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Transcript of Power Exchange Operation ERLDC, POSOCO
04/20/23 ERLDC: POSOCO 1
Power Exchange Operation
ERLDC, POSOCO
04/20/23 ERLDC: POSOCO 2
Con
tent
s
• Overview – – Evolution of Power Market – Fundamentals: Review– Power Exchange Concept – Implementation in India– Congestion Management– Experience Gained
• Future Posibilities
Transition from one voltage level to the other
• The next voltage level was achieved after 15 years.
• Technologically there was not much of a change in raising the voltage from 132 KV to 220 KV.
• Change from 220 KV level to 400 KV level required adoption of new techniques.
IntroductionIntroduction• At the time of Independence power systems in the country
were essentially isolated systems developed in and around urban and industrial areas.
• The highest transmission voltage at the time was 132 KV.
• The Electricity (Supply) Act, 1948 was enacted and CEA was formed for coordinated development of Power Sector
State Electricity Boards (SEBs) were formed for development of generation, transmission, distribution and utilization of Electricity in their respective States and requirement of integration of the state grids felt for emergency assistance.
Till such time the entire transmission was in HVAC at 132 KV.
Organisational setup of power sector
• In 1964, for the purpose of integration of State Grid systems the country was demarcated into five Regions viz. the Eastern Region, the Northeastern Region, the Northern Region, the Western Region and the Southern Region
• The Regional Electricity Boards were established in each of the regions for facilitating integrated operation of state systems
• Inter state connections were aided by central government as centrally sponsored schemes for emergency assistance between the states
Regional grid formation• In early seventies power shortage started in various
parts of the country.• In 1975, Central Sector generation utilities viz. NHPC
and NTPC were created to augment generating capacity & Large capacity units planned to be added.
• These companies were also mandated to provide transmission for their generation.
• For movement of such large block of power 400 KV lines found optimal and for sustenance of bigger generators integration of state grids required to enhance system inertia.
• Regional grids were formed with 400 KV transmission as back bone
POWERGRID formed To accelerate development
• To give thrust to implementation of transmission system associated with Central generating stations and intra-regional transmission.
• Inter-regional links were also planned and developed to facilitate exchange among the various regions for emergency assistance and transfer of operational surplus between the regions.
HVDC B/B INTRODUCED
To facilitate inter-regional exchanges between asynchronously operating regional grids HVDC back-to-back links were developed.
• 500 MW link between Northern and Western Region at Vindhyachal.
• 1000 MW Western and Southern Region link at Bhadravati.
• 2x500 MW between Eastern and Southern Region link at Gazuwaka.
• 500 MW between Eastern and Northern Region link at Pusauli.
Landmark Events
1948 ES Act
1950-60Establishment of state Grid system
1962 First 220kV Voltage level
1964 Constitution of Regional Electricity Boards
1965-73Formation of Regional Grids for integrated operation
1975 Central PSUs in generation and transmission
1977 First 400kV Voltage in state sector
1980-88Growth of regional grids-400kV back bone network
1989 HVDC Back to Back for interregional controlled transfers
1989 Formation of POWERGRID Corporation
1990 First HVDC bi-pole Transmission line transfer within region
Landmark Events 1990 Generation of electricity opened up for private sector
1991 Synchronous operation of ER and NER Grids
1998 Electricity Regulatory Commissions Act
1998 765kV initially charged at 400kV
2002 Inter regional HVDC Transmission system
2002 Goal set for All India National Power Grid
2003 EA 2003- Balancing and short term markets
2003 Synchronous operation of Western with Easter and North Eastern Grid- Central Grid
2005-06 National Electricity Plan
2006 Synchronous operation of Northern , Western , Eastern and North Eastern Grid- first phase of
National Grid Complete- The ‘NEW’ Grid
2008 Power exchange( day ahead market)
Agenda
Competitive Power MarketsEvolution of liberalized power markets
Developments in the Indian context
Need for Competition
Development of Markets and Marketplaces
Development of Power Exchange in India
Way Ahead
04/20/23 ERLDC: POSOCO 12
Vertically integrated monopolies used to supply electricity until 1980s,
worldwide (deregulation of transportation / financial services / wholesale
market for Natural gases).
De-regulation and unbundling into Generation, Transmission, Distribution,
System Operation, PX (Pools) resulted in enormous efficiency gain & price
reduction of electricity.
Liberalization of Electricity Markets
1st serious attempt to form liberalized electricity market: Chile, 1982
Followed by England and Wales in 1990 and Nordic Market (now Nordpool) in 1991
Australia, New Zealand, North America, California, Netherlands: Later half of 1990s
Electricity Act 2003 ushered in wide-scale changes in the sector
04/20/23 ERLDC: POSOCO 13
Vertically Integrated SEBs
Only SEBs entitled to buy or sell electricity
Generation and Supply largely owned by state or central sector companies
Inefficiencies leading to enormous losses in the system – debt restructuring
Private participation almost non-existent
Generation needed license
No significant participation in Transmission, distribution
Cost plus model followed by generators and distributors
Power traded through Long Term PPAs of 25 years or so
Complete absence of competition
Large captive capacities come up due to continued poor and inadequate
supplyNeed Felt to Develop a Competitive Power Market
04/20/23 ERLDC: POSOCO 14
Large number of participants interact
Through free, fair and transparent marketplace
To provide appropriate goods and services
At fair prices
Determined by both long-term and short-term
demand-supply considerations
04/20/23 ERLDC: POSOCO 15
Allows multiple participants to compete with each other toProvide High Quality
At Low Prices
Allows participants to manage their supply requirements byPurchasing deficits from the market
Selling excess to the market
Therefore, investments on unneeded capacities is not wasted
Allows participants to manage the cost of supplyPurchasing lower cost supply from market and back-down expensive generation
Availability of an efficient market allows investors to set-up capacities
Part of long term capacity kept for sale as merchant capacity
Even long term capacity is easily set-up with the availability of a market as a back-up
04/20/23 ERLDC: POSOCO 16
Allows multiple generators to come up and compete
Allows larger consumers to choose supplier
Prescribes competitive procurement of power on long term
Aims to create a National Market via compulsory open access
Policy framework assures
Reasonable and stable returns on investments
Well defined Regulatory mechanisms
Makes governments responsible for providing Power on demand
Commits the Nation to creating A Competitive National Market in Electricity
04/20/23 ERLDC: POSOCO 17
04/20/23 ERLDC: POSOCO 18
Power Exchanges provide :
Common infrastructure for all market participants to buy & sell
Transparent & Fair price discovery through Anonymous bidding
Equity in terms of trades
• Common risk and reward structure provide comfort
• Similar to standardized bidding documents in long term space
Helps tide over poor credit quality of Discoms
• Daily payment culture setting in
Bring efficiency in usage of Transmission capacity
Providing encouraging investment signals to investors in
generation
Power Exchange is the Market Place for Competitive Power Market
Agenda
Competitive Power Markets
Development of Power Exchange in IndiaRegulatory roadmap
Exchanges in India and Benefits
New product development
Way Ahead
04/20/23 ERLDC: POSOCO 20
In transition towards a competitive market structure
Regulatory Framework for Power Exchange
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
36
34
32
30
28
26
24
22
BASE LOAD
BASE LOAD
in
100
MW
Base Load – Managed through Long Term PPA’s
Daily Variations – Managed through 1) Day ahead Power Exchange or 2) UI Balancing
Seasonal Variations – Managed through Short Term trades, by1) Traders, 2) Bilateral Contracts or 3) Wheeling/Banking Arrangements
Hou
rs
For
illu
stra
tive
purp
oses
onl
y Load Curve and Management of Demand
Day Ahead Contracts
INR/KWh
MW
Price
Volume
Day-ahead Spot Market
Day of Delivery
Double-sided closed bid Auction Price / Volume Bids Binding Contracts Financial settlement based on Cleared Volume and Price
Resources Commitments
Metered
generation
Imbalance
Day-Ahead
Schedule
Real Time Market
Calculation of Imbalances
Final Day-Ahead Schedule includes PX
transactions. Deviations, linked to frequency of the Grid;
- Balanced on a real-time basis
- Penalties for over-drawal or under-supply
- Benefits for under-drawal or over-supply
Day of Delivery (minus ‘1’)
MCP
The Day-Ahead-Market for Indian PXs has been fashioned on the NordPool Market
Product Development Life Cycle
1, 2, 3 Spot Market
(DAM, Intraday, Contingency)
4OTC through
Exchanges5
Forward Market (Week / Month
Ahead)6,7
Futures and Options
1, 2, 3 Spot Market
(DAM, Intraday, Contingency)
4OTC through
Exchanges5
Forward Market (Week / Month
Ahead)6,7
Futures and Options
Market maturity depends on:a. Extent of liberalization of market b. Regulatory Supportc. Participation by entities d. Liquidity of transactions
Market maturity depends on:a. Extent of liberalization of market b. Regulatory Supportc. Participation by entities d. Liquidity of transactions
Note: The time period varies from 2 to 8 yearsNote: The time period varies from 2 to 8 years
Time
1
4
6
2 3
5
7
Various Products Sl. No. Products Term / Duration
1 Intraday contracts For trades during the day
2 Day-ahead-contingency contracts
For 24 Hrs the next day
3 Week ahead contracts 24 Hrs of calendar week
4 Month-ahead-contracts 1st, 2nd and 3rd calendar months
5 Intra-state contracts For 24 Hrs after two days – Only within State geographical boundary
Longer Tenure Products – On Exchange
Longer tenure ProductsContracts directly between utilities or via traders
Contract structure continues to remain non-standardized
• Risks have to be detailed for each transaction separately
Individual search has to be conducted for buyers / sellers
Information asymmetry among different entities causes huge price variations
Credit issues also create lack of liquidity and uncertainty of financial transaction
Single unit owners (like captives) have huge uncertainty in the absence of appropriate penalty and risk management structure
Longer tenure products available on the Exchange help byIncreasing information transparency by providing a central infrastructure
Exchange ensures payments for all transactions
Managing open access applications centrally through the Exchange
Agenda
Competitive Power Markets
Development of Power Exchange in India
Way AheadExperiences so far
Way Ahead
Experience so far - Policy & Regulatory Gap
Electricity Act is silent on Power market initiatives“Section 66 - The Appropriate Commission shall endeavour to promote the development of a market (including trading) in power in such manner as may be specified and shall be guided by the National Electricity Policy referred to in section 3 in this regard”
National Electricity Policy makes a mere mention of it5.7 COMPETITION AIMED AT CONSUMER BENEFITS
5.7.1 To promote market development, a part of new generating capacities, say 15% may be sold outside long-term PPAs…In the coming years, a significant portion of the installed capacity of new generating stations could participate in competitive power markets…:-
• ...D. Development of power market would need to be undertaken by the Appropriate Commission in consultation with all concerned…
• ...F. Enabling regulations for inter and intra State trading and also regulations on power exchange shall be notified by the appropriate Commissions within six months.
Need to define the development course to be adopted
04/20/23 ERLDC: POSOCO 29
PX promotes competition in generation that leads to improved
efficiencies, increased supply & reduced price.
PX is an important mechanism to utilise transmission capacities
between regions, thus promoting a better national & inter-regional
utilization of sparse generation resources.
PX promotes Demand Side Response of price signals. Demand Side
Response is essential in any competitive market & contribute in effect
as an alternative to Generation Capacity.
PX provides financial security for long term investments in generation
& transmission. Runs competitive auctions of electricity on non
discreminatory basis.
04/20/23 ERLDC: POSOCO 30
Reduce Transmission Costs
Efficiency in Price Discovery
Optimize Generation Capacity Utilization
Optimize Transmission Capacity
Facilitate Sell from Captive Generators
Optimize Cost of Electricity Procurement
Facilitate Policy Objectives related to “Merchant Gen. Capacity”
Managing Counter Party Risk
Boost Investments
04/20/23 ERLDC: POSOCO 31
A competitive electricity market generally consists of five
elements working together for efficient operation of the
market:
Government, Regulator – Enabling Framework
Network Owner, System Operators - Infrastructure
Power Exchange, Bilateral Market – Market Places
Generators, Consumers, Suppliers, Traders – Market
Participants
Balance Responsible, Portfolio Managers – Service Providers
04/20/23 ERLDC: POSOCO 32
Government & Regulator – Govt. provides legal & policy framework for
development of competitive electricity market. CERC responsible for
regulation of inter-state entities & SERCs for intra-state entities.
Infrastructure Providers –
Transmission Utilities – CTU owns & operates all inter-state lines & STU
own & operates all intra-state transmission assets.
System Operators – Responsible for Real time operation of power System
ensuring security & stability of grid operation.
Power Exchange & Bilateral Market – Both the market co-exists &
provides platform for trading. Price reference of bilateral market is
from PX.
04/20/23 ERLDC: POSOCO 33
Market Participants – Generator, Consumer, Supplier & Trader
Generators – Operate both in wholesale market & PX. Generator includes
ISGS, State Generators, IPP & Captive Generators
Consumers/End users – Large scale consumers may operate in
wholesale market & PX
Suppliers – Normally serve end-users based on their own generation or
power purchased in wholesale markets
Traders – Although all PX participants are trader in a sense, buying &
selling energy, the term is used to classify entities without ownership/control
of physical assets to back up their positions. The traders facilitates
transactions between buyer & sellers and takes position in the market to
arbitrage on price fluctuations.
04/20/23 ERLDC: POSOCO 34
Balance Responsible – RLDC’s are responsible for operating the inter-
state balancing markets(UI Mechanism). Each of the states is a balance
responsible entity. However on implementation of intra-state balancing
market (intra-state ABT) each of entities become balance responsible
entities as per the provision of Intra-State balancing market regulation.
Portfolio Managers – Service providers are participants who themselves
do not have positions in the electricity market. These entities are “Portfolio
Managers, are companies who provide trading services on behalf of their
clients. This can include trading, electricity procurement, risk management,
forecasting, profiling, settlement and invoice service.
Fundamentals: Review
Market
– A mechanism through which buyers and sellers interact to determine prices and exchange goods and services
– Entire set of conditions surrounding production, transport and distribution of a product
– Size determined by geography, transport, costs, etc.
In a market everything has a price !!!
• Price – is the value (not cost) of the good/service in
terms of money
– represents the terms on which voluntary exchange of goods & services takes place
– Serves as signal to the producers and consumers
Demand • Need + Purchasing power = Demand• Law of downward – sloping demand
– When price of a commodity is raised, buyers tend to buy less of the commodity, other things remaining constant (e.g., purchasing power, related goods, preferences, environment, etc.)
Quantity
Price
Supply Curve• The supply curve shows the relationship between its
price and the amount of that commodity that producers are willing to produce and sell, other things held constant (e.g., cost of production, technological advancement, related goods, etc.)
Quantity
Price
Equilibrium
Quantity demanded is equal to quantity supplied
Quantity
Price of commodity
Surplus
Shortage
Shift in equilibrium
Price elasticity (responsiveness) of demand
Elastic More Elastic
Less Elastic
Perfectly Inelastic
Perfectly elastic
%age Change in Quantity Demanded in response to a one percent change in price.
Power Exchanges: Concepts
Power Exchanges
An electricity Power Exchange provides a
spot market, mainly day-ahead, for
electricity, which like any other market
matches demand and supply for each time
block, while providing a public price index
Role of an Exchange
• Standardized Specifications - Contract structure. Tool for system operator to obtain the real-time balance
• Standard margining system– Eliminates credit rating(stakeholder’s ability to pay debt)
• Risk Management in a volatile market – Robust Clearing & Settlement systems
• counter party credit risk absorbed
– Fair, Safe, Orderly market • Rigorous financial standards and surveillance
procedures
Role of an Exchange
• Price Transparency– Anonymous auction platform– Price discovery by matching of demand-supply– Long term price signals
• Transparent real time, pan-geographic price dissemination – Benchmark Reference Price – Liquidity to Participants
• Risk Management– Separation of Pricing Function– Neutral, Secure and Self Regulated Market
Bilateral Markets
Bilateral: Cooperative Approach
– Major Concerns –• Price Discovery • Price Discrimination• Liquidity• Transaction Costs
Power Exchange: Non-Cooperative Approach
Exchange vs. OTC ContractOTC contract Exchange Traded
Available to limited market participants
Liquid market – wider market participation
Bilateral/ Customized Contracts Standardized contracts
Counter party credit risk Counter party risk assumed by exchange
Is an involved participant Platform is Neutral
Opaque dealing Transparent price discovery mechanism
Bilateral dispute settlement mechanism
Well defined dispute settlement mechanism
Difficulty in reporting and regulating various trades
The exchange is the central reporting and regulating
entity
Interplay:PX – Bilateral Markets (OTC)• Rivals –
• Competition between two types of markets
• Complementary –• Competition limited to day-ahead• Preference to OTC in longer time frame
• Inter-dependent – • Prices on the PX & OTC must be very close else arbitrage
occurs (Practice of taking advantage of a price difference between
two or more market) • Hedging (Practice of taking a position in one market to offset and
balance against the risk adopted by assuming a position in a contrary or opposing market or investment)
The PX Clearing HouseA clearing house is a financial institution that provides clearing & settlement services for financial and commodities derivatives and securities transactions. It stands between two clearing firms and reduces the risk of one (or more) clearing firm failing to honor its trade settlement obligations.
• Subordinate to the PX• Intermediary for transactions• Tracks all transactions• Primary Role – Guarantee financial reliability to
the participants• Participants required to maintain margin accounts
• Effectively hedges against credit risk
Auction Models
MCP
MCV MCV
MCP
PRICE PRICE
VOLUMEVOLUME
One Side Auction Two Side Auction
Supply SupplyDemand
Estimated Demand
MCP = Market Clearing Price MCV = Market Clearing Volume
Market Clearing Price
MCV
MCP
PRICE
SalePurchase
Accepted Purchase Bids (>= MCP)
(Consumers’ Discount)
Accepted Sale Bids (<= MCP)
(Generators’ Surplus)
Price Calculation Algorithm -Day ahead– Hourly Bids
0
100
200
300
400
500
600
700
800
0 200 400 600 800 1000 1200 1400
MWh/hr
pa
ise
/kW
h
Market Clearing Price (MCP) : 270 p
Market Clearing Volume (MCV): 600MW
AGGREGATED SALE BIDS
AGGREGATED PURCHASE BIDS
PRICE-paise/kWh 0 100 200 230 250 270 300 400 500 600 700
PARTY A-ZONE-1 600 600 600 400 400 400 400 200 150 100 100
PARTY B-ZONE-1 600 600 400 400 300 200 0 0 -50 -100 -200
PARTY C-ZONE-2 0 -100 -100 -100 -200 -300 -400 -500 -500 -500 -500
PARTY D-ZONE-2 0 0 -200 -300 -300 -300 -400 -500 -500 -500 -600
SUM, PURCHASE 1200 1200 1000 800 700 600 400 200 150 100 100
SUM, SALES 0 -100 -300 -400 -500 -600 -800 -1000 -1050 -1100 -1300
NET TRANSACTION 1200 1100 700 400 200 0 -400 -800 -900 -1000 -1200
Price (Rs./kWh) 0 20 1 2 2.1 3 3.1 4 4.11.1
SalePurchase
Rs/kWh
MW40 80 120
2
3
4
Price
MW
2.5
Portfolio A, MW 20 020 020
SUM, Purchase 120 100 80 80 60 60 40 40 202060
Portfolio C, MW 40 -400 -12020 0 -120-80 -81-60
Portfolio B, MW 6060 2040 40 2040 4040
SUM, Sale 0 0 -40 -120 -120-80 -81-60
Net transaction 120 20 -100 -80-20 -21100 80 80 -1000
2.5
60
MCP:
MCV (Market clearing volume):
Price Calculation Algorithm ….each hour
Advantage PX• Promotes trade and competition• Reliable price discovery
• Reference for bilateral contracts
• PX recognizes value of commodity (electricity) • Does not guarantee lower prices
• Optimal utilization of sparse resources• Generation• Transmission
• Credit risks covered by the PX• Congestion Management• Facilitates trading short term surpluses arising
on account of uncertainty in demand forecasting
Implementation in India
The Milestones• July 2006: Staff Paper by CERC• February 2007
– CERC Guidelines for establishment of Power Exchange
• August 2007– In principle approval to the first power exchange in the country
• January 2008– Revised Regulations for Open Access in Inter-state
Transmission, Effective 1st April 2008
• June 2008– Procedure for Scheduling of Collective Transactions by CTU– Commencement of operations of first exchange
• October 2008– Second Exchange begins operations
Open Access Regulations, 2008• Categories of Transactions
– Bilateral– Collective Transactions discovered on a Power Exchange
• Nodal Agency– Bilateral: RLDCs– Collective: NLDC
• Transmission Charges– Shift from “Contract Path” to “Point of Connection”– Both buyers and sellers to pay
• Transmission Losses– Applicable on both buyers and sellers
• Thrust on empowerment of SLDCs• Groups of buyers and groups of sellers
Regulator’s Approach
CERC Guidelines for setting up of a Power Exchange:
“The general approach of the Commission is to allow operational freedom to the PX within an overall framework. The regulation would be minimal and restricted to requirements essential for preventing derailment/accidents and collusion. Private entrepreneurship would be allowed to play its role. The Commission shall keep away from governance of PX, which would be required to add value and provide quality service to the customers”
Eligibility Conditions • Entities scheduled by RLDCs
– Deemed Regional Entity• Entities whose metering and energy accounting done by
RLDCs
• Entities scheduled by SLDCs– SLDCs to assess TTC/ATC for their State system– Prior Consent from respective SLDCs– Standing Clearance / NOC
• New Entities – To Satisfy conditions as laid down in CERC Order
58/2008 dated 07.05.2008– Obtain Prior Approval from RLDCs/SLDCs as per
jurisdiction
Salient Features of PX Implementation
• Voluntary participation• Day ahead• Energy only• Physical delivery only• Double sided bidding• Hourly bids• Uniform pricing• Multiple exchanges• Congestion Management using ‘Market Splitting’
N L D C
Power Exchange
NRLDCSRLDC WRLDC ERLDC NERLDC
Information exchanged over
leased line between NLDC and PX
Constituents
Constituents
Constituents
Constituents
Constituents
SLDCs
Final Trade Results for State Utilities & Intra State
Entities to be sent by PX directly to SLDCs
Information Exchange
Pro
vis
ion
al
So
luti
on
Req
ues
t fo
r S
ched
uli
ng
Time Line for scheduling of Collective Transaction
10:00 14:0018:00
12:00
Market Participants to place their Bid
PX to send Scheduling Request to NLDC based on margin specified by NLDC/SLDCs
RLDCs/SLDCs to incorporate Collective Transactions in the Daily Schedule
PX to send provisional unconstrained solution to NLDC and flow on TS as informed by NLDC
13:00 17:30
NLDC to check for congestion. In case of congestion shall intimate PX regarding to the period for congestion and available margins
15:00
NLDC to confirm acceptance. PX to send files to SLDCs for scheduling
16:0017:00
NLDC to send details to RLDCs for scheduling
RLDC to confirm to NLDC
Application from PX
• Application for scheduling : – Summary of Collective Transaction – Declarations
• Scheduling Request: – Each Region– Inter-Regional corridor – At Regional entity Periphery– Other Bid Area, Sub-Bid Area – if required.
Treatment Of Losses
• Average transmission losses of the respective region to be applied, both on Buyers and Sellers– Sellers to inject extra power (MW) in addition to
contracted power (Contracted Power + Losses)– Buyers to draw less power (MW) than contracted
power (Contracted Power – Losses)
• Applicable losses to be declared in advance• Intra-State losses to be taken care of by the
respective SLDCs• Additional losses for wheeling, if necessary
– To be notified in advance by NLDC– Applicable only for Injection
Treatment of Losses… for buyer
• NR (Regional) Loss: 6%• S1 (State) loss: 4.85 %• Buyer X bids for 100 mw at its respective regional periphery
100 MW
at NR periphery
NR
Loss
6%
94 MW at S1 periphery
S1
Loss
4.85%
89.441 MW at Buyer End
X
(Buyer)
Bid VolumeScheduled Drawal
<= SLDC Clearance
Maximum Bid= Volume in standing clearance + Regional & State losses
• SR (Regional) Loss: 6%• A1 (State) loss: 4.85%• Seller Y bids for 100 mw at its respective regional periphery
SR
Loss
6%
111.14 MW Injected by
seller at its end
A1
Loss
4.85%
Y (Seller)106 MW at state
periphery 100 MW at regional periphery
Treatment of Losses… for seller
Bid VolumeScheduled Generation
<= SLDC Clearance
Maximum Bid= Volume in standing clearance – Regional & State losses
Commercial Conditions (1)• Charges for Collective Transactions payable to NLDC• Application Fee
– @ Rs. 5,000/-, payable by PX to NLDC at the time of application• Transmission Charges
– Applicable for each point of injection and drawl– Charges for use of ISTS @ Rs. 100 per MWh
• Operating Charges– @ Rs. 5,000/- per day per entity involved– Buyers and Sellers in a State to be clubbed into separate groups– Each group to be counted as a single entity by NLDC
• Payment by PX to NLDC– Transmission and Operating Charges: By next working day– Preferred Mode: Electronic Fund Transfer
• Default in Payment by PX to NLDC– PX to pay a simple interest @ 0.04% for each day of default from the
due date of payment
Commercial Conditions (2)
• Charges for Collective Transactions payable to SLDCs– Transmission Charges: As per SERC, if notified or
else Rs. 100/MWh – Operating Charges: Rs. 2,000 per day for each point
of transaction– Each point of injection and drawl to be counted
separately by SLDCs– PX to settle SLDC charges directly with respective
SLDC
Congestion Management
04/20/23 ERLDC: POSOCO 71
Congestion visible to the market• “Congestion” means a situation where the demand for
transmission capacity exceeds the Available Transfer Capability (ATC) Note: Here ATC = Total Transfer Capability (TTC) – Reliability
Margin (RM) Congestion does not necessarily mean that
• Load is not being met• Generation is not being evacuated
Congestion implies that an entity willing to pay is not able to access cheapest source of power
Existing transmission system was not planned with short-term open access in mind
Congestion• Sign of growth and vibrant market• Natural corollary to Open Access
When Congestion will take place ?
N
E, NEW
S
Scenario Congestion
4S X
1S 3D X
2S 2D X /
3S 1D
4D X
S= Surplus D= Deficit
Congestion Management: Bid Area
Area Region States
N1 North JK, HP, CHD, PUN, HAR
N2 North RAJ,DEL, UP, UTT
W1 West MP, CHTG
W2 West MAH,GUJ, GOA, DD,DNH
S1 South AP, KAR, GOA
S2 South TN, KER, PONDY
E1 East WB, SIK, BIH, JHAR
E2 East ORISSA
A1 North-East TRIP, MEGH, MANI, MIZO
A2 North-East AS, AP, NAGA
NLDC Report on Congestion to PX• Interconnections
– North, West, East and North-East synchronously connected– South connected asynchronously.
• Power flows – For synchronously connected systems, allocated notionally whereas the
actual flows follow the laws of physics – For asynchronously connected system, the HVDC set points may be changed
but this would also have an impact on the flows in the synchronously connected system.
• Congestion – May occur simultaneously in multiple corridors– May shift from one corridor to another while reworking solution.
• Iterative process – Difficult to implement (time line has to be met)
• In order to avoid back and forth, if congestion is detected, then all the limits are communicated to the exchange (all corridors, all regional imports & exports)
• Automated without any manual intervention
Discovery of Multiple Prices & Interplay
• Prices discovered in Power Exchange– Reflection of anticipated demand-supply position for
the next day
• Multiple Prices– Collective Transactions:
• Two prices – one for each exchange
– Two Grids – two UI Prices– In case of congestion, market split
• Area prices• Multiple exchanges
Multiple Power Exchange Operation
• First Power Exchange : 27th June 2008– Indian Energy Exchange
• Promoters – Financial Technologies (India) Ltd., MCX, PTC. • Key partners/investors – IDFC, Adani Enterprises, Reliance
Energy, Lanco Infratech, REC, and Tata Power Company
• Second Power Exchange : 22nd October 2008– Power Exchange of India (PXI):
• Promoters – NSE, NCDEX • Equity Partners : Power Finance Corporation, Gujarat Urja Vikas
Nigam, JSW Energy, GMR Energy, Jindal Steel & Power
• Third Power Exchange in the offing – Promoted by NTPC, NHPC, TCS
Experience Gained
*Includes Bilateral + Collective transactions
04/20/23 ERLDC: POSOCO 97
04/20/23 ERLDC: POSOCO 98
Groups of Buyers and Sellers at Regional Level Scheduled For Power Exchange Transactions
0
10
20
30
40
50
6010
-Aug
-08
9-Sep
-08
9-Oct-
08
8-Nov
-08
8-Dec
-08
7-Jan
-09
6-Feb
-09
8-Mar
-09
7-Apr
-09
7-May
-09
6-Jun
-09
6-Jul-
09
5-Aug
-09
4-Sep
-09
4-Oct-
09
3-Nov
-09
3-Dec
-09
2-Jan
-10
1-Feb
-10
3-Mar
-10
2-Apr
-10
2-May
-10
1-Jun
-10
1-Jul-
10
31-Ju
l-10
30-A
ug-10
29-S
ep-10
29-O
ct-10
28-N
ov-10
28-D
ec-10
27-Ja
n-11
Date
No. o
f Gro
ups
04/20/23 ERLDC: POSOCO 99
Volume Change During Congestion (1)
Volume Change During Congestion (3)
Volume Change During Congestion (4)
Volume Change During Congestion (6)
Volume Change During Congestion (7)
Market Clearing Price (MCP) - Volatility
Source: Website of Indian Energy Exchange (IEX)
Price Vs Volume (IEX)
Price Duration Curve (IEX)
Volume Cleared at Different Prices (IEX)
Correlation – Price and Shortage/Surplus
Landmarks – Both PX• Maximum Volume Cleared (Region-wise)
– Buy (MW)• AR – 150, NR – 1223, WR – 650, SR – 1968, ER – 200
– Sell (MW)• AR – 165, NR – 1131, WR – 907, SR – 597, ER – 765
• Maximum Volume Cleared – IEX
• 1968 MW on 22- Nov-08• 26.44 MU on 27-Jun-09
– PXI• 384 MW on 26-Jun-09• 7.07 MU on 1-Mar-09
– Combined (IEX + PXI)• 31.98 MU on 27-Jun-09
• Total Energy Transacted through PX Between 27th June 2008 and 7th July 2009– IEX – 3.92 BU– PXI – 0.25 BU– Total – 4.17 BU
• Highest Buying Region on any day (IEX)– NR – 24.75 MU on 27th June 2009
• Highest Selling Region on any day (IEX)– WR - 16.38 MU on 27th June 2009
Data taken for the period 28-June-08 to 7-July-09
Landmarks – IEX
Data taken for the period 28-June-08 to 7-July-09
Landmarks – PXI
Data taken for the period 28-June-08 to 7-July-09
Total revenue Retained by POWERGRID (upto 31.03.2009) Application fee + Operating Charge: 2.02 Crores 25% of Transmission Charges: 4.15 CroresTotal : 6.17 Crores
Impact of PX on short term trading
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Apr-09 May-09 Jun-09 Jul-09
PX transactions as % of trading licensees volume
PX transactions as % of total bilateral trade
Power Exchange share in short term trading
Source : CERC June 09 report
Exchange day ahead trade as % UI trading
PX transaction as % of UI transaction
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09
PX transaction as % of UI transaction
Source : CERC June 09 report
IEX monthly Average Price
IEX Monthly Volume
Cost of Transmission (paisa/unit)– Comparison during 2008-09
• Avg. Cost of transmission during congestion : 219
• Avg. Cost of Transmission : 15
• Avg. Cost of Short-term open access : 6
• Avg. trans. Charge retained by CTU : 2
Market Development
Spot/ Auction Mkt
OTC Markets
IndividualB & S
Exchanges
Time
Market
Maturity
PXs Worldwide• India www.iexindia.com ,
www.powerexindia.com
• Nord Pool www.nordpool.com • Amsterdamwww.apx.nl • UK PX www.ukpx.co.uk • IESO, Ontario www.theimo.com • PJM www.pjm.com/index.jsp• California ISO www.caiso.com • Australia www.nemmco.com.au
Electricity Markets worldwide
Power Market implementedPower Market implemented
Power Market planned/under implementationPower Market planned/under implementation
Courtesy:NORD POOLConsultants
Thank YouThank You