Comments on CERC’s Staff Paper: Developing a Common Platform for

Electricity Trading

S. A. Khaparde, A. R. Abhyankar and V. Sarkar

Indian Institute of Technology Bombay

Topics of suggestions

Congestion Management Issue of congestion surplus Utility of market splitting under meshed

network situation Transmission Pricing

Compatibility of PX transmission costs with those of bilateral trades

Ex-ante or ex-post? Point-of-connection (POC) scheme

Suggestions related to Congestion Management

Proposed approach for handling congestion surplus

Area A(2000Rs/MWh)

Area B(3000Rs/MWh)

100 MW

50 MW

150 MW

150 MW

50 MW

Proposed approach for handling congestion surplus (con..)

Original pricing rule: Generator at area A is paid a price of

2000Rs/MWh Load at area A pays a price of 2000Rs/MWh Generator at area B is paid a price of

3000Rs/MWh Load at area B pays a price of 3000Rs/MWh ISO collects a net congestion surplus of

100000Rs/h

Proposed approach for handling congestion surplus (con..)

Proposed pricing rule: Generator at area A is paid a price of

2000Rs/MWh Load at area A pays a price of 2000Rs/MWh Generator at area B is paid a price of

3000Rs/MWh Load at area B pays a price of

(50*3000+100*2000)/150= 2333.33Rs/MWh ISO collects a net congestion surplus of 0

Rs/h

problem of power mixing

Area A(2000Rs/MWh)

Area C(3000Rs/MWh)

Area B(2200Rs/MWh)

100

MW

80 M

W

200 MW

100 MW

Area D(3500Rs/MWh)

70 MW

120 MW 70 MW

100 MW

180 MW

200 MW

130MW

Problem of power mixing (con..)

Area ‘A’ & ‘B’ are generation surplus areas Area ‘C’ & ‘D’ are generation deficit areas 100 MW from area ‘A’ and 50 MW from area ‘B’ are

mixed first to form a net surplus amount of 150 MW. Areas ‘C’ and ‘D’ get shares in this mixed amount in a

ratio of 8:7 It can’t be immediately determined how much power

is delivered from a sending end area to a receiving end area

Therefore an additional tie-breaking strategy is required to implement the proposed method

Principle of proportional sharing may be adopted for the purpose of tie-breaking

Compatibility of Nord Pool version of area pricing with Indian system

Nord Pool approach of market splitting considers only area power balance and inter-zonal capacity limit constraints

This approach is mainly applicable to a radial system where removal of any inter-zonal link separates the original system into two totally disconnected systems

In case of a radial system, for a certain zonal injection and withdrawal pattern, power balance equations give a unique solution to the inter-zonal flows

However, for a meshed system, Nord Pool approach may lead to multiple solutions

Unfortunately, our system is a meshed system

Structure of the Indian system

NR

WR

SR

ER

NER

Structure of the Indian system (con..)

Three loops are there in the system NR-WR-SR-ER NR-WR-ER WR-SR-ER

There is no synchronous loop in the current system However, an additional tie breaking strategy is to be

designed to distribute the net incoming or outgoing flow of each of the regions NR, WR, SR & ER over the corresponding interfaces

In presence of synchronous loop, Nord Pool approach will fail!

Our proposal

To go for a direct OPF based congestion management mechanism considering regions as nodes

Joint clearance of power exchange and bilateral trades for a better utilization of transmission resources

Financial transmission rights to give financial security to bilateral traders

Setting up curtailment priority among the bilateral trades by means of transmission service request mechanism

Suggestions related to Transmission Charges

Compatibility of PX transmission costs with bilateral trades

It is not clear whether the transmission charges for PX in Rs/MW/Hour would be comparable with prevailing long term rates or short term rates?

The staff paper mentions that the usage of pre-assigned transmission capacity by PX on inter-regional corridors shall be ‘akin’ to long term usage.

If this is so, whether, the charges would be comparable with long term rates?

Compatibility of PX transmission costs with bilateral trades (con..)

We believe that the PX trades and short term bilateral trades would act as two parallel activities for sale and purchase of power.

It is expected that the PX would help the price discovery for bilateral transactions

This would hold true only if the entities involved in both mechanisms are subjected to common transmission prices

Common platform for transmission capacities mandates common platform of its pricing

The transmission charges for PX trades and short term bilateral trades should be comparable

Ex-ante or Ex-post?

No specific details about socializing total transmission cost among the participants are given in the staff paper

Ex-post scheme of transmission usage charge Members of PX would come to know about their

share in transmission cost, only after market clearance

If the costs are made distance based or direction sensitive (rightly so!), then participants are exposed to vagaries of transmission charges

Socializing transmission costs does not necessarily mean assigning charges based only on MWs traded

Our Suggestions

The transmission pricing scheme should be ‘ex-ante’

The transmission charges should be sensitive to distance and topology of the network

This gives rise to appropriate price signals for generator and load investments

The ‘point-of-connection’ (POC) transmission tariff provides a good solution to the above problem

Point-of-Connection (POC) Scheme

The payment at one point, the point of connection, gives access to the whole network system, and thus the whole electricity market place

Single charge in Rs/MW/Hr, depending upon the level of connection

Real power tracing can be employed to arrive at point charges in POC tariff

Tracing results are topology dependent and hence give rise to spatially variant price signals

POC scheme can be applied to both, i.e., PX trades and short term bilateral transactions

Thank Yousak@ee.iitb.ac.in