“Banking of electricity” shall mean and include transactions for inter-State exchange of electricity between two grid connected entities either directly or through a Trading Licensee.
This means, Electricity gets exchanged between two parties and no monetary transactions are carried out in exchange for power. Thus, the electricity is said to be “banked” or “swapped” between two parties and the transaction is said to be “cash-less”. Banking Contracts are also known as “Power Swap Arrangements”.
Each Banking contract consists of a Supply period and a Return period which is fixed. Usually, Banking Transactions are finalised through ‘Memorandum of Understanding’ route or through Bilateral Negotiations. The supply period and return period get closed within the same Financial Year.
Banking Transactions can prove to be useful in conditions where the surplus power and deficit requirements of two parties is complementary in nature