Software services provider Tata Consultancy Services will be the lead stake holder in the proposed power exchange venture with public sector power firms NTPC and NHPC and power sector financier Power Finance Corporation. 

In a regulatory filing today the software services provider revealed that last week it had signed a memorandum of understanding for forming a joint venture with India's largest thermal power producer, NTPC Ltd, along with  biggest hydropower generator, NHPC Ltd  and public sector power projects financier Power Finance Corporation to set-up and operate a national power exchange. 

TCS will hold majority 50.02-per cent stake in the proposed exchange company and the three public sector units would equally own the rest in equally with a 16.66-per cent stake each.

NTPC and NHPC together own a third of India's electricity generation capacity.

The joint venture partners have filed an application with the Central Electricity Regulatory Commission (CERC) for setting up the power exchange and expect to complete the formalities in one month.

The JV company would be registered as a publicly listed company with an authorised capital of Rs50 crore with an initial investment expected to range between Rs50 crore and Rs100 crore by each of the four partners.

TCS said this power exchange would provide a "neutral and transparent electronic platform for trading of power on day ahead basis" and ensure clearing of all trades in a transparent, fair and open manner with access to all players in the power markets.

In June this year, MCX owner Financial Technologies, announcede the  the Indian Energy Exchange (See: PTC ropes in Financial Technologies, MCX for power exchange JV) while the National Commodities and Derivatives Exchange Ltd (NCDEX) plans another power bourse with the National Stock Exchange, which is expected to start by FY09.

India is emerging as one of the fastest growing countries in the world and its energy needs  increased exponentially over the past few years due to good industrial growth. This has resulted in existing power infrastructure under tremendous pressure. The Indian government sensing the demand for power has shifted its focus to the power transmission and distribution sector.

A solutionis to relay power effectively and efficiently from regions of surplus to deficit areas and load centres. Thus by providing a platform for trading in power, the acute power shortage in the country can be reduced by utilizing the current power generating capacity by power plants quite effectively by spot traded contracts that allows a company to sell its excess power.