As chairman and managing director (CMD) of PTC India Limited, Dr Rajib Kumar Mishra’s biggest priority is to steer the company’s transformation from being predominantly an electricity trader to a bespoke solutions provider in the electricity value chain….
During his long and eventful career of 37 years in the power sector, Dr Rajib Kumar Mishra has worked with NTPC Limited, Powergrid and PTC India Limited. In 1991, after he joined Powergrid from NTPC, he was involved in the O&M, design, planning, installation, commissioning and integration of a state-of-the-art automated power control centre, with regional load despatch centres operating at various capacities. As head of commercial and business development of the telecom business at Powergrid, Mishra turned around the loss-making strategic business unit.
In 2011, he joined PTC as executive director and played a key role in the development of the retail and open access business, a market-creation initiative. He also led the team that launched the third power exchange, Hindustan Power Exchange. Now, as CMD of PTC, a position he assumed on November 6, 2022, Mishra is steering the company’s transition to a technology-enabled solutions provider.
According to Mishra, the sector has seen remarkable developments in the last year. “We saw landmark regulations that will change the design of the market, such as general network access rules, ancillary services regulations, deviation settlement mechanism regulations delinked to frequency, renewable energy certificate guidelines, the green hydrogen policy, and guidelines for battery energy storage systems. This reflects the intent to create a vibrant power sector,” says Mishra. Policymakers and regulators took decisive, and tough measures during the year, such as allowing the blending of imported coal when coal stocks were under stress, introducing price caps on power exchanges when prices were rising, clearing the outstanding dues of discoms through a one-time intervention, and barring 13 state utilities from accessing short-term power markets pending the clearance of their dues.
Mishra points to the resilience of the power sector in dealing with increased demand following the resumption of economic activity after the pandemic and in the shadow of global commodity inflation (crude, LNG, and coal) and geopolitical conflicts. Moreover, the sector is evolving and market design is undergoing a transformation. “Future market design will be built on renewable energy and sustainability as well as extensive use of technology-enabled solutions to take market and price risks,” Mishra notes. “The biggest opportunity is reforms in the distribution segment, which is being attempted by the introduction of the Electricity Amendment Bill. More than any other element, the reform of this segment will determine the sector’s continuing health as distribution cash flows support the entire value chain.”
The growth of the sector is, being impeded by the technical and commercial challenges of the increasing integration of variable renewable energy (VRE) into the grid, Mishra notes. Also, giving away free electricity is not a sustainable approach, he argues. Despite these challenges, Mishra is sanguine about the outlook for the sector. In an economy that is expected to register a real GDP growth rate of 7.5 per cent, the opportunity for growth in the power market is second to none. In terms of the trends in the power trading segment in the near to medium term, Mishra notes that power tariffs vary across buyers based on their unique supply-demand characteristics and seasonal requirements. For example, recently concluded auctions by utilities on the DEEP portal have resulted in prices ranging from Rs 7.25 per kWh to around Rs 10 per kWh for the period September 2022 to March 2023. Likewise, the price levels on the ultra-short-term segments of the power exchanges were elevated at atypical levels for the monsoon season (over Rs 4.50 per kWh). In the peak time blocks, price discovery on the exchanges was at levels of the capped price of Rs 12 per kWh until recently, and it has only now shown signs of easing off. With the resumption of economic activity, high crude and natural gas prices, high imported coal prices, and the pick-up in demand, price levels remained high compared to previous years.
Trading volumes, both bilateral and power exchanges put together, account for 10 per cent of the overall generation. These volumes are typically marginal in nature, as most of the capacity is contracted under dedicated power procurement and sale agreements. According to Mishra, “Trading will pick up if we have merchant capacities that are either untied or are allowed to be sold based on the cancellation of contracts or the adoption of penal mechanisms.” Wind and solar capacities are still being set up under long-term agreements, although PTC is working to operationalise market-based agreements in these segments.
The biggest challenges facing the power trading segment, according to Mishra, are the limited marginal capacities available for merchant trading in the short term and the lack of fresh capacities being commissioned in the renewables’ space. PTC is trying to address these challenges by assuming market risks as a counterparty and by blending solutions to create round-the-clock (RTC) power to make renewable energy more marketable. PTC is also looking to separate green attributes from renewable power and to sell electricity and green attributes separately.
As CMD, Mishra’s biggest priorities and key focus areas for PTC are to steer the company’s transformation from being predominantly an electricity trader to a bespoke solutions provider in the electricity value chain. The company’s solutions and offerings now include battery energy storage systems and green hydrogen. Mishra believes that trading as we know it will also undergo a change, with PTC assuming market risks and taking positions. Increasingly, PTC is focusing on offering solutions for renewable energy participants both on the supply and demand sides. It is also focusing on structuring solutions for virtual contracts and acting as a virtual power plant. With the increasing adoption of VRE, PTC is also structuring solutions for RTC power offerings by blending it with thermal generation and/or storage solutions. It is increasingly investing in cross-border electricity trades, from both a tactical (short-term) and a strategic (long-term) perspective. In addition, as and when the electricity derivatives market is launched, Mishra expects PTC to be a significant player in the new segment. While trading will remain a staple activity of PTC, he wants the company to scale its advisory/consulting business, including in energy portfolio management, which will require technology-intensive solutions. PTC is also embedding itself in the developing value chain of battery energy storage systems and green hydrogen. Hence, PTC intends to engage in capability-building exercises so that, as and when these opportunities emerge, it will have the requisite competencies to capitalise on them.
Mishra’s management approach is to identify the right person for the right initiative and then empower the individual to perform to the best of his/her ability. Since most business decisions are cross-functional in nature, he adopts a consensus-based approach to decision-making and implementation, with key functions represented in a matrix team structure. Once the right team and the right team leader have been identified for a project and duly empowered, he follows a style of exception management, intervening only to manage deviations and disruptions. His sees his role as a leader to be a mentor and to create an enabling environment for professionals to thrive and to accomplish organisational objectives. He endeavours to not sacrifice the long-term vision at the altar of short-term goals and hence tries to anticipate future trends.
Mishra integrates his professional commitments and his personal life seamlessly, without bucketing these into separate compartments. He maintains a healthy work-life balance by paying attention to the issue at hand, be it professional or personal. He enjoys gardening, which allows him to experience actual growth first-hand, and travelling, which allows him to experience diverse cultures.
Mishra envisages a highly positive outlook for India’s power sector over the next two to three years. He points out that India is the third largest generator of electricity in the world, with generation in excess of 1,400 TWh and with an installed capacity of over 400 GW. India is a global energy superpower. Its increasing trade with neighbouring countries such as Nepal, Bhutan and Bangladesh is evidence of its expanding influence. However, India’s per capita consumption of electricity is lower than that of a developing country like Brazil. Hence, the opportunity for growth is immense.
Going forward, India’s targets for renewable energy addition, green hydrogen adoption and electric vehicle adoption make it the most attractive market for global investors, technology providers, developers, supply chain stakeholders, capital providers and other stakeholders. Discussing the growth prospects for PTC in the next two to three years, Mishra notes that PTC has traditionally categorised its business segments into two: bilateral over the counter (OTC) and power exchanges. The OTC segment is where PTC crafts and creates bespoke solutions for its customers. The power exchange segment is where PTC either advises or trades on behalf of clients. “We are market responsive and whenever the market pivots, as it did in the last two years of the pandemic, to the ultra-short term, we adapted as well,” Mishra notes. However, the scenario is returning to normalcy and bilateral contracts carry equal weight in a consumer’s portfolio. PTC does not pursue volumes for the sake of the metric alone. Its approach is to create sustainable relationships with suppliers and buyers, which will yield progressive returns over the long term. The bedrock of PTC’s business is its long-term and medium-term trades, including transactions with neighbouring countries. It is already trading with Bhutan, Bangladesh and Nepal, and has strengthened these relationships recently. PTC’s medium-term schemes are also gaining traction. It has launched state schemes as well, and sees increasing opportunities in this segment.
Above all, PTC is developing products in the renewables segment where it plans to take market and price risks and operationalise new capacities that are not getting installed for want of a credible PPA. Mishra believes that PTC, as a market maker and domain specialist, can aggregate such capacities and create offerings for the market.