A plan addressing the near-, medium-, and long-term interventions for the development of the electrical market has been proposed by a commission established by the power ministry.The panel's recommendations for interventions include establishing a system to check on the state utilities' maintenance of a sufficient supply, improving the efficiency of the day-ahead market, introducing a market-based system for secondary reserves, and implementing 5-minute based metering, scheduling, dispatch, and settlement.
The adjustments also include demand response and aggregation, which could minimise reserve requirements and lower electricity costs. To keep track of participation and avoid price volatility, market monitoring and surveillance operations would be strengthened. The implementation of a regional balancing framework for deviation management will lead to a decrease in the States' ISTS-level deviation fines, which will lessen their reserve needs.
Under the leadership of S Power Secretary Alok Kumar, the ministry established a Group for "Development of Electricity Market in India" with participation from the Ministries of Power, New & Renewable Energy, Central Electricity Authority, Central Electricity Regulatory Commission, Grid Controller of India (Grid-India), and state governments. According to a power ministry statement, the Group gave the findings to Union Minister of Power and New & Renewable Energy, R. K. Singh.
The Group made recommendations to address important problems, such as the predominance of rigid long-term contracts, the necessity for resource adequacy planning in the federal
government and the states, and the ability to take advantage of a grid's natural diversity. The group also sought to address issues like reducing system inefficiencies by relying less on self-scheduling, increasing the proportion of renewable energy sources in the overall energy mix, encouraging market participation for renewable energy sources, and being firm in the procurement of ancillary services through a well-developed ancillary services market. The solutions are intended to establish an effective, ideal, and trustworthy market structure to facilitate the energy transition and the grid integration of renewable energy.
The Group has provided a detailed roadmap and proposals for the future reform of the Indian electricity market. The transition to renewable energy will result in significant changes to India's electrical markets. According to Singh, the proposed reforms will help India reach its goals for renewable energy and will also foster investment in the sector. The adjustments will make it possible for renewable energy to be more effectively integrated into the grid and open the door to a cleaner, greener future.
The need for enabling operational and power market advancements to function under a new energy order has been further underscored, according to Singh, as a result of India's energy shift to renewable energy. The minister added that rather than relying on the methods used in other nations, we should come up with our own solutions. "India has been in the forefront of taking timely interventions and was able to keep electricity prices in check during the energy crisis in the last one year, whereas electricity prices shot up many times in electricity markets of many developed countries," Singh added.
The Minister emphasised the importance of selecting the most effective power generation capacity when negotiating capacity contracts and agreed that long-term PPAs (Power Purchase Agreements) of 12–15 years duration should be used going forward. In order to maintain competition and transparency, the Union Minister also instructed to immediately start developing new RE capacity based on Contract for Difference (CfD) methodology. He ordered that the CERC validate the power exchange clearing engine.
The overall traded volume in the Indian electricity market in 2022–2023, according to the most recent data, was 1,02,276 MU (million units), which is a very small amount of the 16,24,465 MU of energy produced from all sources (including RE). Electricity demand peaked in 2022–2023 at 215.8 GW, and by 2029–2030, it is anticipated to reach 335 GW.India's electricity markets will change as a result of the Ministry of Power's efforts to reform the country's electricity market and the interventions that the Group for Development of Electricity Market in India has proposed. This would enable India to accomplish its energy goals sustainably.
