How NSE’s electricity future is reshaping the Indian energy market

The National Stock Exchange (NSE) is witnessing a surge in participation in the electricity futures segment, with traders, industrial users and producers emerging as the key drivers of trading volumes. According to Harish Ahuja, head of Issuer Relationship & PSD at NSE, the exchange now has a market share of 76-80% in the emerging but fast-growing segment.“Traders, industrial customers and generators are leading the trade. Discom participation needs to increase,” Ahuja told ET Now.

Contract design aligns with the vision ‘One Nation, One Grid, One Price’

The NSE’s electricity future is designed to align with India’s common vision for the energy market. Each contract represents 50 megawatt hours (50,000 units) of base load electricity for a full month (24×30 hours), allowing industrial consumers to hedge against fluctuations in electricity prices.“Our settlement price reflects a volume-weighted average of all three energy exchanges – hydro, heat and green – ensuring a uniform benchmark price,” Ahuja explains.

Margins are kept at approximately 10%, balancing risk and liquidity for participants.

Three key differentiators distinguish NSE

Ahuja identified three key differentiators behind NSE’s growing dominance:

• Alignment with national policy objectives on electricity market reforms and the net zero transition.
• Robust clearing and settlement systems modeled after the Nifty 50 index.
• Structured rollout of futures and CFDs, in sync with the evolution of the Indian energy market.

“Our pricing is transparent, our settlement mechanism is proven and our risk management is robust,” Ahuja said.

Industrial customers are emerging as game-changers

Since its launch on July 14, 2025, the NSE has clocked 3.16 lakh lots, equivalent to 15.98 billion energy units traded. Within three months, daily electricity futures volume nearly matched spot market activity – a milestone Ahuja calls “rare and encouraging.”

“Industrial customers are key to unlocking the next phase of growth,” he said. “Any business or unit with a base load of 70 kW – from shopping centers to factories – can efficiently cover its energy costs.”

To deepen participation, NSE is conducting awareness programs and offering free electricity derivatives certification to industry participants.

Futures and spot prices are now perfectly aligned

Ahuja shared a real-world example that shows price convergence.

“On October 31, Damodar Valley Corporation’s auction discovered a price of ₹3.23 per unit – exactly matching the NSE November futures price that day,” he revealed.

This alignment, he said, shows that NSE futures prices are being treated as benchmarks by the physical energy market – a strong validation of product design and price integrity.

The road ahead: more tenors, more industrial participation

The exchange plans to expand electricity derivatives to quarterly and annual contracts, and later to Contracts for Difference (CFDs) for renewable energy.

“We are aligning new products with India’s net zero transition goals,” Ahuja confirmed.

With growing participation, NSE’s electricity futures could become a benchmark for India’s energy trading ecosystem, providing industries with a transparent, efficient hedging mechanism.