Load Despatch Centre
Powergrid Corporation of India Limited, Mumbai
Framework For Facilitating Power Trading in India
|Anjan Roy||M. G. Raoot||P. Pentayya||Rajesh K Mediratta|
The paper discusses potential for various products in the emerging Indian power markets with emphasis on real time trading. Large scope exists for trading of short term energy exchanges as and when available but not fully harnessed at present due to constraints in the commercial mechanism rather than any technical reasons. The short-run marginal cost based pricing system is suitable for economy transactions. However, to facilitate economy transactions, large infrastructure and investments are required. The Availability Based Tariff (ABT) approved by CERC provides for pricing of short term energy transactions without the need for negotiations on price or quantum in real time. The framework being implemented through ABT requires minimal cost on infrastructure development and poses no problems in switching over to the new framework. Further, the ABT framework promotes trading, grid discipline, new investments, encourages development of ancillary market and utilization of captive and private generation in a cost effective manner. The pre-requisites for trading and the way these pre-requisites are fulfilled in the ABT framework are discussed in detail. The ABT framework suits ideally for real time pricing of electricity. This model can be used in other developing countries also due to its simplicity and no significant expenditure in change over.
Trading inherently means a transaction where the price is negotiable and options exist about whom to trade with and for what quantum, to obtain the best bargains. However, the consumers in retail and wholesale markets have almost no choice in selecting sellers in the fully regulated power system in India. The SEBs(vertically integrated utilities) or licensees have exclusive franchise over the area of operations, thereby limiting the choice for the end-consumers. Even the relationship for bulk power supply is similar. State and central generators in the regional grids are more or less the only sellers available for bulk power purchase by the state utilities. Each SEB is having an allocated share in all such generation of Central Sector and are expected to draw its allocated share without really bothering about the prices and about whom to purchase their requirements from, as prices are cost-based and are fixed by central regulator.
Presently, when almost all the SEBs have shortages in the peak demand periods, it seems that trading is really not a possibility in India. But the high frequency periods in some regional grids for some part of the day or in others for some part of the year indicate excess availability. In other words, there is scope for trading between SEBs both inter-regional and intra-regional.
Several standardised energy trading products can exist in the power markets. They are i) Capacity ii) Energy iii) Economy iv) Ancillary services etc. These products in Indian context are discussed below:
2.1 Capacity Trading
In India, long-term capacity is normally not available with most of the states except in Eastern Region where Central Sector plants have some unrequisitioned capacity. The trading of capacity in other regions is presently limited to surrender of capacity by one utility and allocating to other desiring utility. More so, the existing commercial mechanism have further compounded problems in affecting many of trading possibilities. For example, in Western region recently one of the utilities surrendered its allocations from costlier power station, which created an accounting dilemma due to equal landed cost methodology being followed in which it is not possible to avoid booking of power to a beneficiary from any central plant.
The licensees and embedded IPPs are not being allowed to trade their surplus capacities resulting in some capacity remaining unutilised due to other than technical reasons. Therefore, there is minimal scope for capacity trading opportunities at present.
2.2 Energy Trading
High frequency periods in some regional grids for some part of the day or in others for some part of the year indicate excess energy. Therefore, trading of energy is a potential possibility. There is scope for trading between SEBs both inter-regional and intra-regional. Diversity across the regions and states provide ample opportunities for energy trading.
2.3 Economy Power Trading
In situations, where multiple utilities have surplus power available, scope exists for economy power exchanges. The economy transactions take place when both buyers and sellers are having capacity available with them but they exchange power to optimize the costs. The transactions are priced at average of incremental costs of the buyer and seller. The incremental costs are energy charges of costliest power station operating in the utility's power system. The buyer backs down on its costliest generating station and seller increases generation on its costliest generating station to sell the power. For these transactions, capacity charges i.e. sunk costs are normally not considered since these transactions are taking place only for short-term and as-and-when-available energy.
The economy transactions call for transparency of costs, update of incremental cost with each unit tripping/synchronization and maintaining tie-line schedules more closely by continuous regulation of own generation on a minute-to-minute basis.
2.4 Reactive Energy Trading
The reactive energy is a product but it has never been seen as one in the absence of pricing norms of this product. The markets have not developed in India and with the introduction of reactive energy charges in IEGC, the market for this product is likely to assume importance.
Inadequacies of Trading in Present Frameowrk
Present commercial mechanism (before CERC's order of 17th Aug,2000) has major flaw that schedules are not known in advance. The real-time entitlements are taken as schedules which does not give datum for trading to take place. The basic reasons for little trading opportunities is absence of proper framework for trading. The following are, inter alia, the trading opportunities lost typically in a regional power grid in India. The examples quoted are from Western regional grid.
Non-utilisation of Utility's surplus power (within region)
Non-utilisation of embedded IPP/Licensee's surplus power
Non-utilisation of Pumped Storage Schemes
Inability to despatch generation according to grid requirement
Curtailment of bilateral transactions due to grid indiscipline
Absence of merit-order operation
Non-utilisation of Utility's surplus power (within region)
Since the overdrawals are not properly priced in the present mechanism, the trading is not being resorted to by deficit states. In Western region, CSEB has surplus power but neighbouring state of MP which is having deficit, overdraws from the grid rather than going in for purchase of power from CSEB. CSEB will not utilize additional captive generation till the time bilateral transactions are made with a state in neighbouring region. This is because their own surplus (including captive) will be overdrawn by other states in the region, which is priced at regional pool rate (generally less than captive power costs) giving wrong economic signals thus restraining CSEB to maximise captive generation. As such, the intra-regional trading is seriously affected. However, only some inter-regional trading takes place.
Incidentally, there exists a scheme for pricing deviations linked to frequency in Western Region, but the same is not effective due to non-participation of generators.
Non-utilisation of embedded IPP/Licensee's surplus power
The licensees are having surplus power in state of Maharashtra, but due to ineffective commercial mechanism and other administrative problems, the surplus power could not be exported to other needy states. In the present mechanism, both fixed and variable costs are charged for IPP's surplus power irrespective of time when surplus is available i.e. peak/off-peak. The cost of off-peak power is not distinguished vis-a-vis peak power resulting into unattractive proposals.
Non-utilisation of Pumped Storage Schemes
The Pumped Storage schemes are not being utilised by the utilities due to absence of proper pricing mechanism.
Inability to despatch generation according to grid requirement
Tata Power, a licensee of Maharashtra runs 300MW hydro during their peak (11 hrs to 14 hrs) when the system frequency is high. Thermal generation surplus from the grid can be utilised during this time, the hydro generation can be displaced to evening peak hours i.e. 19 to 22 hrs when grid frequency is low. Due to differential cost of pricing in MSEB-to-Tata and Tata-to-MSEB transactions, such desired redespatch is not possible even though beneficial for the grid. Moreover, during evening peak hours the onset of loads have to be matched with fast-start generation thereby precious hydro resources are wasted in a region deficient in hydro.
Curtailment of bilateral transactions due to grid indiscipline
A case in point is when CSEB had surplus power which it was trading with DVB, serious impediment was faced due to other state's (MPSEB) overdrawal resulting into termination of trading. A point to be noted is that even when CSEB was underdrawing to the extent of its export , transaction had to be terminated for no default on the part of CSEB. A similar case could also be cited when MSEB was trading its surplus power with TNEB.
Absence of merit-order operation
The fixed costs, in the present mechanism, are not perceived as sunk costs due to payments based on drawals and not on shares/schedules. Therefore, economic signals for true merit order operation are absent.
Solution For Indian Grids
The existing commercial mechanism has many fallacies and were not inducing trading opportunities and grid discipline but rather preventing development of conducive markets for trading. The setting up of a central regulator (CERC) in 1998 and its subsequent issuance of orders on ABT and IEGC, has addressed both of these problems.
4.1 Availability Based Tariff
Indian power sector comprises of SEBs(the vertically integrated utilities) and their licensees/IPPs and central generators. The Availability Based Tariff notified is a scheme of tariff for central generators as well as tariff for deviations in SEB drawals. As the name signifies, the major part of payment for the stations' output in this tariff scheme is based on station's availability, rather than on MWH/MVAH output or peak MW/MVA as in conventional two-part tariff applicable presently.
Payments under ABT basically comprise of three parts -capacity, energy charge and charges for deviations. The capacity charge for a time block (15-minute time block or one day) is paid for the declared MW output capability of the station for that particular time block (for target availability of say 80% in the year). The capacity charge is meant to cover the total fixed cost for the generating station i.e. interest on loan, return on equity, loan repayment provision or depreciation/ amortisation, fixed O&M cost, insurance, taxes, interest on working capital etc.
The energy charge is meant to cover the variable cost of the station, that is the fuel cost component which goes up with amount of energy generated. They are payable on schedules and not actual drawals.
The third part which is of much importance is - charges for deviations. These charges are payable for deviations of injections of Central plants and drawals of SEBs from the their respective schedules and are linked to average frequency in particular 15-minute time-block. Schedules for SEBs shall be prepared on the basis of their requisitions from the declared capabilities of Central plants. The charges for deviations i.e. unscheduled interchange(UI) rates are maximum at 49Hz and below and is zero at 50.5Hz and above, with constant slope between two extremes. The maximum rate (presently 420paise/kWh) has been linked to diesel-generation cost of power and minimum of zero is linked to over-flowing hydro power with zero incremental cost.
Any extra generation beyond the schedule is deemed to be going to replace the generation of highest incremental cost operating at that time. Similarly, when SEBs draw more (or less) than the schedule at a particular frequency, they are deemed to be drawing power from the grid at these frequency-linked charges i.e. third part which should always be more than their own incremental cost. It would be therefore logical to fix the pool price equal to incremental cost of that generating unit which has the highest incremental cost and is not inflexible i.e. it can increase or reduce its output. As the regions' demand goes up or down, different generators are taken to full or minimum load, the systems' incremental cost would also go up and down. In general, the pool price would rise to a ceiling level (say 420p/kWh) when all generation is in and load shedding is required (peak load hours) and frequency dipping to lowest allowable limit i.e. 49.0Hz, and would fall to zero when all generation has already been backed down to the lowest technically allowable level (off-peak hours) and frequency touching highest allowable limits i.e. 50.5Hz.
Prerequisites for Successful Trading
The prerequisites for successful trading and how these are fulfilled in ABT, is described below:
The SEBs' shares in Central and jointly-owned power plants are identified in hourly energy or MW, not just in monthly and daily energy. Datum interchange schedule with respect to which trading quantum is to be negotiated, needs to be established.
ABT fulfills this requirement since CGS and JS will have to indicate their expected MW capability for the next day. The schedules prepared on the basis of requirement and bilateral contracts, if any, are frozen one hour before actual operation. Therefore, schedules provide for the first pre-requisite for trading.
Up-to-date System Information
The Load Despatch Centres or System Control Centres of each utility has a full, upto the minute picture of its complete system, particularly regarding incremental costs, spinning reserve etc. of its generating units in operation and on standby.
Many of the SEBs today do not have the full-fledged load despatch and communication facilities. POWERGRID has proposed frequency-linked load despatch guidelines, primarily for achieving region-wide economy despatch (merit order generation) consistent with ABT mechanism. In this scheme, the frequency thresholds upto which different types of generating units should work at full load, and thereafter how they should back down, is specified. Once such a guideline is given to and adopted by all power plants, a definite relationship will get established between the grid frequency and the system-wide incremental cost. It will then not be necessary for load despatchers to continuously communicate with their various power plants for obtaining their status, incremental costs etc. Therefore, this requirement is met with in ABT.
Adequate authority with CLDs and Transparency
Chief Load Despatcher of each utility has the requisite authority to negotiate over telephone the quantum and price of such trading with his counterparts, and is willing to take crucial on-the-spot decisions having high monetary value.
In ABT, the incremental cost vs. frequency relationship would be identical for all SEBs, all utilities can reasonably be assumed to be having the same incremental cost at a particular time, such that the transparency is automatic and therefore, no negotiations between load despatchers are necessary regarding fixation of transaction price, substantially meeting the intents of the this requirement.
Adequate transparency and/or faith between utilies
In economy transactions, incremental costs of available/avoided generation as stated by one utility must be accepted by other in good faith. This requirement for effective economy transactions disappears in case of ABT where the system-wide incremental cost are well known to all.
Advanced Load Despatch & Communication Facilities
Each utility must have full-fledged load dispatch and communication facilities for continuous monitoring of its actual interchange and for on-line regulation of its generating units to minimize deviations from its interchange schedule.
In ABT, lack of or gaps in the required full-fledged load despatch and communication facilities would no longer be a bottleneck for trading since actual interchanges could be allowed to deviate from the schedules and the fifth requirement would disappear.
Measurement of deviations
There must be a mechanism for determining periodic (15-minute block-wise) deviations from net-interchange schedule for each utility, and then either attaching a monetary value to it or making a compensatory adjustment in future schedules.
Requisite special energy meters have been installed on all inter-utility ties, to record energy flows for every 15 minute time-block along with average frequency for each time-block. These should suffice for off-line computations for the settlement purpose. These are indigenously developed and are cost-effective.
Willingness to draw as per schedule
There should be willingness on part of all utilities to maintain their drawals from the grid as per schedules even during conditions of generation shortage. They should be willing to buy the deficit from their neighbours through advance negotiations to meet their consumers' total demand and they should have the capability to pay a reasonable price for the same.
In ABT, deviations from schedules would be permissible, but will be appropriately priced at frequency-linked rates thus the requirement made redundant.
Paying capability of the SEBs is however a serious matter, since the concept is based on financial disincentive for overdrawl during a deficit situation. This disincentive would become ineffective if an SEB can get away when it does not pay for the energy drawn from the grid. Timely payment of dues by all SEBs has in any case to be ensured, for the very survival of Indian power sector.
Modes of Trading within ABT Framework
Within ABT mechanism, scheduled interchanges and trading can take place in the following modes:
Supply of allocated shares to all SEBs from the Central and jointly owned power plants. Central plants to indicate their MW and energy availability on a day-to-day basis and SEBs to specify their requisitions over the next day. SEBs to pay capacity charges as per their MW declared capability and energy charges as per drawal schedule.
If an SEB does not need its share in a Central plant as per the prevalent formula, it would be allowed to transfer or forego its share in full or in part, at its option. Any such foregone share would be offered to other interested beneficiaries.
The SEBs would be allowed to similarly contract for long-term capacity , with each other and with any private generators (except for those captive to another States) duly identifying drawal schedules. Price to be paid through a two-part tariff i.e. capacity and energy charges.
The constituents of a regional pool would also be freely allowed to enter into standing agreements with each other for as-and-when available energy, or for off-peak energy on a regular basis (duly identifying the drawal schedule) on a negotiated price basis.
The regional power pools could also negotiate interchanges / trading with neighbouring regions on behalf of the member SEBs, duly identifying the drawal schedules, SEBs' shares, capacity and energy charges etc. Similarly, consortium of certain SEBs could negotiate long-term/short term contracts with neighbouring countries as well.
Trading can also be done through a power trading company viz. PTC.
The only restriction for the above modes of interchanges/trading would be a check from transmission constraint angle and other security aspects.
Besides such scheduled interchanges and trading, the ABT mechanism would provide a vast scope for unscheduled (but desirable) interchanges of as-and-when-available energy. So much so, that pool members may even prefer to supply/receive as-and-when-available energy as unscheduled interchange (at the frequency-governed price) rather than bother to negotiate the appropriate quantum and price in advance with a neighbour in real-time.
The present constraints due to the ineffective commercial mechanism as described in the previous paragraphs can be effectively handled under the new framework. Since the overdrawals are priced at frequency linked rates, the states within a regional power pool would honour pre-drawn schedules and would not cause impediments in the bilateral transactions within or across the regions. In the case of embedded IPPs and licensees within a state, the state participating in the regional power pool as a control area, can earn UI by trading the surplus power available from embedded IPPs and licensees by strategically scheduling/re-despatching generation. The state, IPPs and licensees can share the accrued benefits. At present, pumped storage schemes are not despatched due to non availability of power at incremental cost even during off peak hours. The pumped storage scheme would become viable since pumping power can be purchased when UI rates are minimal and can be despatched when the UI rates are higher. In the ABT framework, generators are also included, with their deviations from schedule are subject to UI pricing. Under ABT, the fixed costs are paid to the generators based on their entitlements. The utilities see the cost of energy from central sector plants with reference to variable cost only and compare the same with their own generating plants thus promoting merit order scheduling. All the generators irrespective of ownership would be despatched with frequency based despatch guidelines where at each frequency level, output of the generators are regulated by comparing their own variable cost with the frequency linked UI price. Thus, merit order scheduling as well as merit order despatch of generators are ensured.
ABT framework supports growth of inter-regional trading, development of ancillary markets, provision of open mandatory access, grid discipline and security aspects.
7.1. Inter-regional Trading of Power
Spot price for inter-regional trading
There are some inter-regional trading issues which needs attention in ABT mechanism. When power is to be exchanged between two regions, there is discrepancy between two regional grid's frequencies and therefore, in frequency-related unscheduled interchange rates. It is expected that mostly the SEBs shall have contracts for such exchanges and deviations from schedules would be insignificant. For utilising the as-and-when-available energy following price options are available at which deviations from schedules or cost of economy transactions can be settled :
Lower of the UI rates in two regions
Both region's constituents to pay/receive UI rates as per their own rates applicable
UI rate of exporting region
Average of two UI rates (share-the-savings)
We propose that on same principles of economy exchange, i.e. share-the-savings, the average of two regions' UI rates may be agreed.
Inter-regional Power markets
UI gives trading signals not only within the region but also across the regions. Presently, HVDC links(B-to-B) connect WR-NR, WR-SR, and ER-SR and further one more HVDC links will be established in near future forming national grid. The frequencies of the two contiguous regions are available at HVDC back-to-back stations. If all regions agree for standing guidelines to be issued to HVDC back-to-back stations, then HVDC stations can effect the transaction on their own taking advantage of differential UI rates between the two regions.
7.2 Development of Ancillary Market
The power system presently though having shortages, have grown sufficiently and needs further focus on ancillary services like Reactive Power, use of fast-start / fast-ramp sources, Black start sources etc. The ABT framework will induce opportunities for development of markets for ancillary services as described below:
Reactive Power Sources
The reactive power management, now, must be seen as opportunity for growth of market for HT capacitors and FACT devices. This provision of reactive energy charges shall put pressures on SEBs to take corrective measures for maintaining right voltage profile. The signal is clear, if SEBs donot put enough money in reactive compensators, they might be paying to pool account. Therefore, investments are expected in this area also. Further, private sector may enter this ancillary market as service providers and install transmission elements and recover the charges through tariff which will match with as otherwise payable as reactive energy charges.
Use of Pumped Storage Schemes
The pumped storage schemes may also be developed and these can be used by all SEBs in the region as fast-start units for providing balancing power in the short-run. These units can be run on frequency-governed rates. Automatically, during high frequency they will work in pumping mode and during low frequency periods they will start generating. The capacity charges of such plants may be payable at predefined ratios of their system sizes since the reliefs obtained from such plants shall be availed in the ratio of their system size.
Spinning Reserve Sharing
A utility shall be encouraged to buy capacity in other utilities as reserves so as to avoid unscheduled interchange costs occurring due to sudden loss of generating units within their system. Though, surpluses to that extent presently not available, but with more transmission capacity additions, the surpluses in Eastern Region can be utilised by other regions as spinning reserves.
7.3 Mandatory Open Access
Another prerequisite for trading in modern complex power systems is the provision of mandatory open access. All utilities need to abide by the concept of open access so that trading opportunities be never lost in the absence of agreement on transmission and wheeling charges. These should be tightly regulated by the central regulator. The owners of wheeling transmission systems should not be allowed to hamper the trading just on account of non-agreement on the issue of pricing of such wheeling.
7.4. Improvements in Grid Operation & Security Levels
Apart from providing the trading mechanism, ABT shall also facilitate improvements in system operation in mitigating the present problems viz. large frequency fluctuations, high frequency (excess generation) during off-peak periods, low frequency (shortages) during peak-demand periods, low voltages at load centers and rampant grid indiscipline etc. The regional grids are expected to operate in narrower frequency band between 49 to 50.5 Hz whereas presently they are operating in 47.8 to 52 Hz band. Besides economic and operational advantages, the security levels and reliability of the supply will improve. Further, narrower operating frequency band shall facilitate free-governor mode of operation.
Comparison With Other Market Models
In last decade, there has been considerable restructuring in developed as well as developing countries. In the basic model adopted, competition in wholesale supply, retail wheeling and open access are the centerpieces of reforms. The basic objectives behind all the above reforms have been i) making power available to all ii) making cost of power cheaper under competitive pressures. UK's model of market-based electricity pricing became the model for restructuring around the world, including USA.
In UK, the Power Pool bidding system was instituted in 1989 with the objective of reducing electricity prices by subjecting power generation to competitive market forces. In bidding system, every day, generating companies bid for supplying the national grid system for each half-hour of the following day. The bidders are scheduled in merit order of their bids for next day's despatch. But the experience so far with new competitive Power pool bidding system is not satisfactory. An investigation conducted by OFFER(Office of Electricity Regulator) concluded that after nearly a decade of market prices, electricity prices for residential customers have risen considerably since 1989 when privatisation was enacted.
Similar reforms were implemented in most of the states of USA and state of California has been at the forefront in implementation of full scale competition at retail and wholesale levels. Different but unfortunate outcome of reforms in California has been in providing inadequate incentives for new capacity addition. On an average in USA, the capacity margins have declined to less than 15% over peak demand, which was about 20-30% before 1990. In California, rapid economic growth resulted in 18% increase in peak demand in 6 years(1993-99) whereas generating capacity increased by only 0.1%.
The ABT mechanism is a step forward for Indian conditions without going in for full-scale competition as instituted in the developed markets. One of reasons for not implementing UK model in our grids is federal structure. The states have insisted for decentralized scheduling and dispatch model, therefore, UK model cannot be implemented. The possibility of real-time pricing is being explored in California where similar situation of high peaking shortages have come up and expected to continue at least in near future.
The scenario in Indian power markets can be examined in light of introduction of ABT. The various issues like competition, attracting investments, utilising non-utility (captive) generation, cost of infrastructure for developing markets are discussed in relation to ABT mechanism in the ensuing paragraphs.
8.1 Abuse of Market Power
In India, much broader changes would need to be done if competition in bulk supply are to be brought, in the real sense. The process of unbundling has really not taken off in India except in some states. Therefore, states' generating plants would remain under exclusive jurisdiction of SEBs, and trading with them will not take place. If only Central plants will be allowed to compete with each other, then the market will be monopolistic. Herfindahl Index is an indicator of true competition in any market. This index can be calculated as (Market Share in %age)2 , which should be less than 2500 in a market to avoid collusion and abuse of market power. Till the time, regional grids do not fully develop as per the above norms of Herfindahl Index, true competition cannot be expected despite making market free. Therefore, in absence of such market conditions, those models cannot be applied in Indian grids. Till the time, our grids generate enough capacity margins and spinning reserve, ABT would be best suited for providing a mechanism for merit-order scheduling of Central plants and trading of economy power through third part of ABT i.e. frequency-linked charges for deviations. With more unbundling of vertically integrated utilities, we will be approaching towards a more competitive regime.
8.2 Issue of Stranded Cost & Long-term Investments
The reforms have created major issue of idling investments in the West which has become unprofitable due to newer technologies brought out under competitive pressures. In India, we intend to utlise privatisation as means for 1) increase private participation 2) reduce government control in the economy 3)increase efficiency. In the present structure, when we like to bring investments, a long term signal must be available to developers for making decisions on choice of technology, location, fuel of new plants etc. ABT mechanism best serves this purpose. The capacities which are not being requisitioned in full, gives idea about what fuel, technology, location are unattractive. The incremental costs i.e. UI pricing gives right signals for building new capacities.
8.3 Infrastructure Requirement
Through indigenously developed Special Energy Meters of 0.2 S class at very cost effective price of about less than US$700, the total investments are expected only about half a million dollars for each region. These costs of putting new arrangements are insignificant as compared to millions of dollars spent in each power pool of developed countries for bringing competition at wholesale level. In UK, the cost of development and running the new wholesale market for first 5 years was approx. US$1.1billion. and after a decade of high prices, Britain spent an additional 100 million pounds to institute NETA(New Electricity Trading Arrangements).This is apart from what electricity industry spent to install computer systems and trading desks to participate in bidding process. Whereas, in ABT mechanism, there are no major changes which are required to be brought out either at utility-level or RLDC-level except change of procedures and of course, bringing in grid discipline.
8.4 Pricing of Non Utility Generation
Non-utility generation (NUG) is the next area for which ABT mechanism provides a solution. India already has many thousands of MW of captive generation in industrial plants, but the same is not being integrated with the grid because of present frequency fluctuations and due to absence of proper commercial mechanism. On the commercial side, we could simply stipulate that any NUG injection into the grid would be priced as per the forementioned frequency-linked rate. What the NUG injects into the grid can be left entirely to be decided by the NUG. And the whole system would operate without any online communication between the load despatch centres and NUGs.
We must take advantage of the uniqueness of electricity as a commodity. This is the only commodity whose excesses or shortages can be measured at the supply side by any consumer or utility. Frequency of supply can be measured without installing any complex point-of-sale equipment. In Indian grid, we have taken advantage of this uniqueness and made the cost of electricity known to all concerned using frequency-linked electricity rates.
ABT gives fillip to the development of Indian power markets by promoting investments, utilization of bottled up power and captive generation surpluses without incurring huge costs (unlike in developed markets) for infrastructural development for the power trading. ABT also does not lead to competition to a level where growth in investments gets stunted and results in gaming/ manipulation of pricing. At this stage of development and in cost-plus regulated economy, ABT provides right signals for investment as well as protects consumer interest. Further, SEBs may take full advantage of ABT by devising Time-of-Use pricing and demand side management in their grids at retail level.
The authors acknowledge with thanks the valuable guidance and support given by Shri Bhanu Bhushan, Director(Operation), POWERGRID.
|WRLDC/OS/1532/01||4th September, 2001|
Central Board of Irrigation & Power,
New Delhi 110 021.
Sub: International Conference on Bulk Power Transmission System Integration in Developing Countries.
We are enclosing a paper titled "Framework for Facilitating Power Trading in India" for inclusion in the above Conference. This paper may be included in the session on "Bulk Power Marketing in Developing Countries".
We hope you will find the above paper suitable for inclusion in the above conference.
Addl. General Manager
Encl: As above