A special group constituted by the Union power ministry for the development of electricity market in India has proposed comprehensive solutions to address key issues.
The solutions are aimed at creating an efficient, optimal, and reliable market framework to enable the energy transition and integration of renewable energy into the grid, a government release said.
The group with the official mandate “Development of Electricity Market in India” has proposed comprehensive solutions to address key issues. Some issues addressed are:
- Dominance of inflexible long-term contracts
- Harnessing the inherent diversity of a large and synchronous grid
- The need for resource adequacy planning in the Centre and states
- Reduction in system inefficiencies through lesser reliance on self-scheduling
- Increasing share of renewables in the overall energy mix
- Encouraging market participation for renewables, and
- Firmness in procurement of ancillary services through well-developed ancillary services market.
The Group has outlined the roadmap and specific recommendations in the redesign of the Indian electricity market of the future.
The Group has also recommended a roadmap outlining the interventions for the near, medium, and long term. The interventions include:
- Setting up a mechanism to monitor whether adequacy of supply is being maintained by the state utilities
- Enhancing the efficacy of the Day-ahead Market
- Introducing a market-based mechanism for secondary reserves, and
- Implementing 5-minutes based metering, scheduling, dispatch, and settlement
Demand response
The proposed changes also include demand response and aggregation, which could reduce reserve requirements and lower electricity costs. There will be strengthening of market monitoring and surveillance activities to keep track of participation and prevent price volatility. A regional level balancing framework for deviation management will be implemented which would result in reduction in deviation penalties for the States at the ISTS level and consequently lower the reserve requirements.
Trading volume
According to the latest data for 2022-23, the total traded volume in the Indian electricity market was 1,02,276 MU, which represents only a small portion of the energy generated from all sources (including RE) of 16,24,465 MU. The peak demand for electricity in 2022-23 was 215.8 GW, and it is expected to increase to 335 GW by the year 2029-30.
The Group
The Union ministry of power had constituted a Group for “Development of Electricity Market in India” under the chairmanship of Alok Kumar, Secretary, Ministry of Power, with representation from Ministry of Power, Ministry of New & Renewable Energy, Central Electricity Authority, Central Electricity Regulatory Commission, Grid Controller of India (Grid-India) along with state governments of Maharashtra, Madhya Pradesh and Tamil Nadu. The Group recently presented the report to Union Minister of Power and New & Renewable Energy, R. K. Singh.
Featured photograph sourced from Press Information Bureau (PIB)
