Open Access and Pricing of
Power
17th July’14
Rohit Bajaj
V.P. (Business Development)
In this presentation
Introduction to Indian Power Market
Open Access Current Scenario
Trading through IEX
Cost Economics for Industries
Barriers and Enablers for Open Access
Indian Power Market: Present Status
Long Term
Upto 25 Years
Medium Term
Power Purchase Agreements
89%
OTC
Licensed traders (61)
6%
3 months- 3years
OTC Intraday- 3 months
Short-Term
Intraday - 3 months
Balancing Market
Real Time
Exchanges
1. Intra-day
2. DAM
3. DAC
4. Daily
5. Weekly
Unscheduled Interchange
3%
2%
Growth Trend of Short Term Power Markets
10.9%
100
8.8%
Volume (BU)
9.3%
10%
7.8%
80
60
9.1%
12%
8%
5.4%
6%
40
4%
20
2%
0
0%
FY 08-09
FY 09-10
Bilateral
Source: Monthly MMC Reports
FY 10-11
PXs
FY 11-12
UI
FY 12-13
FY 13-14
Share of ST Vol in Tot Gen
Share of Short Term Volumes Traded in
Total Power Generation (%)
120
Open Access: Current
Scenario
Status of Open Access
• Electricity Act, 2003 envisages States to implement open
access for 1MW+ customers by Jan, 2009
• IEX pioneered operationalisation of retail open access,
first transaction was in August, 2009
• Several operational and regulatory impediments have led
consumers to choose partial open access and not full
open access
• Consumer maintains its supply agreement with local
distribution company and leverages market for
economical and contingency power.
State wise Status of OA Consumers
FY13-14
No Open Access
Consumers
Uttar Pradesh
Generators
Uttar Pradesh
Jammu & Kashmir Delhi
Delhi
Jharkhand
Bihar
Tamil Nadu
Goa
Kerala
Jharkhand
Union Territories
Sikkim
Bihar
DVC
NE States (except
Meghalaya &
Arunachal
Pradesh)
Chattisgarh
West Bengal
Union Territories
(except Daman &
Diu)
NE States (except
Assam,
Meghalaya &
Arunachal
Pradesh)
Share of OA Consumer in Total Purchase
2.80
Participation
Increasing Participation
Industrial Segment Participating at IEX
Miscellaneous
7%
Paper
3%
Housing &
Commercial
Complex
1%
Cement
4%
Textile
33%
Food
5%
Home Product
5%
Auto Components
9%
Chemical
11%
As on 30th June’14
Metal
22%
Trade through IEX
Company Snapshot
95% Market Share
~80,000MWh average daily trade
3000+ Participants
2100+ Industries
Transparency
Liquidity
Competition
IEX Market Segments
Delivery-based Contracts
Day-Ahead
Market
since June,08
Term-Ahead
Market
since Sep,09
Closed , Double-sided Auction
10-12 am bidding
Each 15-min block , 0.1 MW min NOC required
Day-Ahead Contingency – Another window 3-5pm
Intra-Day
- for the same day starting 2 pm
Daily- for rolling seven days (delivery starting after 4 days)
Weekly- for 1 week (Monday-Sunday)
Renewable Energy
Certificates
since Feb,11
Green Attributes as Certificates
Sellers : RE generators not under feed in tariffs
Buyers: Obligated entities
1MWh equivalent to 1 REC
Next… Energy Saving Certificates
Auction
Continuous
Features of Day Ahead Market
A closed double-sided anonymous auction for
each 15-min time block for the following day
N1
The intersection between the aggregated
sale and purchase curves defines the market
clearing price (MCP)
N3
A2
N2
N2
E1
W1
W3
12 Bid area defined
Congestion Management through market splitting
and determining Area Clearing Price (ACP)
specific to an area
W2
E2
S1
S2
Bid types: Portfolio Orders or Block Orders
Minimum bid=Re.1 for 0.1MWh
Minimum Price & Volume Step = 0.1p * 0.1 MWh
12 Bid Areas
A1
DAM Trading Process
Bidding
Matching
Review corridor
and funds
availability
10:00 am to
12:00 pm
12:00 pm
to 1:00 pm
1:00 pm to
2:00 pm
Bids for
15- min
each or
block
bids can
be placed
MCP
&MCV
calculate
d
Corridor
availabilit
y and
funds
verified
Result
Confirmation
Scheduling
3:00 pm
5:30 pm
6:00 pm
Final ACV
and ACP
calculated.
Market
splitting if
congestion
Collective
transaction
confirmatio
n by NLDC
Final
Schedule
sent to
RLDC for
incorporatio
n
Prices in the Day-Ahead Market at IEX
• Diverse participation led to high liquidity and most competitive prices
• Prices smoothened gradually depicting the true market scenario
• DAM prices emerged as the benchmark price for a short term trading
Cleared Volume vs. MCP at IEX
35,000
6.81
25,000
7.00
6.00
5.19
MWh
5.00
20,000
3.56
3.54
4.00
3.49
15,000
2.80
10,000
2.00
5,000
0
3.00
1.00
766
6,171
11,801
13,799
22,375
28,925
2008-09 2009-10 2010-11 2011-12 2012-13 2013-14
Cleared Volume (MWh)
MCP (INR/MWh)
0.00
INR/MWh
30,000
8.00
Cost Economics
for Industries
Open Access Charges: What a consumer pays
PoC charges
• Inter-State Transmission charges payable by the open access consumer
Transmission Charges or STU Charges
• Payable to the state transmission utility for the use of the transmission system for availing
power through open access.
Wheeling charges
• Charge to the Discom for conveyance of electricity through open access as determined by
the SERCs
Cross Subsidy Surcharge
• Subsidising open access consumer has to pay a cross subsidy surcharge to the Discom.
Others
• Additional Charges, if any
• NLDC application fee, scheduling and operating charges, SLDC Charges
• IEX transaction charges/Trading Margin
Open Access: What a consumer pays
Losses
• An open access consumer has to bear in kind the following losses as
defined by the relevant regulations
Point of connection (PoC) loss
• Inter-State transmission system loss
Transmission loss or state loss
• Consumer to absorb apportioned energy losses in the
transmission system as per the relevant regulations
Wheeling loss
• Technical losses in the distribution system determined
at various voltage level by the state commissions.
Case : Gujarat
Landed Cost for Open Access Consumer
Calculation of Landed Cost at IEX for Consumers in Gujarat
Voltage Level
66 kV
Total Volume in MWh (at Regional Periphery)
240
IEX Rate at Regional Periphery (in INR per unit)**
2.52
Losses
Gujarat Withdrawal POC Loss
1.92%
State Loss
4.81%
Wheeling Losses
0.00%
Cost After Losses (in INR per unit)
2.68
Charges
State Transmission Charges (in Rs/unit )
0.12
Gujarat Withdrawal POC Charges (in Rs/unit)
0.12
Wheeling Charges (in Rs/unit)#
0.00
NLDC Operating Charges+ NLDC Application Charges + SLDC Charges*
0.01
IEX Transaction Charges @ Rs 20 per MW (in INR/unit)
0.02
Professional Fees ( If transacted through Member)* *
0.02
Additional Surcharge (in INR/unit)
0.42
Cross Subsidy Charges (in INR/unit)
0.39
IEX Rate @ ex ABT Meter (in INR/unit)
3.76
*Assumption: Buy Quantity is 10 MW for 24 hours and 1000 Portfolios are selected everyday
**IEX W2 Avg Price FY 13-14
Case : Gujarat
Cost Benefit Analysis- Retail vs. Open Access
Industrial Consumer
(Connected Load:
66kV)
Retail Consumer
Open Access
Consumer
Retail Tariff:
INR 5.75/unit
Landed Cost:
INR 3.76/unit
Cost Effective Measure for Power Supply is Open Access,
offering savings of INR 1.99/unit
Open Access Charges Losses and Charges in
select States at 33 kV level
PoC
Charge
(INR/kW
h)
PoC
Loss
(%)
STU
Charge
(INR/ kWh)
STU
Loss
(%)
Wheeling
Charge
(INR/
kWh)
Wheeling
Loss
(%)
Cross
Subsidy
Surcharge
Punjab
(33 kV)
0.16
1.75%
0.27
2.5%
1.19
2.26%
1.07
Uttar
Pradesh
(33 kV)
0.16
1.75%
0.03
3.67%
0.082
7.00%
-
2.02
0.13
Haryana*
(33 kV)
0.16
1.75%
0.29
2.5%
0.74
Included
in
wheeling
charges
Rajasthan
(33kV )
0.16
1.75%
0.37
4.2%
0.11
3.8%
* Additional Surcharge in case of Haryana is Rs 0.50/unit
Landed Cost to Consumer Accessing DAM at IEX
(33 kV, 1 MW, RTC)
Assumptions:
- Consumer connected at 33kV level
- Consumer load = 1 MW
- Average Price at which procured from IEX = Rs 2.5/kWh for all
- Calculating landed cost after adding POC, STU & Wheeling Charges & losses,
NLDC operating & application charges, SLDC charges, IEX transaction charges
Punjab (33 kV)
Landed Cost to
Consumer
(INR/ kWh)
5.49
State Energy Charge
(INR/kWh)
6.33
Uttar Pradesh (33 kV)
3.26
5.60
Haryana (33 kV)
6.36
6.94
Rajasthan(33kV )
3.67
5.50
Average Area Prices in DAM at IEX
(Apr’13-Mar’14)
Area DAM Prices (RTC)
6
N1
N3
5
A2
E1
W1
W3
E2
W2
A1
4.73
4
N2
INR/kWh
N2
5.58
3.11
3
2.44 2.44 2.42 2.42 2.55 2.55
2
S1
1
S2
0
Region
12 Bid Areas
2.80
2.52 2.52
2.25
Cost saving for Industries Procuring Power
through IEX
Case study of some industrial units shows the monthly cost saving as a result
of procuring power from IEX instead of resorting to costly power from DG sets
or Discom
Industry Analysis
(FY 2011-12)
Textiles
Auto
Component
Manufacturer
Pharmaceuticals
Chemicals
Paper
Industries
State
Punjab
Haryana
Gujarat
Punjab
Punjab
Load
Requirement
5-6
MW
12 MW
4 - 5MW
27MW
25MW
Power cost as a
percentage of
total cost
10%
High
2%
60%
10.2%
% consumption
procured from
IEX
73%
67%
80%
51%
4%
Monthly saving
(INR)
69.4
lakh
89 Lakhs
8.25 lakh
1.5 Crore
10 lakh
Barriers to Open
Access
Barriers to Open Access
Prohibitive Open
Access Charges
• High Cross subsidy surcharge
• High wheeling charges
• Additional surcharge
Legislative
Impediments
• Gross misuse of certain statutes in
the EA 2003 (Section 11, Section 37,
Section 108, etc.)
Operational
Hurdles
• Unwilling /Incapable SLDC
• Procedural Bottlenecks
• Physical infrastructural constraints
States allowing open access
• Haryana: High CSS and additional
surcharge of 50 p/unit
• Punjab: High CSS and high
wheeling charges (same for all voltage)
• Gujarat Charges applicable on the
reserved quantum (OA requested) &
additional surcharge of 42p/unit
• Rajasthan- No issue
• Tamil Nadu: OA not allowed to
Sellers, Sec-11 invoked
Restrictive Open Access
•
High Open Access charges:
• Chhattisgarh, Orissa, Assam – High
CSS
• Meghalaya: OA charges for full day
on highest quantum in a time block,
•
Approvals and additional requirements:
• Maharashtra: Power through
Exchange permissible only on week
ahead basis or higher and not on
Day-Ahead basis.
• Himachal : Requires exact schedule
a day in advance for purchase
through Discom
• MP: Approval from Discom
• Karnataka: Imposed Sec 11 briefly.
Consumers OA is possible.
•
Infrastructure Constraints:
• Tripura, Mizoram, Manipur, Nagaland,
J&K
States not allowing open access
• SLDC Hindrance
• Uttar Pradesh, Bihar, Jharkhand Approvals not given
• Absence of adequate regulatory
framework
• Sikkim: Regulatory inadequacy
• Open Access made unviable through
high charges
• West Bengal: High CSS and flat tariff
• Jharkhand: High CSS
•
Delhi: Either Discom or OA
General Issues and resolution
•Financial Settlement
–Delay in Energy Credits (Haryana )
–UI Settlement –
– No credits for under drawals
• NoC for longer periods (3-6m)
• Same NoC applicable for intra-day transactions
–Procedures to be issued by NLDC
Thank You for your attention
www.iexindia.com
Best Power Exchange in India
– Enertia Awards ‘13
Best Performing Power
Exchange – Power Line
Awards ’13 & ‘12
Best E-enabled consumer
platform – India Power
Awards ‘09
Open Access Registry Framework
Proposal for implementation
• This will bring in transparency and
facilitate faster transactions using
automatic rule-based open access
clearance while removing manual
discretions
• Integrated IT based system
• All OA approvals automated
• Function as an interacting medium
between the OA Participants, Trade
Intermediaries/PXs
and
National/Regional and State LDCs.
• Record of Information will be available
to CERC, System Operators, OA
Customers, Traders and PXs
Stakeholders
OA Applicants
Financial
Institutions
(in future)
LDCs
Regulators
OAR
• Store information of all OA granted
• Info on inter-state corridor available
for STOA as uploaded by NLDC/RLDC
• Info on availed STOA corridor
Proposed amendment in the Electricity Act, 2003
Separation of Carriage & Content
• Broad Principles
– Distribution and Supply shall be recognized as separate licensed activity
– Distribution Licensee: To be responsible for development, operation and
maintenance of distribution network business and shall have an obligation to
provide connection on demand to any consumer in its area of distribution
– Supply Licensee: Clear unbundling from existing distribution licensee
• Responsible for arranging supply of electricity to all consumers in the
area of supply. The areas of supply for the incumbent supply licensee to
be the same as area of distribution for the distribution licensee
– Competition among suppliers for eligible customers (1MW+)
• We need to deal with India-specific issues
– Cross subsidy elimination Roadmap
– T&D Loss Treatment (Supplier Vs Distributor)
– Exempt small utilities from Unbundling