Indian Energy Exchange Ltd Q2 FY23 Earnings Conference Call Insights

Key highlights from Indian Energy Exchange Ltd (IEX) Q2 FY23 Earnings Concall

Management Update:

• [00:03:40] IEX said it will achieve 50% of clean energy share by 2030.

• [00:06:47] IEX said it expects further correction in prices on the exchange that will result in increased volume on the Exchange Platform.

Q&A Highlights:

• [00:19:09] Mohit Kumar of DAM Capital asked about the derivative markets and when IEX is planning to launch it. Satyanarayan Goel MD replied that IEX has already launched the long duration contracts for delivery of power up to 3 months and is seeing lot of interest from the buy side.  Derivatives will be regulated by SEBI and will be launched only on the SEBI regulated exchanges, like MCX, NSE or BSE.

• [00:22:48] Aniket Mittal with SBI Mutual enquired about the reason for shift in volume from the Day-Ahead Market to Day-Ahead Contingency Market. Satyanarayan Goel MD said that the reason is that in DAM, buyers and sellers both have to pay the transmission charges. But in DAC it’s only either buyer or seller paying.

• [00:25:43] Aniket Mittal from SBI Mutual asked about the potential for the RTM market and despite higher prices why is the growth coming here. Satyanarayan Goel MD said that some cannibalization is happening. However, RTM market is mainly improving because of the higher share of the renewable generation taking place.

• [00:27:25] Aniket Mittal of SBI Mutual enquired about the reason for avg. prices of RTM being lower than DAM market. Satyanarayan Goel MD replied that a seller in DAM market is placing a bit higher price and if it’s not cleared, then in RTM market there is no choice than to place at a marginal cost, so it’s lower.

• [00:30:18] Sumit Kishore from Axis Capital asked at what price level, does the industrial demand or volume on exchange is coming back. Satyanarayan Goel MD answered that in October vs. last year the volumes were lower due to participation of distribution company was slightly lower. However, when availability of coal improves and prices decline, distribution companies will meet their demand, optimize their cost and increase viability.

• [00:35:29] Sumit Kishore from Axis Capital enquired that for the DAM, INR3.85 is the current exchange price and if INR3.30 will be a reasonable level for demand to come back on exchanges.  Satyanarayan Goel MD replied that around INR3.25 to INR3.50, there are many high-cost power plants. So for distribution companies, in any case, it’s a lucrative price.

• [00:38:15]  Devansh Nigotia of SIMPL asked about the constraint on postponing the relaunch of derivatives. Satyanarayan Goel MD answered that the delay is due to the regulator being concerned about the effect of derivatives in the spot market. So they want to rule out any adverse impact of this on the spot market.

• [00:48:29] Milind Karmarkar with Dalal & Broacha asked about the new generating capacities coming in, in renewables, if it would directly come to the market or would prefer the PPA route. Satyanarayan Goel MD clarified that as of now most of the renewable capacity is under PPA. But the distribution companies who have PPA, have their participation on the exchange platform increasing now.

• [00:49:56] Milind Karmarkar from Dalal & Broacha enquired that with two exchanges being setup, if IEX is expecting some reduction in current share or lower growth. Satyanarayan Goel MD clarified that with the one exchange in operation of the two, the company has not seen any impact yet.