Power Exchanges: In regulated electricity markets, electricity is bought and sold through organised market platforms via exchange such as Indian Energy Exchange, Power Exchange India Limited and Hindustan Power Exchange. Market participants, including generators, utilities, traders, and consumers, submit bids and offers to buy or sell electricity based on factors such as price, quantity, and delivery terms. Market prices are determined through competitive bidding and are influenced by supply and demand dynamics, fuel costs, transmission constraints, and regulatory factors.

Bilateral Agreements: Outside of electricity markets, electricity can also be bought and sold through bilateral agreements negotiated directly between parties. These agreements, known as power purchase agreements (PPAs) or electricity supply contracts, define the terms and conditions of the transaction, including the price, quantity, delivery schedule, and payment terms. Bilateral agreements may involve long-term contracts between generators and utilities, short-term contracts between traders, or direct transactions between generators and large consumers.

Physical Delivery: In both market transactions and bilateral agreements, the sale and purchase of electricity typically involve physical delivery of electrical energy from the seller to the buyer. Electricity flows through transmission and distribution networks, which transport the energy from generating facilities to consumption points. Transmission systems transmit electricity over long distances, while distribution systems deliver electricity to end-users such as homes, businesses, and industrial facilities.

Financial Settlement: After the physical delivery of electricity, financial settlement occurs to reconcile the differences between contracted volumes and actual usage, as well as to settle any imbalances between supply and demand. Settlement processes vary depending on the market structure and contractual arrangements but often involve financial exchanges, invoicing, and payment settlements to ensure that buyers and sellers are compensated or charged appropriately based on their contractual obligations.

Overall, the sale and purchase of electricity play a fundamental role in the functioning of electricity markets, enabling efficient allocation of resources, price discovery, and reliable delivery of electricity to meet the needs of consumers and support economic growth. Whether through competitive market transactions or bilateral agreements, electricity trading facilitates the efficient operation of the electric power system and ensures the availability of electricity to power modern societies.