How will electricity futures be traded when the NSE receives approval to launch them?

NSE MD and CEO Ashishkumar Chauhan stated that this approval is the first step toward expanding NSE's power derivatives ecosystem. We are also planning to launch long-duration derivatives like Contracts for Difference (CFD) as well as quarterly and annual contracts. However, this will depend on regulatory approval.

Hexa Climate Solutions Chairman Sanjeev Agarwal said, "Discoms will be able to plan purchases dynamically using the forward curve. This will help reduce costs, avoid unnecessary contracts, and better estimate demand."

The forward price curve helps predict future power prices. Presently, discoms sell solar surplus at a lower price during the day, but now, by using derivatives, they will be able to sell it at a higher price than previously fixed. They will also have the ability to purchase power at a lower price using contracts during non-solar hours when spot prices usually rise.

Aditya Malpani, senior director at Ampin Energy Transition, noted that power producers can also hedge by taking inverse positions in the derivatives market using the forward price curve.