Development Of A Common Development Of A Common Platform For Electricity TradingPlatform For Electricity Trading

CERC Public Hearing CERC Public Hearing

Presentation By POWERGRIDPresentation By POWERGRID

19-December-200619-December-2006

IntroductionIntroduction CERC Staff Paper CERC Staff Paper

– Well researched and documentedWell researched and documented– Created AwarenessCreated Awareness

Building blocksBuilding blocks– Physical growth of networksPhysical growth of networks

» Interstate & Super gridInterstate & Super grid– UI and ABTUI and ABT

» Creation of a marketCreation of a market» Streamlined at the inter-state levelStreamlined at the inter-state level

– STOASTOA– Merging of marketsMerging of markets

A priori to market designA priori to market design– UIUI– STOASTOA

Short Term Open AccessShort Term Open Access

Experience So Far & Lessons LearntExperience So Far & Lessons Learnt

Growth Of STOA TransactionsGrowth Of STOA Transactions

+ 406 %

+ 35 %

Intra & Inter Regional Transactions Intra & Inter Regional Transactions (Energy MUs)(Energy MUs)

STOA - Participating Utilities STOA - Participating Utilities

No. of Transactions:No. of Transactions:Advance Vs Day AheadAdvance Vs Day Ahead

Approved Volume:Approved Volume:Advance Vs Day Ahead (MU)Advance Vs Day Ahead (MU)

Applied Energy As % Of Applied Energy As % Of Approved Energy (NR)Approved Energy (NR)

% Utilization of Advance % Utilization of Advance Reservation (NR)Reservation (NR)

STOA Utilization In NR: Sep – Nov ‘06STOA Utilization In NR: Sep – Nov ‘06(As % of Approved Energy)(As % of Approved Energy)

STOA Utilization In WR: Apr – Oct ‘06STOA Utilization In WR: Apr – Oct ‘06(As % of Approved Energy)(As % of Approved Energy)

Load Curve & STOALoad Curve & STOA(NR) (20-10-2006)(NR) (20-10-2006)

Load Curve & STOALoad Curve & STOA(WR) (09-11-2006)(WR) (09-11-2006)

Market Structure - GenerationMarket Structure - Generation

Market Structure - LoadMarket Structure - Load

STOA ExperiencesSTOA Experiences

An enriching experienceAn enriching experience 95% applicants successful in getting approval 95% applicants successful in getting approval

for STOAfor STOA Single Transaction SizeSingle Transaction Size

– Smallest – 1 MWSmallest – 1 MW– Largest – 450 MWLargest – 450 MW

Maximum transfer 2780 MW on a dayMaximum transfer 2780 MW on a day Diversity being gainfully utilizedDiversity being gainfully utilized

STOA ExperiencesSTOA Experiences

Advance ReservationAdvance Reservation– Applications received up to 300% of available Applications received up to 300% of available

corridorcorridor» Pro rata allotment Pro rata allotment

VolumesVolumes– No. of transactions in day-ahead approx 4 times No. of transactions in day-ahead approx 4 times

that in advance reservationsthat in advance reservations– Energy volume in day-ahead approx 10% of that in Energy volume in day-ahead approx 10% of that in

advance reservationsadvance reservations

STOA ExperiencesSTOA Experiences

Utilization of booked corridorUtilization of booked corridor– About 70%About 70%

– Put and call options ?Put and call options ?

– Easy exit - low costEasy exit - low cost

Corridor availability Corridor availability – Peak hours – Corridor available but low volumesPeak hours – Corridor available but low volumes

– Off peak hours – Corridor & power availableOff peak hours – Corridor & power available

Costlier (liquid) generation & captives under utilizedCostlier (liquid) generation & captives under utilized Day ahead transactionsDay ahead transactions

– Serious playersSerious players

STOA ExperiencesSTOA Experiences UI volumesUI volumes

– Excessive reliance on UIExcessive reliance on UI– Need for a cap on UI volumeNeed for a cap on UI volume

Exploding size of matrixExploding size of matrix– Nearly 100 control areasNearly 100 control areas

» Implementation of Intra-State ABTImplementation of Intra-State ABT

– 96 time blocks96 time blocks Day ahead – schedules & utilizationDay ahead – schedules & utilization

– Frequent revisionsFrequent revisions– Un-utilized corridors, prospective buyers/sellers availableUn-utilized corridors, prospective buyers/sellers available– No show at 1500 hrsNo show at 1500 hrs

» Getting streamlined through intervention of Honble’ Commission Getting streamlined through intervention of Honble’ Commission

STOA ExperiencesSTOA Experiences

Assessment of Transfer CapabilityAssessment of Transfer Capability– Weather dependent loadWeather dependent load– Monsoon dependent Hydro generationMonsoon dependent Hydro generation– Firmness of maintenance schedulesFirmness of maintenance schedules– UI volumes – high uncertaintyUI volumes – high uncertainty– Floating frequency band – line flows affectedFloating frequency band – line flows affected– Frequent large contingenciesFrequent large contingencies

TTC, ATC, FC ATC, FC SATC, TRM, CBMTTC, ATC, FC ATC, FC SATC, TRM, CBM

STOA ExperiencesSTOA Experiences Evils of pro-rata Evils of pro-rata

– Advance Booking – E-bidding being avoidedAdvance Booking – E-bidding being avoided– SchedulingScheduling– Curtailment on congestionCurtailment on congestion– Problems of SEAMSProblems of SEAMS

» Multiple regions and states affectedMultiple regions and states affected– ReconciliationReconciliation

“If the system operator chooses such tools as pro rata curtailment or bilateral curtailment for line loading relief, they will interfere with economic dispatch.”

Steven Stoft, Power System Economics (3-4.5)

STOA Contracts So Far …. ?STOA Contracts So Far …. ? Advance Contracts – Advance Contracts –

– Firm ?Firm ?– For physical delivery ?For physical delivery ?– Forwards?Forwards?– Options Options

» Call ?Call ?» Put ?Put ?

“The day-ahead market is the forward market with the greatest physical implications”

Steven Stoft, Power System Economics (3-5)Steven Stoft, Power System Economics (3-5)

Procurement OptionsProcurement Options Long term contractsLong term contracts

– DirectDirect– Through tradersThrough traders

Short term open accessShort term open access– DirectDirect– Through tradersThrough traders

UIUI Power Exchange - Power Exchange - Another optionAnother optionFreedom to choose from the alternatives

Four Pillars of Market DesignFour Pillars of Market Design

IMBALANCESCONGESTION

MANAGEMENTANCILLARY

SERVICES

SCHEDULING &

DISPATCH

ELECTRICITY MARKET

Sally HuntSally Hunt

The Way Forward …The Way Forward …

Intra state ABT and STOA at state levelIntra state ABT and STOA at state level– Regulatory framework at state levelRegulatory framework at state level– Harnessing of latent generationHarnessing of latent generation– Optimal use of embedded generationOptimal use of embedded generation– Reduce market dominanceReduce market dominance– Intra State STOAIntra State STOA– Management of imbalances within statesManagement of imbalances within states

The Way Forward …The Way Forward …

Strengthening of network (state level)Strengthening of network (state level) Indexing of the real time market price (UI Indexing of the real time market price (UI

Rate)Rate)– Rationalization a pre-requisite for efficient Rationalization a pre-requisite for efficient

market functioningmarket functioning Robust financial settlement systemRobust financial settlement system Information exchange systemInformation exchange system

– Strong IT infrastructureStrong IT infrastructure– TransparencyTransparency

Resource buildingResource building

The Way Forward …The Way Forward …

Market rules that do not compromise with Market rules that do not compromise with system operator’s responsibilitysystem operator’s responsibility regarding regarding power quality and reliability.power quality and reliability.

“In the absence of a mature physical system operators fight an endless losing battle”

Charles ConcordiaCharles Concordia

Power ExchangePower Exchange

Voluntary participationVoluntary participation Double sided auctionDouble sided auction Uniform pricingUniform pricing Normative transmission charges, to startNormative transmission charges, to start Normative transmission losses, to startNormative transmission losses, to start No bid capsNo bid caps Robust financial settlement systemRobust financial settlement system Strong IT infrastructureStrong IT infrastructure Resource buildingResource building Organizational issuesOrganizational issues

““Bilateral markets provide a private Bilateral markets provide a private coordinating mechanism;coordinating mechanism;

Exchanges provide a public, centrally Exchanges provide a public, centrally determined market price.”determined market price.”

“All except the real time market are financial markets in the sense that the delivery of power is optional and the seller’s only real obligation is financial”

Steven Stoft, Power System EconomicsSteven Stoft, Power System Economics

Thank YouThank You