n · 2. affidavit .0, -- .... 32 for indian ... iex commenced its operation by introducing day...

No. IEX/BD/1540/16-17

To,

The Secretary,

Central Electricity Regulatory

3rd & 4th Floor, Chanderlok Buil

36, Janpath

New Delhi -110001

"'N teLm....)

.INDIAN ENERGY EXCHANGE

India's No.1 Power Exchange

Date: 21.09.2016

Subject: Petition under Section 66 of The Electricity Act, 2003 read with the Regulation 7 of the

Central Electricity Regulatory Commission (Power Market) Regulations, 2010 for

approval of introduction of the Green Power (Renewable Energy) Contracts at Indian

Energy Exchange Ltd.

Dear Madam,

With reference to subject matter Petition, following documents pertaining to online

submission of Petition on 21.09.2016 is enclosed:

a. Diary Acknowledgement

b. Petition Summary

c. Form-I (Payment Related Report)

In addition to above, Ten copies (One original and 9 copies) of the Petition on the subject matter

are enclosed for records of the Hon'ble Commission.

Yours faithfully,

k4,44-07

V itg pr;p id.ent

(Regulatory Affairs & Communication)

Encl: As above

www.iexindia.com

Indian Energy Exchange Ltd Registered & Corporate Office: Fourth Floor, Plot No.7, TDI Centre, District Centre, Jasola, New Delhi - 1 10025, India.

Tel No.: +91-1 1-4300 4000 I Fax No.: +91-1 1-4300 4015

CIN: U74999DL2007PLC277039

BEFORE THE CENTRAL ELECTRICITY

REGULATORY COMMISSION

3RD& 4TH FLOOR, CHANDRALOK BUILDING,

36, JANPATH, NEW DELHI — 110 001

PETITION NO. /MP/ 2016

IN THE MATTER OF:

Petition under Section 66 of The Electricity Act, 2003

read with the Regulation 7 of the Central Electricity

Regulatory Commission (Power Market) Regulations,

2010 for approval of introduction of the Green Power

(Renewable Energy) Contracts at Indian Energy

Exchange Ltd.

And

IN THE MATTER OF:

Indian Energy Exchange Limited ...Petitioner

INDEX

Sl. No. Particulars Page No.

1. Petition 1

2. Affidavit .0, --....

32

For INDIAN ENERGY'EXCHANGE LIMITED

At: New Delhi

Dated: This 21" day of September, 2016



3RD& 4TH FLOOR, CHANDRALOK BUILDING,

36, JANPATH, NEW DELHI — 110 001


IN THE MATTER OF:






Exchange Ltd.

And

IN THE MATTER OF:

Indian Energy Exchange Limited,

4th Floor, TDI Centre,

Plot No. 7, Jasola,

New Delhi 110 025 ...Petitioner

MOST RESPECTFULLY SHOWETH

1. The Indian Energy Exchange Limited (hereinafter

referred to as the "IEX" or as the "Exchange"), is a

1

0..c PAY F2

+ App. sy. (..,.. Govt. of India ‘ I

* Regd. NO.7717 Area- Deihl

(P Jells Extd • Whose India e

arayan

company incorporated under the provisions of the

Companies Act, 1956 and having its registered office

at 4th Floor, TDI Centre, Plot No. 7, Jasola, New

Delhi 110 025.

2. The Honorable Central Electricity Regulatory

Commission (hereinafter referred to as "Hon'ble

Commission") was pleased to grant permission to the

IEX to set up, operate and commence exchange

operations by its orders dated 31.8.2007 and 9.6.2008.

That IEX has been in operation since 27.06.2008.

3. By way of the present Petition, the Petitioner herein

seeks approval of this Hon'ble Commission to

introduce Green Power (Renewable Energy) Contracts

on its platform.

2

BACKGROUND

4. It is submitted that, IEX is presently operating Day

Ahead Market (DAM) and Term Ahead Market

(TAM) in electricity segment and Renewable Energy

Certificate (REC) Market in accordance with the

relevant rules, regulations and approvals of this

Honorable Commission. In particular, electricity

transactions on Power Exchange are governed by

Power Market Regulations and Open Access

Regulations and Procedure thereof.

5. The Exchange has provided flexibility to participants

by offering diversified products to trade in electricity.

IEX commenced its operation by introducing Day

Ahead Market (DAM) allowing participants to

procure power for the following day. Subsequently, it

offered four products in the Term Ahead Market

(TAM) segment, helping participants manage their

3

power needs up to 11 days in advance. The Exchange

is also aiding the obligated entities in accomplishing

the RPO (Renewable Purchase Obligation) by

providing the platform for trading of RECs

(Renewable Energy Certificates).

6. Since the last eight (8) years, IEX has been

successfully providing a transparent, demutualized

and automated platform enabling competition,

efficient price discovery and counter party risk

management for its participants in DAM and TAM

markets.

7. To give thrust to Renewable Energy in the Country,

the Government of India (GoI) has set a target of

175GW of installed capacity of Renewable Energy

(`RE') by 2022 comprising major share of Solar

(100GW) and Wind (60GW).

4

8. It is submitted that by the end of the 12th Plan i.e.

Year 2017, the RE installed capacity is expected to

increase to about 46,000 MW of Wind and about

10,000 MW of Solar (Green Energy Corridor Report).

Further, large solar generation capacity addition to the

tune of 20,000 MW and more is expected by 2019 and

this would comprise of large Solar Parks of size upto

1000 MW and Ultra Mega Solar Projects of 4000 MW

each (as per the decisions of the Union Cabinet, Dec

2014).

9. Taking into consideration above aspects and to

facilitate integration of renewable energy (RE)

generation in the grid, Hon'ble Commission has

already established a framework for forecasting,

scheduling and handling deviations from schedule for

the infirm RE generation (like wind and solar). To

operationalize this framework, Hon'ble Commission

5

has already notified Central Electricity Regulatory

Commission (Indian Electricity Grid Code) (Third

Amendment) Regulations, 2015 and Central

Electricity Regulatory Commission (Deviation

Settlement Mechanism and related matters) (Second

Amendment) Regulations, 2015 on 07.08.2015.

10.The Honorable Commission has resolved issues

involved in scheduling and deviations settlement of

Renewable Energy by establishing the new

framework wherein special dispensation has been

given to the RE generators (Solar and Wind) by

providing on one hand separate deviation charges and

on the other hand providing for balancing of deemed

Renewable Purchase Obligation (RPO) compliance of

buyers with respect to schedule through RECs.

Relevant provisions of new framework are extracted

below for ready reference:

6

(i) Central Electricity Regulatory Commission

(Deviation Settlement Mechanism and related

matters) (Second Amendment) Regulations,

2015:

"5. Charges for Deviations:

(v) The wind or solar generators which are

regional entities shall be paid as per

schedule. In the event of actual generation

being less than the scheduled generation,

the deviation charges for shortfall in

generation shall be payable by such wind or

solar generator to the Regional DSM Pool

as given in Table —1 below:

(vi) The wind or solar generators which are

regional entities shall be paid as per

7

schedule. In the event of the actual

generation being more than the scheduled

generation, the Deviation Charges for

excess generation shall be payable to the

wind or solar generators which are regional

entities from the Regional DSM Pool as

given in Table — II below:

(vii) In reference to clauses (v) and (vi) of

this Regulation, for balancing of deemed

renewable purchase obligation (RPO)

compliance of buyers with respect to

schedule, deviations by all wind and solar

generators which are regional entities shall

first be netted off for the entire pool on a

monthly basis and any remaining shortfall

in renewable energy generation must be

balanced through purchase of equivalent

solar and non-solar Renewable Energy

Certificates (RECs), as the case may be, by

NLDC by utilising funds from the Pool

Account. For positive balance of renewable

energy generation, equivalent notional

RECs shall be credited to the DSM Pool and

carried forward for settlement in

future. "(emphasis added)

11.Further, in IEGC it has already been clarified by the

Honorable Commission that revision in schedule is

not permissible in case of collective transactions.

Relevant provisions IEGC is extracted below:

(i) Central Electricity Regulatory Commission

(Indian Electricity Grid Code) (Third

Amendment) Regulations, 2015:

9

"6.5 Scheduling and Despatch procedure

for long-term access, Medium — term and

short-term open access

23 . Special dispensation for scheduling of

wind and solar generation

(iii) The schedule by wind and solar

generators which are regional entities

(excluding collective transactions) may be

revised by giving advance notice to the

concerned RLDC, as the case may be. Such

revisions shall be effective from 4th time

block, the first being the time-block in which

notice was given. There may be one revision

for each time slot of one and half hours

starting from 00:00 hours of a particular

day subject to maximum of 16 revisions

during the day." (emphasis added)

12.It is submitted that Ministry of New and Renewable

Energy (MNRE), GoI has hosted a report on its

website on "Market Design for Renewable Energy

Grid Integration in India" published by 'Deutsche

Gesellschaft fir Internationale Zusammenarbeit

GmbH' or `GIZ' wherein inter-alia it is recommended

that for higher share RE scenario, market driven

mechanism is imperative to off-take RE. The report

even goes further to the extent that in long run 100%

power should be traded on Power Exchanges.

Relevant excerpts of the report are reproduced below:

"Off-take of RE power is still a challenge due to its

price competitiveness with conventional sources of

power. RPOs, Feed in tariff, competitive bidding,

tax policy and many other policy, fiscal and

11

regulatory interventions are providing impetus to

facilitate off take of RE. However, in future would

such intervention still facilitate off take of

additional large shares of RE generation such

solar and wind into the grid Hence, it is

imperative to develop a market driven mechanism

in addition to regulatory interventions in order to

foster higher shares of renewables into the grid."

13.It is submitted that with the introduction of Ancillary

Services by this Hon'ble Commission and ample

liquidity in Day Ahead Market (DAM) at IEX, there

are enough tools available to cater variability of

Renewable Energy injected into the grid.

14.In the backdrop of aforesaid developments, IEX

submits that time is now appropriate time to introduce

exclusive Exchange based contracts for trade in

12

renewable energy to provide avenues to existing and

perspective RE Generators for sale of Renewable

Energy through Exchange platform and to provide

more options to Obligated Entities to fulfill their

Renewable Purchase Obligations (RPO).

FRAMEWORK OF GREEN CONTRACTS ON

POWER EXCHANGE:

15.To facilitate the aforementioned objectives and

considering CERC framework for forecasting,

scheduling and handling deviations from schedule for

the infirm RE generation and considering better

forecasting and scheduling of renewable power on day

ahead basis, by this Petition, IEX proposes to

introduce following new contracts (on similar lines

with existing contracts) in Green Power Market

Segment on its platform:

13

(i) Green Day Ahead Market (G-DAM)(based on

collective transactions):

1) Solar Day Ahead Contract

2) Non-Solar Day Ahead Contract

16. Framework of the proposed contracts in Green

Day Ahead Market (G-DAM):

(i) The overall framework of the proposed G-

DAM is based on the existing framework in

DAM and on the premise that :

1) RE Sellers/Buyers can participate in G-

DAM and subsequently in existing DAM

if their bid in G-DAM is not cleared or

cleared partially by way of bidding their

unsuccessful bids in DAM. Further, in

case RE Seller (whose bid is not cleared

fully or partially) participating in DAM

will amount to selling of Renewable

14

Energy at market determined price

therefore as per `CERC (Terms and

Conditions for Recognition and Issuance

of Renewable Energy Certificate for

Renewable Energy Generation)

Regulations, 2010' such RE Seller will

get equivalent amount of RECs in lieu of

bid cleared in DAM.

2) Buyers procuring power in G-DAM shall

be eligible to fulfill their respective RPO

compliance by participating in

Solar/Non-Solar Day Ahead Contracts.

(ii) Eligibility of Participation:

1) Solar Energy sellers shall be eligible to

trade in 'Solar Day Ahead Contract' and

15

Non-Solar RE Seller shall be eligible to

trade in 'Non-Solar Day Ahead

Contract'.

2) RE Seller having merchant green power

capacity shall be eligible to participate in

G-DAM subject to applicable

Regulations notified by Appropriate

Commission.

3) RE sellers who are under the purview of

CERC DSM Regulations i.e. who are

eligible to settle with buyers on

scheduled energy (not actual energy) and

deviation settlement of RE generators

through purchase of RECs, can

participate in G-DAM. The RE sellers

situated in State where SERC has

adopted same framework, shall also be

eligible to participate in G-DAM.

4) All the entities which are eligible to

procure power through Open Access

shall be eligible to participate in G-DAM

as buyer.

5) Buyers will be eligible to participate in

the G-DAM based on the same NoC

issued for DAM/Intra-Day market by

SLDC.

6) Eligibility of RE sellers shall be

ascertained at the time of registration at

the Exchange based on NOC/Standing

clearance issued by RLDC/SLDC, as

applicable.

17

(iii) Risk Management: As per existing practice of

Electricity Day Ahead Market.

(iv) Bidding mechanism: Double-sided closed bid

Auction.

(v) Price Discovery methodology: Uniform market

clearing price for all buyers and sellers who are

cleared.

(vi) Auction Timing : 08:00 AM to 09:00 AM of

previous day (D-1)

(vii) Scheduling: As per procedure of scheduling of

Collective transactions. No revision of schedule

will be permissible.

18

(viii) Delivery: Next day (T+1) from 0000 Hrs to

2400 Hrs in 96 separate 15 min time blocks.

(ix) Delivery Point: At Regional Periphery.

(x) Transmission Congestion management: As per

existing practice of market splitting in

Electricity Day Ahead Market.

(xi) Deviation Settlement Mechanism: As per

applicable Regulations notified by Appropriate

Commission.

(xii) Allocation of Available Transmission

Capability (ATC) by NLDC:

1) As per availability of ATC at the time of

Request.

19

2) Solar to be given priority followed by

Non-Solar or as may be decided by the

Hon'ble Commission.

3) Pro-rata basis between the two

Exchanges.

(xiii) Proposed timelines: Since G-DAM is a new

segment and considering basic framework of

the proposed G-DAM mentioned in point no. (i)

above, it is essential to devise a timeline of

various activities during the day different from

existing DAM timelines. Accordingly, IEX

proposes following timelines for G-DAM

activities during the a trading day:

20

S. No. SESSIONS G-DAM

1. Bid - Call session 08.00 AM -09.00 AM

2. Determination of MCP/MCV By 09.30 AM

3 Publish of Provisional Obligation By 09.45 AM

4.

Request of ATC to NLDC, Request for

confirmation from bank on availability

of funds

By 10.00 AM

5.

NLDC Exception for scheduling,

Receipt of confirmation from bank on

availability of funds

By 10.45 AM

6. Determination of ACP/ACV By 11.15 AM

7. Publish of Final Obligation By 11.30 AM

8'

Submission of Application for

scheduling to NLDC By 12.00 PM

9'

NLDC sends scheduling request to

RLDCs By 1.00 PM

10'

RLDC acceptance of scheduling to

NLDC By 1.30 PM

11. NLDC conveys acceptance of

scheduling to Exchange By 2.00 PM

12. Funds and Margin Pay In By 5.30 PM

21

(xiv) Interface between G-DAM and DAM: As per

the framework proposed for G-DAM as

mentioned in point no. (i) above, in order to

facilitate evacuation of entire power of RE

sellers and to meet requirement of buyers in

case of non-selection or partial selection of

their bids in G-DAM, the Exchange proposes to

provide a window to such RE Sellers/buyers to

bid unsuccessful bids of G-DAM in DAM. To

facilitate this bidding, the existing DAM

timelines need to be revisited. Accordingly,

IEX proposes consequential change in timelines

of Day Ahead Market. A comparison G-DAM

timeline, existing DAM timeline and Proposed

new DAM timelines is shown below in table for

consideration of the Hon'ble Commission:

22

PROPOSED G-DAM & DAM TIMELINES

S.

No. SESSIONS G-DAM

EXISTING

DAM

PROPOSED

DAM

1. Bid - Call session 08.00 AM -

09.00 AM

10.00AM-

12.00 PM

12.00 PM -

02.00 PM

2. Determination of

MCP/MCV By 09.30 AM By 12:20 PM By 02:30 PM

3 Publish of Provisional

Obligation By 09.45 AM By 1.00 PM By 02:45 PM

4. Request of ATC to NLDC,

Request for confirmation

from bank on availability

of funds

By 10.00 AM By 1.00 PM By 3.00 PM

5. NLDC Exception for

scheduling, Receipt of

confirmation from bank on

availability of funds

By 10.45 AM By 2.00 PM By 4.00 PM

6. Determination of By 11.15 AM By 2.30 PM By 4.30 PM

ACP/ACV

7. Publish of Final Obligation By 11.30 AM By 2.45 PM By 5.00 PM

8. Submission of Application

for scheduling to NLDC By 12.00 PM By 3.00 PM By 05.30 PM

9. NLDC sends scheduling

request to RLDCs By 1.00 PM By 4.00 PM By 06.30 PM

10. RLDC acceptance of

scheduling to NLDC By 1.30 PM By 5.00 PM By 07.00 PM

11. NLDC conveys acceptance

of scheduling to Exchange By 2.00 PM By 5.30 PM By 07.15 PM

12 Funds and Margin Pay In By 5.30 PM By 3.00 PM By 05.30 PM

23

Proposed timelines are indicative and flexible

to revision based on the feedback of NLDC and

advice of the Hon'ble Commission.

(xv) Unsuccessful Bid Submission Mechanism: As

mentioned in the foregoing paragraphs that

sellers/buyers participating in the G-DAM will

have window to bid their unsuccessful bids in

DAM. To enable this proposition, as shown in

above table, the complete process of 'Opening

of trading window' till 'Publish of Final

Obligation of G-DAM' is proposed to be

completed by 11.30 AM and also to

accommodate unsuccessful bids of G-DAM it is

proposed to shift existing DAM trading window

by 2 hour i.e. between 12.00 PM to 2.00 PM so

that G-DAM participants can place their

unsuccessful bids in DAM.

24

17.Amendments required in existing Regulations and

Procedures: To facilitate the proposed framework

following amendments would be required in `CERC

(Terms and Conditions for Recognition and Issuance

of Renewable Energy Certificate for Renewable

Energy Generation) Regulations, 2010' (herein after

referred as `REC Regulations') and 'Procedure of

scheduling of Collective Transactions':

(i) As per Regulation 5(1)(c) of REC Regulations

a RE Generator shall be eligible for issuance of

RECs if it sells the electricity through power

exchange at market determined price. Therefore

any RE generator who is selling electricity at

Power Exchange in conventional electricity

contracts would be eligible for issuance of

RECs. However, in the proposed Green Power

25

Contracts, RE power will be traded at Power

Exchange on market determined price which

will be eligible for meeting RPO of buyers.

Therefore being RE nature of the Contract, RE

power traded in the G-DAM shall not be

eligible for issuance of RECs and as per

existing regulations any power traded on power

exchange in any contract will be eligible for

issuance of RECs. Therefore amendment in

REC Regulations are required to specify that

RE Sellers who is selling power at Power

Exchange in Green contracts, to that extent RE

Seller shall not be eligible for issuance of RECs

and Buyers can fulfill their Solar and Non-Solar

RPOs by procuring power in respective Green

Contracts.

26

(ii) The procedure of collective transactions issued

by NLDC inter-alia specify timelines of various

activities related to scheduling of power traded

in Day Ahead Market of Power Exchanges. In

view of the proposed G-DAM and

consequential changes in timelines of existing

DAM, the 'Procedure of Collective

Transactions' need to be suitably modified.

(iii)Hon'ble Commission may modify/amend any

other Procedure/Regulations as it may deem fit

to enable introduction of Green Contracts on

Exchange platform.

18.In respect of RPO compliance by obligated entities

who will participate in the proposed contracts, though

petitioner has taken all measures in eligibility criteria

to ensure that generators participating in the proposed

27

contracts are RE Generators, however to further

strengthen the nature of contract Honorable

Commission is urged to specifically hold that the

renewable power bought under these contract shall be

eligible for RPO compliance of obligated entities.

19.Benefits of the proposed Green Power Contracts:

(i) Green Power Contracts will enable obligated

entities procure renewable power at competitive

prices at the power exchanges and help meet

RPOs.

(ii) RE generators will get payment based on

schedules obviating the need for settlement

based on actual injection report.

(iii) RE Sellers and Buyers will get more options to

sell/buy renewable power.

(iv) By providing more options to sell RE power,

new merchant capacity may come up which

28

will inter-alia help to achieve ambitious

renewable capacity addition targets of the GoI.

(v) RE Generator need not tie up capacity in

advance or depend on PPA with the incumbent

Discoms.

(vi) High certainty as liquid DAM is available as

fallback option if volume not cleared in G-

DAM.

(vii) Discoms preference of buying green power

over REC is addressed.

(viii) Small participants (OA/CPP) can buy green

power to meet their RPO.

(ix) Renewable rich States can sell RE power to

Renewable deficit States to meet their RPO and

therefore lessening burden on Renewable rich

State to absorb all RE power generated within

the State.

29

(x) RE generators under preferential tariff in States

having excess wind/solar power are being

curtailed due to Discoms' inability to pay. Such

generators will now be able to sell power in the

market.

20.In view of the above and considering the overall

development of RE market, it is submitted that the

Honorable Commission may accord approval to

launch proposed Green Contracts at IEX platform.

21.The required amendment in Rules, Business Rules

and Bye Laws of the Exchange and contract

specifications shall be submitted for approval of the

Honorable Commission in due course of time as may

be directed by the Honorable Commission or on in-

principle approval of the proposed contracts.

30

necessary in the facts and circumstances of the case.

votteof

FOR IND NERG

Place : New Delhi

Dated : 21st day of September, 2016

GE LTD

31

22.The Petitioner herein craves leave of the Honorable

Commission to submit further additional information

in support of this petition.

PRAYER

In the premise the Petitioner respectfully submits that this

Hon'ble Commission may be pleased to:

1. accord approval of introduction of proposed Green

Contracts on IEX platform.

2. consider holding that the power bought in the

proposed Green Contracts from the Exchange shall be

eligible for RPO compliance by obligated entities.

3. amend Regulations / Procedures required for

introducing of Green Contracts on Exchange platform.

4. pass such further order or orders as may be considered



3HD& 4TH FLOOR, CHANDRALOK BUILDING,

36, JANPATH, NEW DELHI - 110 001


IN THE MATTER OF:






Exchange Ltd.

And

IN THE MATTER OF:

Indian Energy Exchange Limited,

4th Floor, TDI Centre,

Plot No. 7, Jasola,

New Delhi 110 025

AFFIDAVIT

...Petitioner

I, Shruti Bhatia daughter of Sanjaya Bhatia aged about 42

years Resident of B-15/23, DLF, Phase-1, Gurgaon,

Haryana do hereby solemnly affirm and state as under:

1. I am working as Vice President (Regulatory

Affairs & Communication) in the Indian Energy

32

ack/

o..cpstY P

Govt of Bind la * Regd. No.7717

h

r e-

o Jugse E

rte

l nxcitidi

t:

=9rayan 5\‘ 4;),.,

41

(INDIA)

33

2 1 SEP 2016

Exchange Limited, New Delhi, the Petitioner and I

am well conversant with the facts of the case and

hence competent and authorized to sign this

affidavit.

2. I have gone through the contents of the above

Petition and I say that the facts stated therein are

based on the records of the Petitioner and believed

by the deponent to be true.

VERIFICATION

I, the deponent above named do hereby verify that the

contents of my above affidavit are true to my knowledge,

no part of it is false and nothing material has been

concealed therefrom.

Verified at New Delhi on 21st day of September 2016.

n · 2. affidavit .0, -- .... 32 for indian ... iex commenced its operation by introducing day...

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