In a very recent order, Central Electricity Regulatory Commission (CERC) has allowed Indian Energy Exchange (IEX) to introduce High Price Day Ahead Market (HP-DAM) on the exchange’s Integrated Day Ahead Market (I-DAM) segment.
IEX had filed a petition with CERC for seeking approval of the Commission to introduce High Price Day Ahead Market (HP-DAM) in the I-DAM segment on its platform to facilitate high variable cost generators to participate in the market which are otherwise not able to do so due to the prevailing price cap.
The Rs.12 per kwh cap
It may be mentioned that during March 2022, with surge in electricity prices in the spot market owing to prevailing demand and supply constraints, CERC, by its order dated April 1, 2022, had directed power exchanges to operate their software in such a way that members can quote in the price range of Rs.0 per kwh up to Rs.12 per kwh in the Day Ahead Market (DAM) and the Real Time Electricity Market (RTM). This was subsequently made applicable to all market segments (those other than DAM and RTM) by CERC in its order dated May 6, 2022.
While this has ensured that the spot prices are within the ceiling of Rs.12 per kwh, the generators based on high variable cost were unable to participate in these markets, the latest CERC order observed.
HP-DAM proposed
In view of this price ceiling (of Rs.12 per kwh), the Union power ministry, in August 2022, proposed to introduce HP-DAM within the I-DAM segment to allow sellers with high cost of generation to participate (sell) in this market. Such sellers would typically include gas-based power plants using imported naphtha/R-LNG, coal-based power plants using imported coal, and battery energy storage systems.
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How it works
As per the CERC order, the minimum (floor) price for HP-DAM will be considered as Rs.0 per kwh while the maximum price would be set at Rs.50 per kwh. On its part, IEX, in its petition, had suggested keeping the maximum price at its technical “two-digit” highest, which is Rs.99 per kwh. [It may be noted that the present system used on IEX, and perhaps on other exchanges as well, is designed for two-digit numbers.]
In its order, CERC said that it would undertake periodic review of this upper price limit based on the highest cost of generation and other relevant global and domestic factors, including the impact of HP-DAM on other markets.
CERC has currently permitted the following categories of producers to sell on HP-DAM:
- Gas-based generating stations using imported RLNG and naphtha
- Imported coal based generating stations using only imported coal, and
- Battery Energy Storage Systems (BESS)
“The category of generating stations eligible to participate in HP-DAM shall be subject to periodic review by the Commission,” the CERC order said.
Featured photograph (courtesy: Fluence) is illustrative of a battery energy storage system.