Power Exchange Operation
ERLDC, POSOCO
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Contents
• Overview –
– Evolution of Power Market
– Fundamentals: Review
– Power Exchange Concept
– Implementation in India
– Congestion Management
– Experience Gained
• Future Posibilities
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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.
•
•
•
Introduction
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
 1950-60
 1962
 1964
 1965-73
 1975
 1977
 1980-88
 1989
 1989
 1990
ES Act
Establishment of state Grid system
First 220kV Voltage level
Constitution of Regional Electricity Boards
Formation of Regional Grids for integrated operation
Central PSUs in generation and transmission
First 400kV Voltage in state sector
Growth of regional grids-400kV back bone network
HVDC Back to Back for interregional controlled transfers
Formation of POWERGRID Corporation
First HVDC bi-pole Transmission line transfer within region
 1990
 1991
 1998
 1998
 2002
 2002
 2003
 2003
 2005-06
 2006
 2008
Landmark Events
Generation of electricity opened up for private sector
Synchronous operation of ER and NER Grids
Electricity Regulatory Commissions Act
765kV initially charged at 400kV
Inter regional HVDC Transmission system
Goal set for All India National Power Grid
EA 2003- Balancing and short term markets
Synchronous operation of Western with Easter
and North Eastern Grid- Central Grid
National Electricity Plan
Synchronous operation of Northern , Western ,
Eastern and North Eastern Grid- first phase of
National Grid Complete- The ‘NEW’ Grid
Power exchange( day ahead market)
Agenda
Competitive Power Markets
Evolution 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
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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
supply
Need Felt to Develop a Competitive Power Market
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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
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Allows multiple participants to compete with each other to
Provide High Quality
At Low Prices
Allows participants to manage their supply requirements by
Purchasing deficits from the market
Selling excess to the market
Therefore, investments on unneeded capacities is not wasted
Allows participants to manage the cost of supply
Purchasing 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
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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
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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
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Agenda
Competitive Power Markets
Development of Power Exchange in India
Regulatory roadmap
Exchanges in India and Benefits
New product development
Way Ahead
Regulatory Framework for Power Exchange
2007
February –
guidelines
on setting
up PX
2003 June
–
enactment
of EA 2003
2006 July
– CERC
issues
staff paper
on PX
2008 June guidelines for
scheduling of
transactions on
PX
2008 January
– guidelines
for collective
transactions
2008 October
–
instructions
for multi
exchange
scenario
In transition towards a competitive market structure
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36
34
32
30
28
26
24
BASE LOAD
22
BASE LOAD
1
2
3
4
5
6
7
8
9
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Base Load – Managed through Long Term PPA’s
Seasonal Variations – Managed through Short Term trades, by
1) Traders, 2) Bilateral Contracts or 3) Wheeling/Banking Arrangements
Daily Variations – Managed through
1) Day ahead Power Exchange or 2) UI Balancing
Hours
in 100 MW
For illustrative purposes only
Load Curve and Management of Demand
Day Ahead Contracts
Real Time Market
Day-ahead Spot Market
Hours
Buy Bids
Hours
Sell Bids
Prices (INR / KWh)
1 5 7
10
00-08 200
08-16
500 400 250
16-24
400
Prices (INR / KWh)
1 5 7
10
00-08 150
08-16
400 500 600
16-24
350
INR/KWh
Calculation of Imbalances
Resources
Commitments
Imbalance
Price
MCP
Volume
Day of Delivery (minus ‘1’)
 Double-sided closed bid Auction
 Price / Volume Bids
 Binding Contracts
 Financial settlement based on Cleared Volume and Price
Metered
Day-Ahead
generation
Schedule
MW
Day of Delivery
 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
The Day-Ahead-Market for Indian PXs has been fashioned on the NordPool Market
Product Development Life Cycle
Market Maturity
7
6
5
4
1
2 3
Time
Market maturity depends on:
a. Extent of liberalization of market
c. Participation by entities
b. Regulatory Support
d. Liquidity of transactions
Note: The time period varies from 2 to 8 years
1, 2, 3
Spot Market
(DAM, Intraday,
Contingency)
4
OTC through
Exchanges
5
Forward Market
(Week / Month
Ahead)
6,7
Futures and
Options
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 Products
Contracts 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 by
Increasing 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 Ahead
Experiences 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 it
5.7 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.
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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
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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
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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.
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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.
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Balance Responsible – RLDC’s are responsible for operating the interstate 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.
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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
transport, costs, etc.
by
geography,
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.)
Price
Quantity
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.)
Price
Quantity
Equilibrium
Quantity demanded is equal to quantity supplied
Surplus
Shortage
Price of
commodity
Quantity
Shift in equilibrium
Price elasticity (responsiveness) of demand
%age Change in Quantity Demanded in response to a one percent change in price.
Elastic
More Elastic
Perfectly Inelastic
Less Elastic
Perfectly elastic
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 Contract
OTC 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 House
A 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
PRICE
PRICE
Demand
Supply
Supply
Estimated
Demand
MCP
MCP
MCV
VOLUME
One Side Auction
MCP = Market Clearing Price
MCV
VOLUME
Two Side Auction
MCV = Market Clearing Volume
Market Clearing Price
PRICE
Accepted Purchase Bids (>= MCP)
Purchase
(Consumers’ Discount)
MCP
Accepted Sale Bids (<= MCP)
(Generators’ Surplus)
MCV
Sale
Price Calculation Algorithm -Day ahead– Hourly 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
1200
1200
1000
800
700
600
400
200
150
100
100
0
-100
-300
-400
-500
-600
-800
-1000
-1050
-1100
-1300
1200
1100
700
400
200
0
-400
-800
-900
-1000
-1200
SUM, PURCHASE
SUM, SALES
NET TRANSACTION
800
paise/kWh
700
AGGREGATED
PURCHASE BIDS
600
AGGREGATED
SALE BIDS
500
400
300
200
100
0
0
200
400
600
800
1000
MWh/hr
Market Clearing Price (MCP) : 270 p
Market Clearing Volume (MCV): 600MW
1200
1400
Price Calculation Algorithm ….each hour
Price (Rs./kWh) 0
1
1.1
2
2.1
2.5
3
3.1
20
20
0
40
40
40
-40 -60
-80
Portfolio A, MW 20
Portfolio B, MW 60
60
Portfolio C, MW 40 20
0
0
SUM, Purchase 120 100
80
80
SUM, Sale
0
0
Net transaction 120 100 80
80
40
60
40
20
-120
-80
-81 -120
-120
20
-20
-21 -80 -100
-100
0
Sale
40
120
3
Rs/kWh
2
MW
MCV (Market clearing volume):
40
20
-40 -60
Purchase
80
60 MW
0
-81 -120
40
20
60
MCP:
2.5
4.1
60
Price
4
4
20
20
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’
Information Exchange
SLDCs
Acceptance by
NLDC
Request for Scheduling
Information
exchanged over
leased line between
NLDC and PX
Constraints, if any
Provisional Solution
Power Exchange
Final Trade Results for State
Utilities & Intra State
Entities to be sent by PX
directly to SLDCs
Constituent
s
Constituent
s
Constituent
s
Constituent
s
Over WAN
Schedules
Trades
Constituent
s
Over Internet
(RLDC
NERLDC
Schedules
Schedules
ERLDC
Schedules
Schedules
NRLDC
Trades
Schedules
Trades
Schedules
WRLDC
Schedules
Schedules
SRLDC
Trades
Trades
Schedules
NLDC
Time Line for scheduling of Collective
Transaction
NLDC to
16:00
10:00
12:0013:00 14:00 15:00
Market
Participants to
place their Bid
PX to send
provisional
unconstrained
solution to
NLDC and flow
on TS as
informed by
NLDC
NLDC to check
for congestion.
In case of
congestion shall
intimate PX
regarding to the
period for
congestion and
available
margins
17:00 18:00
17:30
send details
to RLDCs for
scheduling
RLDC to
confirm
to NLDC
NLDC to
confirm
acceptance.
PX to send files
to SLDCs for
scheduling
PX to send Scheduling
Request to NLDC based
on margin specified by
NLDC/SLDCs
RLDCs/SLDCs to
incorporate
Collective
Transactions in
the Daily
Schedule
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
Scheduled Drawal
<= SLDC Clearance
Bid Volume
NR
100 MW
at NR
periphery
Loss
6%
S1
94 MW at S1
periphery
Loss
X
89.441 MW at
Buyer End
(Buyer)
4.85%
Maximum Bid= Volume in standing clearance + Regional & State losses
Treatment of Losses… for seller
• SR (Regional) Loss: 6%
• A1 (State) loss: 4.85%
• Seller Y bids for 100 mw at its respective regional periphery
Scheduled Generation
<= SLDC Clearance
Bid Volume
100 MW at
regional
periphery
SR
A1
Loss
Loss
6%
106 MW at state
periphery
111.14 MW
Injected by
seller at its end
Y
(Seller)
4.85%
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
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When Congestion will take place ?
Scenario Congestion
N
W
E, NE
4S
1S 3D
2S 2D
3S 1D
4D
X
X
X/
X
S= Surplus D= Deficit
S
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
STOA Approved Energy as a % of total Energy Generated in the country
8.0
7.2
7.0
5.2
% of total Energy Generated
6.0
4.4
4.4
2007-08
2008-09 *
5.0
3.8
3.7
2005-06
2006-07
4.0
2.9
3.0
2.0
1.0
0.0
2004-5
*Includes Bilateral + Collective transactions
2009-10 *
2010-11*( April - Sep
)
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31-Jul-10
1-Jul-10
1-Jun-10
2-May-10
2-Apr-10
3-Mar-10
27-Jan-11
28-Dec-10
28-Nov-10
29-Oct-10
29-Sep-10
30-Aug-10
Date
1-Feb-10
2-Jan-10
3-Dec-09
3-Nov-09
4-Oct-09
4-Sep-09
5-Aug-09
6-Jul-09
6-Jun-09
7-May-09
7-Apr-09
8-Mar-09
6-Feb-09
7-Jan-09
8-Dec-08
8-Nov-08
9-Oct-08
9-Sep-08
10-Aug-08
No. of Groups
Groups of Buyers and Sellers at Regional Level Scheduled For Power Exchange Transactions
60
50
40
30
20
10
0
98
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Volume Change During Congestion (1)
Volume Change During Congestion (3)
Volume Change During Congestion (4)
Volume Change During Congestion (6)
Volume Change During Congestion (7)
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
Data taken for the period 28-June-08 to 7-July-09
Landmarks – PXI
Data taken for the period 28-June-08 to 7-July-09
Total revenue Retained by POWERGRID (upto 31.03.2009)
 Application fee + Operating Charge: 2.02 Crores
 25% of Transmission Charges: 4.15 Crores
Total : 6.17 Crores
Power Exchange share in short term trading
Impact of PX on short term trading
35.00%
PX transactions as % of trading licensees volume
PX transactions as % of total bilateral trade
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
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
Source : CERC June 09 report
Exchange day ahead trade as % UI trading
PX transaction as % of UI transaction
30.00%
PX transaction as % of UI transaction
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09
Source : CERC June 09 report
IEX monthly Average Price
IEX Monthly Average Spot Price
9
Average Price in Rs/kWh
7.91
8
7.29
7
5.76
6
5
4
3
4.54
4.52
4.08
3.90
3.14
2.78
3.18 3.24
3.43 3.43 3.37
3.41
2.34
2
1
0
Months
Monthly spot prices
2.66
1.99
2.36
3.39
IEX Monthly Volume
IEX Monthly Cleared Volume
1400
1205
1181
1128 1089 1121 1163
Monthly Volume(MUs)
1200
1000
888
800
748
723
656
638
600
478
450
376
400
233
200
279
355
377379
291
434 425
472
536
873
541
563563 591
323
180
75
0.42
0
Months
Total Monthly Volume (MUs)
1211
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
Exchanges
OTC Markets
Market
Maturity
Spot/
Auction Mkt
Individual
B&S
Time
PXs Worldwide
• India
•
•
•
•
•
•
•
www.iexindia.com ,
www.powerexindia.com
Nord Pool
www.nordpool.com
Amsterdam
www.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
Courtesy:
NORD POOL
Consultants
Power Market implemented
Power Market planned/under implementation
Thank You