By long-term power purchase getting outdated, the Union Ministry of Power has introduced a set of reforms for short-term sale purchase of power. The ministry has proposed an incorporated day-ahead market (DAM) in power exchanges, which would combine trading of green and conventional energy, better the power price discovery, and improve payment to power generators.
In upcoming days, the ministry is also looking at merging the DAMs of all power exchanges into one entity, which will supervise the trading of day-ahead bids for both renewable energy (RE) and conventional power. The integrated DAM, though, has been planned to initiate without this merger, for now, said officials.
In the set of proposals, the ministry said all existing DAMs should be integrated, with separate price formation for RE and conventional energy. Participants would be permitted to put bids for selling or buying both RE and conventional power.
The step comes at a time when RE in the country is facing lack of buyers.
As per industry estimates, there are currently 19 gigawatt (Gw) of projects, which don’t have any long term power purchase agreements. There are 31 Gw of RE power projects under different stages of construction; 21 Gw are under bidding.
“Our nation has been witnessing remarkable transformation towards sustainable energy economy, with as increasing share of clean and green energy in its mix. With the aim of having multiple options for market participants in Re, which would be competing against each other, it has been decided to introduce integrated DAM in power exchanges with separate price formation for RE and conventional power,” said a note by the Ministry of power.
A senior executive with a power exchange said the power ministry wrote the central electricity regulator, grid operator Power System operation Corporation (POSOCO), and the other two exchanges to launch the integrated DAM by the end of June this year.
The power trading market presently has two platforms in India -power Exchange India (PXIL), and Indian Energy Exchange (IEX). IEX holds 95 per cent of the day ahead spot power trading market. PXIL holds 40 per cent market share in the term ahead market and renewable energy certificates.
The Power ministry has projected that in the integrated DAM, buyers and sellers would indicate the amount of RE and conventional power they are placing bids would be cleared at once. All quantities transacted under ‘renewable purchase obligation’. In this case there is any unselected quantity of Re, it would go to unconventional segment.
The power ministry considers this would assist participants identify they “have actually purchased renewable power from the exchange”.
“Integrated RE and conventional DAM will be a boon to RE capacity is created, so that they sell RE at market determined-prices. The discoms are also not required for long-term rigid contracts, and would be eligible to buy in a flexible manner. They would buy only for first time blocks of next day when they really need that power and at the same time meet their renewable purchase obligation,” said Rajesh Kumar Mediratta, director (strategy and regulatory affairs), IEX.
“The entity can be POSOCO, which can function as a market coupling operator. However, at present, we may go ahead without market coupling,” stated from the note by the power of ministry.
.jpg "Overcoming the Hurdles of Scaling a Startup")
