The Central Electricity Regulatory Commission (CERC) has come up with revised regulations to encourage neighbouring countries to buy more power from India’s spot markets.

The development comes after the power ministry issued fresh guidelines for cross-border trade of electricity in December 2018, where it had removed certain restrictive riders and paved the way for electricity trading in the more attractive ‘day-ahead’ market.

Foreign outfits, however, will be required to participate in power exchanges only through Indian power trading entities.

As much as 7.2 billion units were supplied to Nepal, Bangladesh and Myanmar in FY18 and 6.4 BU has been exported to these countries in the first ten months of FY19. According to preliminary estimates by sector experts, cross-border trade on power exchanges can open up an annual potential market of additional 5-6 billion units of electricity going ahead. Bangladesh is the largest buyer of Indian power.

Apart from the three neighbouring countries mentioned above, India is also exploring possibilities of setting an interconnection from Madurai to New Habarana in Sri Lanka.

In November 2014, India, along with the other countries of the South Asian Association for Regional Cooperation (Saarc), had signed an agreement to enable cross-border electricity trade among the member states on a voluntary basis “subject to the laws, rules and regulation of the respective member states”.

Later in August 2018, the country also signed a memorandum of understanding for establishing grid interconnection between the members of the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (Bimstec). The member states of the Bimstec are India, Bangladesh Myanmar, Sri Lanka, Bhutan, Nepal and Thailand.

Industry analysts see the latest power ministry guidelines as “far more industry friendly, allowing a wider set of generators, using commercial or renewable resource, to export more freely”. The guidelines have barred power plants with Coal India fuel linkage or captive mines from selling electricity outside India, a move that could help imported coal-based units in the private sector to have a larger pie of the markets in neighbouring countries.