Electricity Futures on NSE: Hedging Power Price Swings
Why in the news
NSE was set to launch electricity futures, developing India’s energy derivatives market.
Key facts
- Contracts let parties lock in future power prices.
- Cash-settled on electricity market benchmarks; monthly tenor.
- Seen as unbundling the bundled supply and distribution market.
Background
Energy derivatives derive value from commodities like electricity, crude oil or gas, and manage price risk or allow speculation. Locking rates protects against spikes from demand-supply gaps, seasons or fuel costs.
Exam angle
- Instrument: cash-settled futures on NSE.
- Terms: hedging, DISCOM.