Key Messages

Electricity, like any manufactured product, can be bought and sold in a market — in this case, a power market. The buying and selling transactions of electricity occurs in the units of either power (in megawatts, MW) or energy (in million-units, MU). Like all transactions, power transactions involve a buyer and a seller, which can be a distribution company (DISCOM), a generation company (GENCO), a power exchange, or a bulk consumer. At both ends of a power transaction, a balance has to be maintained in the national electricity grid — the power demand should be matched with timely power supply. Electricity is thus of tradable value when it is available at the right time, in the right amount, and to the right demand. Therefore, power trading helps maintain balance, security, and cost effectiveness of electricity in the grid.

Power Markets in India