power exchange operation erldc, posoco

04/20/23 ERLDC: POSOCO 1

Power Exchange Operation

ERLDC, POSOCO


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


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


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


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


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


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


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


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


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.


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


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


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.


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.


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


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


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

Volume Change During Congestion (1)

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


Landmarks – PXI


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

power exchange operation erldc, posoco

Documents

kv transmission

western region

southern region link

northern region link

intraregional transmission

northeastern region

kv lines

formation of regional