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In a major step toward shaking up India’s power market, the National Stock Exchange (NSE) is set to launch monthly electricity futures contracts this July. These contracts will let participants lock in electricity prices in advance, helping reduce the kind of price swings that often hit the spot market, especially during peak demand.
The contracts are cash‑settled, meaning no actual electricity changes hands. It’s purely a financial deal based on the average market price over 30 days.
Harish Ahuja, who leads NSE’s Power and Carbon Markets division, explained that India’s spot power prices often jump dramatically due to last‑minute bidding, driven more by urgency than logic. Futures can help smooth things out.
“When there's a futures market, traders and buyers have a way to hedge in advance,” Ahuja said. “That cuts down the last‑minute scramble and keeps spot prices more stable.”
India’s spot market has seen extreme price drops recently, largely due to oversupply from solar power during daylight hours. But Ahuja believes these short‑lived price dips won’t skew futures, since contracts use a full‑month average:
“That kind of noise won’t impact the futures market much.”
One of the most exciting parts of this launch is how it invites wider participants beyond generators, discoms, and licensed traders. Corporates, financial institutions, and even retail investors can now get involved, just like they do in stocks or commodities.
Ahuja calls it a move that brings demand‑side flexibility to a system usually driven by supply.
To encourage adoption, NSE’s Chief Business Development Officer, Sriram Krishnan, confirmed:
no transaction fees for the first six months.
“That’s something we do with every new product.”
Limits on trading positions:
- Individual clients: Up to 300,000 MWh or 5% of total market
- Member clients combined: Up to 3 million MWh or 20% of market
India is the third-largest electricity producer worldwide, generating 1,900 billion units in FY25. Ahuja estimates the potential size of India’s electricity futures market at around 8,000 billion units, aligning it with other global power markets.
This monthly contract is just the beginning. NSE plans to roll out quarterly and annual electricity futures within the next six months. It’s also exploring Contracts for Difference (CfD) to help renewable energy projects lock in stable revenue without relying solely on spot prices.
SEBI, the markets regulator, has already approved the monthly futures launch.
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