robotic process automation. We are using UiPath for that, which is again one of the state-of-the-art automation company.
That product is helping us in our uptime. It is also helping us in alerts and notifications, you know, as well. All the integration that we have done internally using APIs with our, for example, with our SAP system, we have been able to achieve that using that automation solution. We are ensuring that in our entire process that we have, and Amit talked about the back office, the financial reconciliation, et cetera, all those processes, we want to eliminate any manual intervention, and we have been able to achieve that by using automation inside. Scalable. You know, the way the architecture is, we have no problem reaching out or adding more customers.
We have no issues even if the number of bids increase. We are, you know, we have been able to manage around a 99.9% uptime in our RTM segment. We are moving towards 100% uptime as well. Both on the hardware and software aspect also, wherever needed, we have used the state-of-the-art hardware and also any virtualization layer that is needed. This entire hardware and also the software, as I said earlier, this is all an internal team, so we are able to use the best of the, I would say, technologies and also train our team according to the architecture and the needs that we have.
State-of-the-art. NOAR is, you know, something which has really helped us in automation and also being able to provide the data in a very seamless manner to our external agencies like NLDC or, you know, POSOCO for that matter. MILP, which is a globally recognized algorithm for giving the best economic social welfare, you know, optimization, that has been used now. We are partners with Inside, which is, you know, providing the solution to us. Data for achieving the kind of data insight products that Amit talked about. We have a data warehouse internally. We have built that system in-house, totally, you know, homegrown built.
We are using Power BI inside, and we have also provided a lot of visualization, charts and, a kind of experience for our senior management, whether they can slice and dice and get access to real-time data in a very, very, you know, seamless manner. We are, you know, following this vision for around, at least two years now, and, I think we will continue to deliver on these.
This is a study or, I would say, a framework that we had created around 2.5-3 years back, where we had recognized where our system was around 2-3 years back and where we want to reach, you know, within, let's say three-four years. Earlier we had manual workflows. It was a monolithic architecture that we had, very desktop-based system, disparate systems, limited products, and all the developments that we were doing were in-house. Now, I can say that we have created an automated digital mesh within the entire product offering that we have. There is a seamless data exchange that happens within all the, you know, different systems.
We have created a kind of a digital twins by using service-oriented architecture and also being able to do any bank-related integration in a very automated manner using that, you know, architecture. We are now on all the platforms, not just desktop. We are focusing a lot on web-based, you know, system. We are transitioning towards that, and we are hoping that within a very short period of time, all our product segments will be available on, you know, web-based systems. Earlier, as I said, we had very disparate systems. Now we have very intuitive and scalable and secure systems. I talked about the 24/7 support center that we are building.
We are also making sure that any UX that we have on our, you know, for our system, we take a very, kind of a survey-driven approach, where we go to our customer, we first discuss the kind of designs or the kind of interface that they need, and we give them all the option, and we actually, in a way, design the system with them. That really helps us to bring the most optimized solution to them. Risk management is also which we are soon going to launch. A lot of it, we are already taken care of, but now we want to have a kind of a unified risk management system as well. Our products are all very configurable.
You know, as I talked about, we have a scalable architecture now. We have been able to launch LDC, you know, green contracts and also RTM using that scalable architecture. We have now with you know with at least a couple of years now, we have been able to create very strong partnerships across you know industry. We are working very closely with GMEX, which is providing us the technology for our IGX platform and also you know companies like Nagarro and uTrade with Capgemini, TCIL. All those we work very closely with them.
Any solution that we need to build, we are able to get the best, expert, advice also and build our, you know, technology accordingly. Again, I mean, in brief, I would say we have a very reliable, scalable and a secure system. We are ensuring that we are, you know, bringing the best value to our customers. Thanks. With that, I'll ask our CFO to cover the next points. Thank you.
Hello. Welcome, everyone. We heard Rohit, Amit, Goel sir and Sangh. Ultimately it's numbers. What is the final numbers which are coming, which drive the value for the shareholders and the whatever we do, if it's not reflecting in the numbers, somewhere it's not the mission achieved. I will look at the what we had achieved in the last four, five years. Basically, this is a summary. You must be aware of the numbers because we had been presenting our results on the quarterly basis. The company had achieved the CAGR of 16% on the volume for the last four years. The company's volume increased from 57 BU to 102 BUs during the financial year 2022.
Corresponding revenue with the CAGR of 17% increased from almost INR 256 crore to INR 500 crore, INR 478 crore what we achieved. EBITDA margin has increased significantly from 82% to 87%, and the PAT has grown by almost 23% CAGR from INR 132 crore to almost INR 303 crore we had crossed. This is the value what the IEX has created, and this is the value proposition and what all my colleagues and Goel sir had talked in the earlier. This is the overall if you look into the financial expenses side. The majority of the cost is the manpower cost and the other operating expenses. Despite increasing the revenue by almost 16%, the cost has been increased by only 7%.
Corresponding slide, you can see the operating expenses, the percentage of total income has been coming down. That's what the reason our EBITDA margin has increased from 82% to 87%. As Sangh had said, how much we are spending on the technology, we just wanted to highlight technology has been in the focus for the IEX management. Over the last five years, since we put in the in-house tech team into the IEX in financial year 2018. Company is regularly upgrading its systems, processes, and tries to have a more robust system, which has been explained by Mr. Sangh and Amit both.
Overall, this is just a highlight of what the company has been delivering over the last 4, five years and what is the vision and the thought process of the management to, and commitment towards the value to create for its shareholders. This is what we are reflecting the value which has been created. The company has been regularly paying as per the dividend policy, more than 50% of its profit as a dividend. The value of the shareholders, if you look, the growth has been CAGR of 25%, which is quite a good value which we have been created for the shareholders. This is the final and the faith shown by the shareholders in the company.
I remember the post-IPO in 2018 when we used to see the company have a shareholding of around 50,000-60,000 shareholders. Now we have more than around 17 lakh shareholders. The company have a paid-up capital of almost now INR 90 crores, which create the enough liquidity in the market. This is the basic summary of the overall snapshot of the way the company is standing. Now I request Mr. Mediratta to give you insight on the IGX. Yeah. Welcome, sir.
Very good evening to everyone. Seeing many of you after a long time, it's really a pleasure. I would be brief on the initiative which we started in 2020. You know that we have been operating spot market in electricity. We were also closely monitoring, even from 2008 onwards, that should we also run a spot market for gas and looking for opportunity. We were waiting for a few enablers to happen and then expecting the government to issue a regulation on gas exchange, and then we will launch.
In 2019, we decided why not start a market as a trading platform and then seek government's acceptance, and then they may issue a regulation, and then we will apply under regulation and get the approval and then start as an authorized gas exchange. Very fortunately, what we thought and the same thing happened. Like, we started as a trading platform in June 2020, and then government actually supported us, our initiative. They saw the market reaction. Once they were convinced that this is the right thing to do, they issued a regulation in something like July or August 2020. We applied under regulation, got the approval within three months, by December, and we launched it as an authorized gas exchange.
It was very good of us that we took that risk of starting a gas trading platform, and then we got it authorized as a gas exchange. That was the beginning of a new initiative which we were waiting. I think we are the only one running two spot markets in the country. It has been good operating this for last 1.five years. We'll share brief on this. Already spent a lot of time on the. So far it has been a long session, so I would be brief on IGX. See, we started working on gas exchange, looking at what way we can provide a delivery-based platform. A lot of things to understand because this is a new sector. This was new sector for us.
We understood the sector. We understood the nuances of delivery, nuances of trading markets. After studying all of that, we put this model in place. This model was a bit different from IEX. Basically in this model, we had to create regional hubs, which in case of electricity was not there. We started with three hubs, then we made six hubs. Later in one year's time, last six months, when we actually required some more hubs to create, then we totally changed the methodology. We designated overall six regional hubs. Now six regions in the country are regional hubs. But the points on which trade will happen, they are called as delivery points. This is one change we did in last one and a half years.
We had started from day one all the six contracts. Starting from day two, going up to a month, going up to a quarter, we started with a quarter. Any timeframe people should be able to trade. See, since we did not have issue of forwards in case of gas, there was no issue of CERC's what we had faced in case of electricity, that CERC versus SEBI, there was some issue, but there was no issue here. We started with all the forwards and spot markets up to three months. Later, we expanded it to six months. Today we are providing this platform for trading of from day two, anything up to six months. The price discovery models are similar. I will not go into detail. The contracts were rupees denominated.
This was something different in case of gas sector because most of the contracts in gas are designated in dollar. We changed that practice, and we also provided option for the industry to start with to do a trade of very small quantities also. Today, in last 1.five years, we have gathered a good ecosystem, about 31 members and then 75+ active clients. Almost every major, all major entities are now part of part of our ecosystem. Most of the big PSUs who are there in the oil sector, ONGC, GAIL, BPCL, HPCL, IOC, Petronet, all of these are members. There are few members who are trading and clearing members who can facilitate trade on behalf of others. Then the industries are part of the client ecosystem.
Now in last one year, just giving you brief on the business, we traded, so far we have traded about 2 crore MMBtu. We achieved the breakeven in the first year of operation. That was, I think first time for any gas exchange to achieve breakeven. That was also something, record of sorts. We in last year, the first year of full year of operation, we traded about 1.21 crore, and we got all the major investors on board, NSE, GAIL, ONGC, IOC, Adani Total Gas Limited, and Torrent Gas. This year, we achieved one more milestone of facilitating trade of domestic gas. So far, domestic gas is not being traded on any market platform.
They can only auction their gas. APM gas is of course not available for trade, but there is whatever new discoveries happen in gas sector that can be sold through auctions. That was the provision earlier. When we persuaded, we did advocacy for allowing this gas exchange to also facilitate trading of domestic gas when we were allowed in August 2021. We are now facilitating those transactions also. We have already done about five auctions, and first trade we did on twenty-third May, and already we have done about five auctions, which is about 48.5 lakh MMBtu. This is the way we have grown over the last one and a half years.
We understand that there are few things which we were looking for from the government or the regulatory side. They were like, one is of course gas to be coming under GST, then unified tariff, access code, because there are a lot of reforms to be done on the access regulations, whatever we call as open access. In case of gas, these access code were framed in 2008. Now they are due for revision and reforms because while exchange is there, we can facilitate trading in with a very short notice, we can facilitate day market, we can actually facilitate a intraday market also.
Since the access code does not support that, we are not able to do much of trade on the within the day we are not allowed. Day also is limited because there is a requirement that when you book a capacity, the pipeline operators can take up to three days for confirmation. That is there are similar issues of streamlining, and there are many things which process to be improved at the pipeline operator's level. That need to change. For that, we are looking for change or access code reforms. Then this CGD exclusivity, which is equivalent to open access in state. That is also actually yet to happen. Then TSO system operator. Today, there is no system operator in gas.
We are looking for creating a system operator because there are multiple pipeline operators, but everyone has got their own processes for capacity booking and confirmation and other issues relating to scheduling, nomination, actual allocation. All of that we need it is to streamline. For that we needed, we feel that there should be a system operator, and we have been working with the government that we should have a TSO also in place. These are a few areas where we are working closely with the government and the regulator for creating a better gas market enabling framework. Now, the way forward, as we see it, we are very bullish.
Though currently the prices of gas have gone up and then we see there is resistance because spot market need something lower prices. When we want to increase the spot market, there is some constraint coming because of higher gas prices. We see that everyone is bullish that though for the present this year the prices have been high over next one year and beyond there will be much better conditions for gas sector. Because one is that already CGD bidding rounds have happened and now more than 95% population is covered in the CGD. These networks would be put in place in two to three years' time, and then there will be lot of demand coming from CGD.
LNG terminal capacity already is about 30 million tons per annum capacity is being created. That is under construction. They, that will also come into play in next 2 to 3 years. We can import much more LNG than we can do today. Transmission pipeline network is also expected to grow from 20,000 km to about 35,000 km. That will create countrywide network and then anyone is sitting any part of the country, even eastern region. Northeastern region today is not so connected. That will also get connected and demand growth will happen there also. Declaration of open access, this can happen in this financial year. We are, PNGRB has issued a draft regulation already, and they are going to do that.
All of this, actually, we see that today the total spot market or what we call a short-term market in gas, which is about 13% of total consumption in the country, we expect that to grow to almost 20%. Because government is putting lot of emphasis on creating a gas-based economy, and we know that a lot of things are happening, supply conditions are improving, demand is also going to improve. We see that overall demand, which is about 160 MMCMD, can grow up to 500 MMCMD.
If we have 20% of that under spot market or short-term market, and out of that we can take a pie of something like 20%, so we can actually do almost trade volume of something like 20 MMCMD, which is about 30 crore MMBtu, and that is the potential we see in the market. Everything is aligned. As far as demand is concerned, a lot of things are happening. As far as the supply is concerned, we know that a lot of initiatives are being taken. During COVID, of course, there was less investment coming in the gas sector all over the world. That actually created a pressure on supply side.
Now a lot of investment is coming to the gas sector, terminal capacities, pipeline, gas production, even domestic production. There is a lot of focus there.
We expect that all of this will help us to grow and we will be able to achieve the vision which we see in achieving 20% of spot market and out of that 20% for IEX. This is what I wanted to share. I think I will leave. If any questions are there, we'll be able to take it later. I will pass it on to Aparna. Thanks.
From IEX. We are now opening for Q&A. Allow us a couple of minutes to set the stage and we will start the Q&A call. We will start with the Q&A session now. I invite the management team of Indian Energy Exchange to kindly be seated on the stage.
Yeah, I think we can start now. Yeah.
Thanks. I wanted to understand what kind of a problem does the long duration contract really solve for our customers? You know, with RTM, there was a real need to get rid of DSM charges being levied on them. But from a customer's point of view, why should he tie up power for 90 days in advance when there's clearly, like you're mentioning, no visibility on coal supply and essentially price of the power? What's the real value add for a customer there?
Yeah. There are few customers who have demand, seasonal demand, like a state like Punjab. They need power from the month of June to September for meeting the requirement of agricultural load during the paddy season. Similarly in case of Madhya Pradesh also and Himachal Pradesh in the winter season they need power. Seasonal demand normally is for a duration of two-three months, and they would like to tie up that power because instead of buying power on an everyday basis, they would like to tie up on monthly basis. The I mean, that is why we have bilateral market where almost about 50 billion-60 billion units of transactions are happening, and that is the opportunity for this long duration contracts also.
There is a need in the market, and we expect that a good part of that need will be served by the exchanges in future.
This is mostly replacing bilateral trades with a-
Yes.
an exchange.
You're right.
The second question was on the Green Day-Ahead Market. Why do we wanna separate day-ahead market and Green Day-Ahead Market? Wouldn't it make more sense to keep liquidity higher in a single platform which enables higher price discovery and more efficient sort of power purchasing needs?
Yeah, I agree with you. You know, when we have Green Day-Ahead Market, by purchasing power in the Green Day-Ahead Market, they can meet the RPO obligation. Whereas in the Day-Ahead Market is the conventional power, so there is no RPO obligation out of that. Many states are buying green power into the Green Day-Ahead Market. That is why there is a separate market.
That's all.
Hello. Yeah. Hi, sir. There is this new exchanges like PXIL and Hindustan Power Exchange coming in as competitors to you, and some of them are backed by NTPC, PTC, and all. In light of these new competitors, even your PPT was showing that your market share is dropping. Isn't just a matter of time that you have to take market share drop? What's your thought?
I think it was very well explained by Mr. Rohit Bajaj in the presentation that the drop in market share is not because of the competition. The drop in market share was mainly because the volume shifted from the Day-Ahead Market to the DAC market. DAC market is the market where the price matching happens, and in the Day-Ahead Market is the price discovery happens. Our USP is in the Day-Ahead Market and the RTM market. Why this shifting happened? Because in the month of March, when power was not available, many distribution companies to secure power, to ensure availability of power at any price, they went to the DAC market. They also saw that there was arbitrage available because of the anomaly in the transmission charge sharing regulation. Some transactions started happening in the DAC market.
In the DAC market, whether there are two exchanges or three exchanges, because there is no additional USP by any particular exchange. These are one-to-one transactions, kind of bilateral transactions. Transactions are happening in other exchanges also. With the implementation of the GNA, this anomaly will be corrected. In fact, collective transactions will have more preference in the transmission pricing. I am very sure that that shifting which has happened from DAM to DAC market will be back to the DAM market. In DAM market, our share is 99% plus, and in the RTM market it is 100%. I don't see any issue in retaining that share in the DAM and RTM market. I don't see any challenge because of the competition.
Sir, in future, with NTPC kind of organization backing these exchanges.
In case of... We are already working in a competitive environment from the last 14 years, and the other exchange also had investors who are from the power sector. Most of those investors are trading on IEX platform. Most of their investors are trading on the IEX platform. I'm sure in case of the third exchange also, the similar situations will happen. Because for a buyer or a seller, it is more important for him to ensure that his volumes are cleared. That is important for him, not that what is going to happen to the investment which he has made. For him, if he's not able to sell power, the opportunity is lost for him. I don't think investment in exchange will be a consideration. In any case, you mentioned about NTPC.
NTPC has capacity which is 100% tied up through the PPA, so they have no power at their disposal. I don't think that should create any problem.
Sir, during the COVID time was one of the best times. We had the best tailwinds. Now that the best of the times have been behind. From here, the headwinds have already started to hit us. How do you see in the next two years? Because it was a low-hanging fruit during that COVID time. What's your thought on going forward in terms of growth? Thanks.
See, during COVID time, the demand was less, coal availability was better, the prices discovered were lower, and because that offered a lot of opportunity to the distribution companies for optimization and industrial consumers to buy power from the market. From March onwards this year, because of the coal shortage, the prices have increased. It is not only domestic coal shortage, it is also the international market. In the international market also, the imported coal prices have increased significantly higher. Many of the imported coal-based power plants are not working in the country. LNG prices have increased. Because of that, the prices have increased in the market, in the DAM and RTM market. It is not providing any optimization opportunity. I'm sure the kind of initiatives which have been taken by Government of India to increase the coal production.
Coal production, I mean, in the first five months have increased by almost about more than 20%. That's a record.
Production. I'm sure this trend is going to be continued. Invariably in the month of July, August, the coal production goes down. This year there was increase with respect to last year. From mid of October, the demand also will slightly go down and after rainy season the coal production starts improving. That is the trend for all years. I'm sure you will see dip in the price also, and that will offer optimization opportunity to distribution companies. The volume should also start improving thereafter.
Okay, sir. Thanks.
Can I request one thing? Before asking a question, please, tell your name and organization also.
Hi, I am Mohit Kumar from DAM Capital. My first question is on the fact that we have direct market and UI market, which is still substantial, you know. Do you think this direct market will go down with the exchanges? And also the UI-
Can you repeat?
Hello.
Which market?
The direct market. The direct purchase between DISCOMs, which is a very high number, you know. Which is 20 BU. UI market is 25 BU. Do you think the regulators will ensure that these direct markets are happen through exchanges or through some, you know, transparent price discovery? Secondly on the UI market, which is despite our RTM, you know, RTM market, which is doing quite well, but still this 25 BU is still very high number, which is.
Mohit, direct market is a part of bilateral. In fact, within bilateral we have two different component. One is direct. Now, direct market is one place where both side distribution companies are participating. Distribution companies selling, they are buying and they are exchanging also. This could be banking also, and this could be real bilateral transaction also, where commercial consideration is involved. We have seen lot of correction in the past. In fact, if you remember two, three years back, bilateral was the major component within the short-term market. Exchanges were doing only 34% of the short-term. Bilateral put together were doing they used to do more than 50% of the transaction. We have seen lot of correction there. It has gone down. It has gone down because of the requirement of the distribution companies are changing.
Sometime back, all these, many of these distribution companies, they had perpetual deficit. Throughout the year they used to have deficit and then they were dependent on different distribution company or bilateral contract for longer duration to do that procurement. As some capacity has come, they have some seasonal deficit or around the clock or daytime deficit, TOD type of deficit, which is there. They are more and more preferring exchange platform because this is one platform which provides flexibility. When do you want to buy for those few hours, you want to buy a few blocks, you can do that. This is one reason why we have seen correction. As explained by Mr. S.N. Goel, seasonal demand is going to be there for sure in times to come.
Agriculture demand, which is there in case of Punjab or similar some other state, will be there in times to come. This market will not go away for sure. It will stay. It will not increase at the rate at which exchanges are increasing, but this is going to stay for some more time. Precisely for this reason our play is there and the LDC that we have launched is going to address this particular potential also. Direct transaction will also happen, start to happen at our platform. In fact, some of these transactions have happened where DISCOM is buying and DISCOM is seller and they are doing transaction on monthly, weekly and all those basis.
Just one clarification. Isn't the barter going to be looked down upon by the regulator going forward?
Yes. Barter, generally what you are saying is right. Barter is required when there is no proper mechanism or market in place. Today we have a robust market in place. Barter has no place because when you are doing bilateral barter transaction and then you are comparing it with the reference price, you will always find somebody is gaining, somebody is losing, right? Generally you will find winter prices are always on the lower side and summer are always on the higher side. Himachal Pradesh who is buying during the wintertime, they are loser in a way because they, when they are supplying prices are more. This is precisely the reason why it has gone down and the point I was explaining it has gone down drastically in past many years.
Still some of these transactions are still continuing and one of the reason it is continuing is the financial position. Many of these distribution company, they are dependent on barter because they find it little difficult to buy because that involves immediate cash. Here in this case you are taking energy and returning it back. The point that you mentioned is very right. Ideally it should not be there, but because of so much inefficiencies in the system because of the problem that we have with distribution company, it is continuing.
Secondly, on this, the UI market, do you think is, you know, that's a very sizable share.
Yes. UI market we are seeing major change. In fact, I shared with you last five years we have seen growth of only 1.8% CAGR. Couple of these years we have seen negative numbers also. One more major change is going to happen. In fact, the new DSM, as per the new D-DSM regulation, now we are delinking overdrawl price with the frequency. Earlier there was a linkage. When the frequency is down and you are a generator, if you are over injecting, you were incentivized at one, as per the present framework. Now going forward, whether the frequency is up or down, you are, you ideally should be following your schedule. You don't have to support the grid. You do your work and be happy with that. Going forward, they are in, going to increase penalties. The regulation is already out.
Only thing is the date is to be notified when this will get implemented. As per the new regulation, the block-wise price will be applicable for the calculation of DSM price, DSM penalty. Today, it is on the basis of average day-ahead price, average for the day. Going forward, it would be, let's say, in the evening at 7:00 P.M. if you are overdrawing, the price of exchange which is between 7:00 P.M. to 7:15 P.M. will be applicable, which is probably INR 10 or INR 12. On top of that, there would be a penalty 140% and 1.4 times or 1.2 times. It is going to be even more stringent, and we expect that there would be lot more reduction going forward will happen on the DSM side.
Sir, on the open access, you know, the numbers have dwindled down since we listed. It used to be 60% of the entire volume, right? That has been a disappointment for us. Do you think this market will come back in future? Do you think? Are you seeing the signs of encouragement? What makes you know, slightly more bullish? Is the green open access going to open some opportunity for us, given that it's going to be the threshold is going to be brought down and what do you think, despite the NOAR being implemented, we don't see the volume going up.
On the open access side, this is not the first time we are seeing this sort of a drop. In the past also, wherever there has been sudden increase in the price. This time it is a little longer, right? We have seen there are many months where we have seen so much price increase. There have been many instances in the past where for a month price was very high and similar correction we have seen in the open access volume. See, open access participants, they have a natural hedge available with them. Whenever there is increase in price, they will always go back to the distribution company and start to draw power. Whenever there is this opportunity in the market, they will come in the market, participate, and then make some saving in that.
That way, it is purely dependent on the market prices. There is one more thing which plays very important role is the state regulation. In last couple of years, or in fact little over one year, we have not seen any negative regulation. In between, we have seen couple of negative regulations for the market where there was increase in additional surcharge. The break-even of one particular state has gone down. In last two, one and a half year, the drop that has happened, it is purely on account of prices. As the price will reverse, we expect their participation will increase. All of them are registered with us. All these parties are registered with us. They are placing their bid also.
If you are seeing our daily demand supply pattern, you will find there is so much buy and clearance is so less. Some part of that buy is coming from open access consumer. Every day, they are placing bid for 50, 60 million unit. Only 5, 10 million unit is getting cleared, only when those are where the prices are very low. As the price will go down, all this will start to increase.
Are we seeing these states following this ±20% of the average price as cross-subsidy surcharge across the country?
Sorry, come again.
The band where, you know, the cross-subsidy surcharge has to, you know, fluctuate ±20% of the average price.
Yes.
Is that being followed across the country?
Yes.
Do you think there is some exception?
Look, now except for one or two states, one state is Calcutta, there could be one more state. Apart from that, across the country, it is now within the band of 20%. There were many states where it was much more. They have reduced it to that level.
Thank you, sir. Thank you.
Yeah.
Hi, good evening. Sumit Kishore from Axis Capital. S.N. Goel sir, you mentioned in your opening remarks that developed markets like U.K. are planning to add 30 gigawatt in large capacities in the market-based model. In the Indian context where DISCOMs are in weak health running 22% AT&C losses and renewable utilities have a 6- to 7-month-plus receivable from DISCOMs. How would projects, renewable projects, 25-year PPA, where they are normally tied up, how would they achieve financial closure under a market-based model? How will the market basically accept renewable projects in the market-based model?
My first question is, do we make highways based on the PPAs? Do we make airports based on the PPAs? Do we make steel plants and cement plants based on the PPAs? No. Why are we talking about PPAs in the power sector? See, it mainly started because the coal allocation was a big issue. For the coal-based power plants, if you have a PPA, then you will get coal. In case of renewables, there are no fuel issues. The lender will have to take a call based on the fixed cost, which is going to be incurred. Is it going to be market? I mean, can it be served through the market or not?
Now, if the price for the renewable has come down to INR 2.50, INR 2.60, which is the price discovered through the bidding route, in fact lower than this, and the exchange clearing price, the marginal cost of the coal-based power plants is more than that. They should have the comfort that, yes, they will be able to get a better price through the market than the PPA route. No issues about signing of the PPAs or curtailment of the schedules or payment defaults, which is six months, 7 months, 8 months, what you said. On the exchange platform, you get paid on a daily basis. In fact-
Financing agencies should get additional comfort by this. Only thing is, because of the coal-based power plants, many of the lenders have burned their fingers. They are very cautious. I'm sure couple of IPPs who are setting up capacities based on the market model, when they see their earnings and when they see their kind of revenue realization they are doing, many more IPPs will follow, and banks also will get comfort out of that. We are also interacting with a couple of lenders. We are interacting with SECI also, and SECI is in touch with a couple of lenders to provide that kind of a comfort to the IPPs, so that financial closure happens.
In any case, what we are talking now is instead of 100% market-based capacity, maybe IPPs can start working with the 20-25% capacity through the market-based models and 70-75% through the PPA so that lenders have a comfort because lending is done for almost about 70% of the total capital cost. I mean, all these kind of options are being discussed. Let's see. I'm sure if country is intending to add 500 GW of their renewable capacity, that cannot be done through the PPA route. Government also will have to find out new ways and means of capacity addition.
Sure. My second question, Rohit, you showed a slide where you compared one day of August last year and this year. So the incidence of, you know, a high tariff during the morning hour and late evening, isn't it likely to be a more recurring phenomenon because coal-based capacities are not getting added? Bulk of the renewable capacity addition is through the solar route. You will have the time when the sun is not shining and you have these peaks where the tariffs will surge, and which could possibly see the incidence of shift away from day-ahead market to, you know, say, term ahead market, which has happened temporarily during this phase, because the tariffs are again hitting INR 12 in the late evening hours.
Do you think that simply the composition of power capacity addition that the country is going ahead with there will be any?
In the evening hours, the prices are INR 12 even now.
Yeah.
Mainly because many of the generators are not able to participate in the evening hours because of the coal shortage. If you look at the PLF of many of these IPPs, like, Jindal, who has got almost about 3,500 MW of capacity, DB Power, RKM, JITPL, many of the I mean, you can look at any of the IPPs. The operating PLF for this year also, when the clearing price is +7 INR, it is still only about 50% because they don't have coal. If they have coal, they will definitely like to sell power in the evening peak hours when the rate is INR 12. I'm sure when the coal availability improves, this rate will come down and, we should have.
See, the one problem is, you know, if a distribution company is not able to get power in the evening peak hours. Evening peak hours are the most crucial hours. To meet that demand, many times they have to run their own units, which are costly units, to meet the evening demand. To keep them running, they have to keep these units running even during the daytime also at the technical minimum. Their purchase during the daytime also when the rate is lower, that also goes down. Evening peak hours has a cascading effect. I'm very sure that after fifteenth of October, you will see evening rates coming down and liquidity improving in the evening hours.
Going forward, see, Government of India has already started looking at coal-based capacities because they are also seized of this matter that only renewable will not be able to meet the demand. We may have to supplement this with the other conventional powers also. They are looking at it.
Sure. Just one clarification on the timeframe over which the GNA will get implemented, because that seems to be an important factor to resolve the anomaly around transmission charges.
Yeah. GNA was notified in the month of June. Only thing is they have to notify the grid code and transmission charge sharing regulation. I believe the way things are happening, this should get notified in maybe two-three months' time. Thereafter, this should be implemented maybe in this calendar year only.
Okay.
Yeah.
Just one final question on, you know, the overall potential that you see with Nepal, Bhutan, Bangladesh all coming into the frame cross-border. You just started scraping the surface there, but in billion unit terms, you would say that when all these three countries are maybe three years down the line, what could be the potential on cross-border?
See, the potential with these countries is dependent on the transmission capacity which is there with these countries. Good part of the transmission capacity is tied up through the long-term contracts. I feel that this year we should be able to do almost about 2 billion units of transactions through the cross-border. Because Bangladesh as of now has not joined, maybe if they join in the next one or two months, we should be able to do 2 billion units in this year. See, when these countries, they start seeing merit in exchange transactions, I am sure they will go ahead with augmenting the transmission capacity with India and the volume in this market should increase. Very difficult to say about that. It all depends on the initiatives taken by the neighboring countries.
If you look at the European market, the market there also, the integration of market with the different countries started and then slowly the volume started increasing, and today you look at the market size. Here also, I'm very sure that it may take another three, four years' time to have significant volume from this cross-border trade. Then the bidding has been made now.
Thank you so much. One final question to Vineet. You know, in your presentation you mentioned that EBITDA margins have improved like 300 basis points in FY 2022 and almost 100 basis points in the first quarter. Now, if I project three, four years forward, because volumes are going to grow inevitably as the exchange volumes grow and IEX maintains its market share. Because your CapEx requirements are not as high, so theoretically, can your margins go to what, 94%, 95%? What is holding back the, you know, the operating leverage? What is the operating leverage?
Exchanges have the operating leverage because when we started it was around 70%, then it moved to 87%. If you maintain the same fee and same structure and if volume increase, definitely EBITDA margin will increase. Looking at the overall market structure and all, and we also have to see how the structures are going to form. I think 87% leverage what we are working now is quite a decent one. Definitely we have to work upon to create some more, do some more for the sector, I think, and try to see whatever the best value proposition we can create so that people can be, see the EBITDA at a more acceptable level. It should not be something, look, it's going beyond 99%. Sometimes it become more impractical.
It will look very good to see 90% EBITDA, but we have to be practical also. Very hard to say how it will be done, but we are looking at it and we are concerned and mindful of those numbers also, and we keep on evaluating the situation as and when the volume moves.
Thank you so much.
Thank you.
Hello, sir. Devesh here from IIFL. One question, sir. There was in between regulation, draft regulation, which talked about you having a different tariff structure for your different products. Also building upon the same question, some of the competitors, they have been giving some discount on the exchange tariff. Do you think there can be a case where we can have a separate tariff for separate products and probably to compete in the TAM, we can give some discounts on the tariff? Is that can be the strategy for us?
As of now, we are not considering that. Maybe in the long duration contracts where we are doing significant volume in one contract, we may think about that, but as far as the DAM, RTM, and short duration contracts are concerned, we intend to continue to charge what we are charging. Of course, this is subject to the regulatory approval.
Any clarity on that tariff clarification that the regulator had asked for?
No, we have filed. See, regulator in any case, as per the regulations, they have mentioned that exchanges can charge up to 2 paise. We have to now take approval of the regulator product-wise, for which we have filed the petition. We are yet to have the order from the regulator, final order on this.
Okay. Thank you, sir.
Our petition is well within the power market regulations.
Anirudh from B&K Securities . What could our addressable market be for long duration contracts and how is the experience been in the past two months?
Long duration contracts, as we have mentioned, the market size is about 50-60 billion units based on the transactions which happened last year, and that's the addressable market size. In the last two months, the transactions in this market have not significant because of the high clearing price. Since generators are not sure about the coal availability, they are not willing to take any call for the future day supply of power. The price which were discovered in the reverse auctions for the monthly contracts was on the higher side, and that is why distribution companies have not placed order for purchase of power under those contracts. Couple of contracts have happened. I mean, one contract between Andhra Pradesh and Karnataka, Shree Cement. There are a couple of small volume contracts also happened.
I'm sure from October when the prices starts coming down, transactions in the long duration contracts also will happen.
You've been talking about cross-border bidding for over a year now. You haven't done that.
Yeah, let me make it clear that cross-bidding is a new concept. See, in fact, when Government of India started talking about CERC and Government of India were talking about the MBED, and we found that there was resistance from many of the states. That is the time when we started looking at other exchanges world over, what kind of concepts they are adopting. We found that couple of exchanges world over are adopting this cross-bidding concept. Cross-bidding concept is basically a voluntary MBED kind of a concept, where distribution company can take a call that how much of capacity at their disposal they want to self-schedule and how much of capacity they want to schedule through the market on the sell side and then buy on the buy side also.
These concepts are there, and we found that maybe this can act as a voluntary MBED because the MBED, there was a lot of resistance from the states. This is a voluntary concept, so states should agree to this. We started interacting with the states also. States found that, yes, there is merit in this concept, but then, you know, adoption of this needs time. Particularly, we are also waiting for the regulatory approval. We filed application with the regulator for approval of this contract. That has not happened yet. They have heard our petition, order is reserved. As and when the regulatory approval is there, then we will work with the states. It is difficult to commit anything on what kind of, I mean, when the transactions will happen under this.
We have, in fact, appointed one consultant also to interact with one of the state who is very active and do a case study for them that if you do transactions through the gross bidding mechanism, how much of cost saving you can do. Make a detailed analysis for them, present it to them, and then help them in bidding also. If that is successful, then maybe we can replicate that with other states. I think this is a slow process, and gradually it will happen.
[Audio distortion]
Yeah, what you said is one of the important enabler for the market overall is GST. That will help to boost the short-term market itself. It's not a dampener. Like, it's like a showstopper. We still can achieve critical mass without having GST in place because even the tariff part is to be done, access regulation is to be done. Since there is a substantial part of gas market, like 21 MMCMD is in spot, we have a lot of room to play. We are today only 1 MMCMD, and we can definitely grow within these constraints also, we can grow. That's what we believe.
The way we have ramped up our volume in last one year, that gives us confidence that we can grow even within these constraints. Of course, once these enablers will be in place, that will definitely help us ramp up better.
On the balance stake sale of about 24%, which needs to happen over the next two-three years, is there any near-term price discovery that can happen on IEX?
You're talking about stake sale?
Yeah. We are very sure about the investment stake.
Yeah, investment.
I think this is IEX investment, so I'll prefer to answer your question.
Sure.
See, IEX started this IGX with the intent of creating an institution in the sector. We have sold 52% of the equity to the market participants who are the key stakeholders in the sector because we wanted their support to create this institution. As per the regulatory provisions, we will have to bring it down to 25% within five years of the license, which was issued in December 2020. By December 2025, we will have to bring it down to 25%. I'm sure that we will be able to do that by that time. If the market conditions are not conducive, maybe we may have to apply to a regulator for giving us extension. We will see at that time.
Sure.
My second question is on the RE capacities. Now, whatever volumes that we are witnessing in the green market so far, we are broadly dependent upon the REs of either RE plants that do it. Now till the time we don't have the RE capacities, I believe obviously can have the J curve really only being right-hand side. What according to you is the potential really for us from the green side? You did mention about the block model that you know you are installing. In the next 2-3 years, where do you see this green market volume playing?
See, the green market volume will depend based on the market-based capacity addition in the renewable sector. I think we will have to wait that to happen. It is something like, you know, when we started in 2008 power exchange for the conventional power, our volumes initially were very, very low. We were every day looking for couple of megawatt hours. Today we are doing 300 million units every day. I think same thing in the green market. We started these products. We are creating market enablers. We are doing policy advocacy, and government is also keen to develop this market. These enablers are in place now. Market will have to respond to these things. I'm sure in the next, two, three years, there will be increased liquidity in this market.
Green market, I believe in the next five-six years should be as big as the commercial market. Because, I am sure in the next five-six years even the storage will be commercially viable. Green with the storage, that will be excellent combination for the market.
Open access can also add to that.
Yes, yes. I mean, most of the corporates are under the ESG policy. They want to go green. They want to buy green power. Definitely the open access, the government also wants to promote open access. The Green Open Access regulations are more favorable, so that will promote open access also.
Sir, thank you so much and apologies.
Thank you.
[Audio distortion]. One clarification. The Open Access was required to be.
Discharged, right?
The PSUs or central government generating station was supposed to start trading on the exchanges if they don't get their schedule by 10 A.M. What is the status of that? Is there some guidelines or regulation, some notification is pending from the POSOCO?
No, no. As far as government is concerned, government has already issued these rules, and these rules are implemented. If the payment is not made by any distribution company, the distribution company is stopped from participating on the exchange platform. Also their bilateral transactions are also not scheduled.
My question was, are the generating stations, are they scheduling power on the exchanges if they are not getting scheduled by 10:00 A.M.?
This is also very clear in that if you are not being paid, then you don't have to obtain consent from distribution company. You can directly go and participate at exchange platform. We have seen certain instances where some of the renewable generator, they started to participate. In most other cases where there are big DISCOM, where there are big defaults in case of big IPPs, normally what happens, in the morning they bar them, and in one or two hours, thing is settled and both the parties, they continue to supply and the restriction which is imposed on distribution company, those restrictions are also removed and their participation in the exchange also starts. Till now, what you are saying we have not seen.
We have seen this in case of few renewable generating stations who are not being paid, so they decided to participate at exchange platform.
One thing is definite that payment position to the IPPs has definitely improved because of this system. That is one thing. A good part of this, the Late Payment Surcharge Scheme is that earlier distribution companies were buying power under the bilateral transactions because they knew as far as payment is concerned, there is no compulsion for that. They can defer the payment for two, three, four, five, six months. Now since they will have to make payment in time, they may not prefer to buy power under the bilateral, may opt for the exchange option because on the exchange platform you can buy what you want and in whatever quantum you want and whenever you want.
You don't have to contract a fixed quantum for three, four months, whereas your demand may not be there in future. I think this is a positive step for us. I am sure this will support exchange transactions in future.
Do you think that the opening up of the new market, high-price DAM market beyond INR 12, will add a significant amount to the volume?
I don't think so because appetite for distribution companies to buy high cost power may be very, very less. Maybe only in the evening peak hours maybe there may be some requirement. We will have to see that. Government is thinking about this market. We have no issue in implementing this product. Once we implement it, then we will see about the appetite of the distribution companies.
Thank you, sir. Thank you.
This is going to be extension of the present integrated market that we have. There would be three different price formations. This is what they have proposed. We welcome this idea. Today we have a price cap of INR 12. There could be possibly some power, some fuel type where the generation cost is more. And if that has to dispatch, we should have a marketplace. That at least should be available. Whether it will happen or not happen, time will tell, but it is definitely a positive thing.
Sir, this is Anshuman from [RKSK]. Sir, as you have also mentioned, there's a change in stance of the government towards energy security now, and this is there through both central and some of the state governments trying to advocate for this to their agencies and trying to tie up more coal-based power, like more coal-based power. Do you think that this will have some impact on the growth of the short-term market going forward?
Can you repeat the question, please?
Sir, the change in stance towards energy security now. Both central government through NTPC and other CGS and some state governments, including Madhya Pradesh, Odisha and all, they are now tying up PPAs, long-term PPAs. They're asking the generating agencies to set up 4 GW power and tying up long-term PPAs. Do you think that this will have some impact on the growth of short-term market, the overall short-term market in the country?
No, I think what is required is addition of capacity. As long as there is a capacity addition happening in the country, it will help the development of market. Because what we are seeing, even in case of long-term PPAs, distribution companies do not have uniform demand throughout the day and throughout the year. Distribution companies are also big sellers on the exchange platform. I mean, in fact, more than 50% of the sale is coming from distribution companies. If there is additional generation capacity coming in the market, even through the PPA, maybe a good part of that will come to the market also.
My question was related to the derivatives contract. What is your current status with that? When are we planning to launch that product? What is the addressable market of that product? How do we intend to place it now that we have these long-duration contracts as well, expected up to 20 months.
Yeah.
How do we intend to
Yeah, let me tell you one thing, that derivative, there are many derivatives for different commodities in the commodity market. Electricity is one area where we have spot market also. In other commodities, there is no spot market. Regulator is very, very cautious in going ahead with the derivatives of electricity because it may have adverse impact on the spot market. They want to see that it does not have any adverse impact on the spot market. They are studying the contract proposals which have been submitted by the commodity exchanges. What we understand that shortly, some of their products are going to be approved and these derivatives will be launched. These derivatives will be launched by the commodity exchanges because this will be regulated by SEBI, and we are regulated by CERC. These derivatives will provide the liquidity in the market.
This should also provide some reduced volatility in the price and also hedging options to the buyers. Only when these products are introduced, we will see, I mean, how this opportunity is developing in the market and what kind of benefit we as a spot exchange are able to take out of it.
Are you discovering patterns now?
Pardon?
Are you discovering patterns now in the derivative market?
No, no. In the derivative market, like any other commodity, you have today, I mean, on the MCX platform, crude derivatives and gas derivatives. Similarly, you will have electricity derivatives.
This will depend upon your spot price.
Yeah. This is, as I told you, this will be launched by the commodity exchanges, not by us.
What is the revenue model for us in that case?
Pardon?
What is the revenue model for us in that case?
Yeah. We see MCX will be using our price for the purpose of settlement. Since they will be using our price, we have agreement with them and there is some revenue sharing with us. The larger gain that we are expecting is from the hedgers. Today, there are people who are not taking position in the market. They are not fully dependent on the spot market because they want some sort of certainty, future certainty. This particular market will provide them that certainty. They can hedge their position and then be dependent totally on the spot market going forward on both buy as well as sell side. We expect this will increase liquidity in the spot market going forward.
Can we?
Sir.
Take subsequent question as well?
Excuse me. Yeah, Pritesh here. We are seeing, you know, derivatives.
We'll do one thing.
Derivatives are.
Can we have this as the last question? Thereafter, we are all available here. I'm sure you all must be getting, because drinks and dinner are ready. We are available here up to maybe 10 o'clock. We will take all questions. We can have informal discussions and continue with the questions if you want that.
Sir, derivatives generally are multi-fold of the spot market. I mean, we are seeing in other commodity or, equity or currency and all that. When we plan to start these derivatives by MCX, what is the timeline? What is the exact revenue share model with MCX?
See, these derivatives will be started by commodity exchanges. After the Joint Working Group clears the product, we understand that the approval is expected very shortly, maybe in a month or two months' time. You may start seeing electricity derivatives on the MCX or NSE platforms also. As far as revenue sharing is concerned, let the derivative market starts operating, then we will, you'll come to know about that, what kind of sharing it is.
Sir, what are our charges for the gas exchange? How much per MMBtu we charge?
We charge INR 4 from the buyer and INR 4 from the seller per MMBtu of gas.
Is there any cap or a floor price?
No, no. This is a fixed price.
Regulator is not.
Regulator has no cap on transaction fee. This is irrespective-
Invariably-
This will remain irrespective of the gas price.
Regulators do not interfere with the transaction fees.
No, this INR 4 will remain irrespective of the gas price, right?
Yes. See, our in case of electricity also, our transaction fees is based on the volume, not on the price of electricity. When the clearing price was INR 3, we were charging INR 0.02. When the price is INR 12, then also we charge INR 0.02 only. It is based on the volume. Similarly, in case of gas exchange also, it is based on the volume.
Okay, sir. Thank you.
Thank you, everyone. Like sir just mentioned, management is available. We have cocktails and snacks right now, so please feel free to help yourselves with the cocktail and snacks and take the questions with the management. Please note that the presentation and the audio recording will be available as well. It will be available on the website before 9 A.M. tomorrow. Thank you. Thank you everyone for joining us.
Thank you.