Indian Energy Exchange Ltd. · NSE:IEX
Indian Energy Exchange — Q4 FY2023 Earnings Presentation
48 slides from Indian Energy Exchange's earnings presentation, May 25, 2023
Slide 1: Exchange filing cover letter
Dated: May 25, 2023 The Manager The Manager BSE Limited National Stock Exchange of India Ltd Corporate Relationship Department Listing Department Phiroze Jeejeebhoy Towers Exchange Plaza, 5th Floor, Plot No. C/1 Dalal Street G Block, Bandra Kurla Complex Mumbai- 400001 Bandra (E), Mumbai-400 051 Scr
Slide 2: Investor Presentation – Q4 and FY'23
Investor Presentation – Q4 and FY’23 Accelerating India’s Sustainable Energy Transition
Slide 3: In this presentation
In this presentation: Sector in Transition Electricity Value Chain IEX: Who We Are Indian Gas Exchange (IGX) International Carbon Exchange (ICX) Way Forward 2
Slide 4: Sector in Transition
Sector in Transition Shifting Energy Mix Deployment of Low-Carbon Decarbonisation Technologies - Wind and Solar % Renewable 50% 41% 33% Small-scale Generation Decentralisation Across T&D Network FY 2010 FY 2023 FY 2030 Installed Capacity Empowered Consumers - Economic Democratisation Power Shift ➢ 1
Slide 5: In this presentation
In this presentation: Sector in Transition Electricity Value Chain IEX: Who We Are Indian Gas Exchange (IGX) International Carbon Exchange (ICX) Way Forward 4
Slide 6: Electricity Value Chain
Electricity Value Chain Generation Transmission Distribution & Consumption Energy Transition World’s largest network Reforms Underway Installed Capacity As on FY 2030 ➢ Inter-reg. trans. Cap.: 112.3 GW ➢ Avg. AT & C Losses: 22% presently 31st CEA to 15% Dec’22 Proj. ➢ 4.63 Lakh CKM of trans. lines ➢
Slide 7: Generation (BU)
Installed capacity has grown at faster pace compared to demand 160 174 199 224 243 275 305 327 344 356 371 382 399 416 141 157 172 Capacity (GW) 102 114 123 133 80 89 CAGR – 7% 67 70 56 63 52 211 218 223 226 231 235 236 237 131 152 168 189 102 113 FY'10 FY'11 FY'12 FY'13 FY'14 FY'15 FY'16 FY'17 FY'1
Slide 8: Installed Capacity = 416 GW
Installed Capacity = 416 GW Capacity by Source Capacity by Ownership 47 GW 7 GW Hydro Nuclear Central State 100 GW 106GW 125 GW Renewable 237 GW Thermal Private 210 GW Data as on 31st March 2023 7
Slide 9: Sector Construct
Sector Construct Long-Term (87%) Long-term (89%) Short-Term (13%) Total Power Consumption FY’23: 1,504 BU Bilateral: Exchanges: Up to 25 years DSM Less than 1 year Real Time (1hour) – 90 days 87% 4% 7% 2% Day Ahead Market, Real Bilateral & Time, Intraday, Contingency, Banking Deviation Settlement/ L
Slide 10: Fast Growing Exchange Markets
Fast Growing Exchange Markets Exchanges (BU) Bilateral (BU) DSM (BU) CAGR: 20% CAGR: 2% CAGR: 1% 101 56 67 58 60 25 25 80 75 24 44 47 23 23 48 54 56 21 FY18 FY19 FY20 FY21 FY22 FY23* FY18 FY19 FY20 FY21 FY22 FY23* FY18 FY19 FY20 FY21 FY22 FY23* Source: CERC, MMR *FY23 data till Dec’22; CAGR Till FY’
Slide 11: Immense Potential to Deepen India's Power Market
Immense Potential to Deepen India’s Power Market 91% 49% 47% 39% 34% 23% 15% 7% Nordpool Germany UK Netherlands Switzerland Belgium France India* Note: Data for India till Dec’22 Source: CRISIL Study Markets are in the range of 30-80% in developed economies. At 7%, India has an opportunity to deepen
Slide 12: Exchanges Share in Short Term Market
Exchanges Share in Short Term Market Exchange Market and ST Market - % of Total Consumption – India Share of 30.2% 34.4% 37.2% 36.9% 41.2% 54.5% 54.3% 52.5% exchanges in short-term market 13.6% 12.6% 11.5% 11.5% 10.6% 10.5% 10.7% 10.7% 7.4% 6.3% 6.6% 4.0% 4.2% 4.4% 3.2% 3.6% FY16 FY17 FY18 FY19 FY20
Slide 13: Electricity Growth Drivers
Electricity Growth Drivers India is placed as the most promising economy on the global map: ➢ Industrialization 2,280 ✓ High GDP growth of about 7% expected to drive electricity 1,907 ✓ Core sector, traction, EV, cooking will drive electricity consumption 1,695 1,504 ➢ Rapid urbanization/ Rural Elec
Slide 14: In this presentation
In this presentation: Sector in Transition Electricity Value Chain IEX: Who We Are Indian Gas Exchange (IGX) International Carbon Exchange (ICX) Way Forward 13
Slide 15: India's Premier Technology-led Energy Marketplace
India’s Premier Technology-led Energy Marketplace ➢ Nation wide, automated and transparent trading Robust Ecosystem platform for physical delivery of electricity, renewables & certificates ➢ Commenced operations in 2008; CERC regulated 7,500+ 4,500+ 1,500+ Registered Commercial & RE Generators & ➢ P
Slide 16: Benefitting Power Sector….and the Nation
Benefitting Power Sector….and the Nation ➢ Provides benchmark prices for All Electricity Transactions ➢ Transparent Mechanism for Price Discovery ➢ High liquidity on Exchange has Ensured Lowest Cost and Assured Supply Truly Benefited Indian Power Sector Generation Transmission Distribution ➢ Lower P
Slide 17: Our Values
NIEX Our Values <Oy, 24X7 Power Transparency Flexibility in Power Procurement Competitive Price Payment Security Cost Saving 16
Slide 18: Market Segments
Market Segments Integrated Day Ahead Market Intraday Market & Contingency Market Segment DAM since Jun’08 Since Jul’15 Delivery for next day Intraday Market : hourly and or 15-minute contracts on same day on Price discovery: Closed , Double-sided Auction rolling basis 15 min. contracts, Dail
Slide 19: IEX Product Mix
IEX Product Mix FY22 FY23 Certificates Certificates TAM 6% 6% TAM 5% 11% RTM 20% DAM RTM 53% DAM 25% Green 64% 5% Green 5% Total Volume: 102 BU Total Volume: 96.8 BU Matching Closed, Double- sided Open Auction -Uniform Price Continuous Reverse Auction Auction Step Matching Existing Products DAM, GDA
Slide 20: IEX Market Share Product Wise
IEX Market Share Product Wise FY23 120 .0 120 .0% 99.8% 87.2% 100 .0 100 .0% 80. 0 72.3% 80. 0% 56.1% 60. 0 45.7% 60. 0% 40. 0 40. 0% 20. 0 20. 0% 79.1 6.6 4.9 6.1 96.8 0.0 0.0 % Collective DAC TAM (Exc. DAC) Certificates Total IEX Volume (BU) ➢ TAM & DAC Volume increased over 115% and 240% YoY resp
Slide 21: Supply Side Constraints Led to Higher Price Discovery
Supply Side Constraints Led to Higher Price Discovery Geo-Political factors impacted international coal and electricity prices HBA Index ($/T) 324 319 322 319 331 E-Auction Qty (MT) E -auction Prices Above Notified 308 305 107.9 288 276 281 277 283 Price (%) 2.42 215 204 188 4.25 150 162 160 159 52.
Slide 22: Coal Supply & Inventory; Policy Measures
Coal Supply & Inventory; Policy Measures ➢ Coal production increased by nearly 15% YoY and dispatch to power sector increased by 9% YoY in this fiscal. ➢ Government focused on increasing supply for plants under long term PPAs Coal Inventory at Power Plants 13 13 14 14 12 12 12 ➢ 100% FDI allowed for
Slide 23: Development of Electricity Market in India: Key Issues
Development of Electricity Market in India: Key Issues Key Issue - 4 Key Issue - 1 Firmness in Ancillary Reserves: 01 Dominance of Inflexible, Longer For a power system of India’s Long Term Duration Contracts with Discoms: Long size with increasing levels of RE, PPAs Term PPAs recognised as ineffici
Slide 24: Development of Electricity Market in India: Key Recommendations
Development of Electricity Market in India: Key Recommendations Short Term Medium Term Long Term Improve Efficacy of Day Ahead RE Participation in the Market Introduction of Standardised Market: Gradual transition to through CfD Mechanism: Mandate Exchange-Based Capacity market-based dispatch of ele
Slide 25: Price - Volume Outlook
Price - Volume Outlook ➢ Easing supply constraints ✓ Improvement in coal production and higher inventory will result in increase in sell by both Discoms & IPPs ✓ IPPs sell will provide Round the Clock supply resulting in better availability & lower prices in peak hours ✓ Lower prices will lead to in
Slide 26: Customer Centric Technology and Product Strategy
Customer Centric Technology and Product Strategy CUSTOMER CENTRIC EFFICIENT STATE OF THE ART ➢ Digital Experience ➢ Comprehensive Product Portfolio ➢ National Open Access Registry ✓ Secure Web Access ✓ High Price Day Ahead Market (HP-DAM) ✓ Integrated bids across segments ✓ Integration of NOAR ✓ Lon
Slide 27: Robust Financial Performance
Robust Financial Performance Consolidated Financials Rs Cr Breakup of standalone Q4FY22 FY22 Q4FY23 FY23 revenues (%) 484.4 474.1 417.0 409.5 308.6 305.9 Transaction Fees 83% 84% 79% 80% Admission and Annual 5% 5% 4% 4% Fees FY22 FY23 Total Revenue EBITDA PAT Other Income 12% 11% 17% 16% 128.4 117.4
Slide 28: In this presentation
In this presentation: Sector in Transition Electricity Value Chain IEX: Who We Are Indian Gas Exchange (IGX) International Carbon Exchange (ICX) Way Forward 27
Slide 29: Indian Gas Exchange (IGX)
Indian Gas Exchange (IGX) VISION To lead India’s transition towards a gas-based economy by architecting next generation solutions for natural gas trading and access 01 1st Natural Gas trading exchange 02 Automated platform with cutting edge technology Indigenous 03 Efficient & transparent market dri
Slide 30: IGX – Key Highlights
IGX – Key Highlights FY23 Business Updates Strategic Partners Total Volume 50.9 Million MMBtu YoY growth (%) 319% Total number of trades 2,355 No. of members 40 Active clients 190+ Domestic Gas Ceiling Price ➢ Commenced trading on 23rd May’22 ➢ Traded Volume: 29.1 Million MMBtu ➢ India’s First Gas I
Slide 31: GIXI - IGX Gas Index
GIXI - IGX Gas Index 31-03-2023 Month ₹/ MMBTU $/MMBTU % Change Apr-23 ₹ 825 $10.1 - Launched on 19th December 2022 Mar-23 ₹ 975 $11.9 - GIXI represents volume weighted average price for all gas GIXI Cumulative ₹ 1,600 20.0 traded on any day (excluding domestic ceiling price gas) 18.5 17.3 18.0 ₹ 1,
Slide 32: Opportunity
Opportunity Growth in Gas Demand will lead to opportunities for Gas Exchange & Other Stakeholders ➢ Government’s vision of increasing share of Natural Gas in total energy basket from ~6.3% to 15% by 2030 will increase gas consumption in the economy from nearly 160 MMSCMD to 500+ MMSCMD ➢ With comple
Slide 33: Key Gas Market Enablers
Key Gas Market Enablers Inclusion of Natural Gas under GST Incorporation of TSO Implementation of New Access Code Regulations Declaration of CGD Exclusivity (Open Access within CGD Areas) Policy Steps to Accelerate Role of Natural Gas in India’s Economy (Natural Gas usage over polluting fuels) 32
Slide 34: In this presentation
In this presentation: Sector in Transition Electricity Value Chain IEX: Who We Are Indian Gas Exchange (IGX) International Carbon Exchange (ICX) Way Forward 33
Slide 35: International Carbon Exchange (ICX)
International Carbon Exchange (ICX) ➢ IEX formed a wholly owned subsidiary – ICX, in December 2022 to promote voluntary carbon market; second diversification initiative after successful launch of IGX in 2020. ➢ Will help India achieve its target of reducing the emission intensity of its GDP by 45% b
Slide 36: In this presentation
In this presentation: Sector in Transition Electricity Value Chain IEX: Who We Are Indian Gas Exchange (IGX) International Carbon Exchange (ICX) Way Forward 35
Slide 37: Create Customer Delight for Each Interaction
Create Customer Delight for Each Interaction ➢ Ease of Bidding ➢ Digital Registration Bidding ➢ Multiple Products ➢ Frictionless ➢ Efficient Price Discovery ➢ Quick Customer ➢ Data Insights Interactions ➢ Automated ➢ On-Time Payment ➢ Real-Time Communication ➢ Robust Risk Management Financial Schedu
Slide 38: Transitioning Towards a Futuristic Tech Architecture
Transitioning Towards a Futuristic Tech Architecture Automated ➢ Digital Inside Manual Workflow ➢ Open API Integration Digital Mesh ➢ Automation Modular ➢ Service Oriented Architecture Monolithic ➢ Automated Bank Integration Digital Twins ➢ Web-based Portal Desktop-based All Platforms ➢ Power Market
Slide 39: Enhancing Liquidity in the Spot Market
Enhancing Liquidity in the Spot Market ➢ Pool based CfD mechanism for RE capacity addition through the market ➢ Merchant RE capacity addition – 25% merchant capacity in all PPAs ➢ Unallocated power of the Central Generating Stations should be sold through exchange ➢ No renewal of existing PPAs after
Slide 40: IEX: Growth Drivers (1/2)
IEX: Growth Drivers (1/2) ➢ RTM: June’20 Growth from ➢ Green Markets: GTAM launched in Aug’20, GDAM launched in Oct’21 recently launched ➢ Cross Border: April’21 products ➢ Term Ahead Market Up to 3-Months in June’22 ➢ HP-DAM (High Price-DAM): March’23 ➢ Ancillary Market ➢ RE capacity through exchan
Slide 41: IEX: Growth Drivers (2/2)
IEX: Growth Drivers (2/2) ➢ Spot markets share to increase significantly as per Draft NEP 2021 Favorable Policy ➢ GNA Regulation, Sharing Regulations, Grid Code, Late Payment Surcharge Rules, and sale of un- and Regulatory requisitioned power on exchanges will help deepen the power markets Initiativ
Slide 42: New Business Initiatives
New Business Initiatives Renewable Through Markets – Merchant RE ➢ IEX has worked with SECI & Deloitte to conduct feasibility study of Market based models for RE capacity addition ➢ The study results shows that market based RE models can command an IRR of 18%-20% V/s SECI bid projects having IRR ~ 1
Slide 43: Future Opportunities
Future Opportunities Virtual PPA’s Contracts for Difference (CfDs) ➢ Financial instrument used by buyers and sellers to hedge cost ➢ CfD model beneficial for RE generators, as it provides long- of electricity term stable price to mitigate risks associated with project ➢ Buyer not obligated to undert
Slide 44: Thank you
Thank you @IndianEnergy @indian-energy @IEX_India_ ExchangeLtdIEX -exchange-limited Phone: +91-120 4648100 Email: contact@iexindia.com Website: www.iexindia.com 43
Slide 45: IEX announces audited financial results for Q4 and FY23
INDIAN ENERGY EXCHANGE (IEX) ANNOUNCES ITS AUDITED FINANCIAL RESULTS FOR THE FOURTH QUARTER & YEAR ENDED MARCH 31, 2023 ● IEX CULMINATES FY ‘23 WITH 96.8 BU OVERALL VOLUME ● PAT DURING FY ‘23 AT INR 305.9 CRORE, MARGINAL DECLINE OF 0.9% YOY ● IEX CONTINUES TO HOLD ~100% MARKET SHARE IN COLLECTIVE TR
Slide 46: Business and Financial Performance Highlights
BUSINESS AND FINANCIAL PERFORMANCE HIGHLIGHTS During Q4 FY’23, IEX achieved overall volume of 26 BUs registering a 7.9% QoQ growth. Total certificates traded during Q4 FY’23 amounted to 1.8 BUs, a 50% QoQ increase. However, total volumes declined by 3.3% in Q4 FY’23 as compared to Q4 FY’22 due to su
Slide 47: Outlook and IGX, ICX update
With gradual improvement in domestic production of coal, improvement in coal inventory, which is at 14 days compared with 11 days last fiscal, lowering prices of e-auction coal, imported coal, and imported gas, we expect lower clearing prices of power on the Exchange, and the volumes to improve on t
Slide 48: Power Sector Highlights Update
POWER SECTOR HIGHLIGHTS UPDATE During the year, fuel supply constraints due to the Russia – Ukraine war led to several countries facing a severe liquidity crunch. Heat waves in various parts of the world increased power demand, which coupled with rising input fuel costs, led to high electricity pric
Indian Energy Exchange — Q4 FY2023 Earnings Presentation on 6ix