POWER TRADING AND DEVELOPMENT OF

POWER EXCHANGE IN INDIA

By K.S Bandyopadhyay, GM (NVVN) and Sanjay Bodh, Manager (NVVN)

Abstract: In this paper, an overview of power trading and development of Power Exchange in
India are discussed. Open access is providing an opportunity for buyer to meet their demand,
seller to sale unscheduled power and trader to arrange power to meet demand and supply of
market without any new investment under short term, medium term and long term bilateral /
multilateral contract. Power is traded either in bilateral mode or in the platform of Power
Exchange. For the last couple of years the generating and transmission capacity of India has
increased and the market is shifting from sellers’ to buyers’ market thus the competition for
traders is getting tough. Many participants – buyers, sellers and traders are using the platform
of power exchange and the price discovered in the exchange is being considered as the
reference for all type of power available in the market. Brief analysis on power trading
arrangements and power exchange are discussed in this paper. Key issues and challenges and
opportunities are also examined.

1. INTRODUCTION:
With the introduction of Electricity Act (EA) 2003, major restructuring of the power industry has taken
place. EA 2003 has created a platform where participants can make use the available resources of the
country to meet their demand / supply. Introduction of EA 2003 has enabled trading of power under a
licence and it has brought in competition among the market players and to make the electricity market
more efficient. Electricity reforms have enabled small captive generators and small consumers to
access market to make best use of it either by selling or by purchasing from the market. Power trading
market has given way to the IT related services giving opportunity many people to come up with new
ideas and tools so that information is available while on the move.

2. POWER TRADING IN INDIA

As per Electricity Act 2003, "trading" means purchase of electricity for resale. Electricity is a
commodity which cannot be stored and this distinct feature of electricity makes trading of electricity
more complex and challenging. Power Trading plays an important role for optimisation of resources
by utilizing the surpluses of seasons or time of day of a state / utility to meet the unmet demand /
deficits of the same or another state / utility / consumers by way of sale / purchase or swap / banking
arrangements. Power traders play a key role for identification of such sources of surplus (generators)
and deficits (consumers), tie ups in open access and arrange scheduling for matching supply &
demand at optimum cost charging a very small margin of their own. Power trading market has
witnessed shift in focus since 2003, during the period 2003 to 2006 trader was helping seller and
buyer to meet there short term requirement and gradually they started finding comfort in the
arrangement. During the period 2006 to 2009 buying utilities started depending on short term market
(Power Exchange came into existence 2008) and generator encashed the situation and even
controlling the market and in fact seller used to invite tender and buyer used to participate in the
tender to meet their short term demand. But gradually market shifted partly because of economic
recession and partly because of lack of demand and availability of more power in the market. During
the period 2011 onwards and till now it is totally buyer market and buyer invites tender and others
(seller / traders) participate through e bidding & reverse auction processes in the tender. Thus market
mechanism has shifted from seller to buyer market within a span of 12 years. All participants of power
market are well informed about the market due to availability of technology.

Bilateral Trading:
A bilateral power trading arrangement is an agreement between buyer and seller to exchange
electricity under mutually agreeable terms and condition for a specified period of time. The bilateral
trading going on at present is mostly between SEBs / Discoms and industrial consumers are also
taking part to optimise their input cost. It is either through a trader or directly. The contract price
information is limited to the parties involved. The power trading agreements are mostly inter-state or
inter-regional, requiring Open Access through the Distribution System, State Transmission System
(STU), and Central Transmission System (CTU). The bilateral contract may be Short Term, Medium
Term and Long Term. Ministry of Power (MOP) has come with Guidelines on Procurement of Power
under Short term / Medium term / Long term to bring transparency in the system.

SWAP / Banking Arrangement:

Power Utilities / Discoms utilize the seasonal variation in their load pattern by means of SWAP /
Banking arrangement. Banking / SWAP arrangement is basically energy to energy settlement and
under this arrangement one power Utility / Discom take the energy from the other and return the
banked energy to other utility with some agreed premium at a pre decided period / date. The
arrangement can be undertaken directly or through trader. The sweetness of SWAP / Banking
arrangement is that it does not involve monetary transaction except nominal amount is required for
booking transmission access. Earlier this arrangement was purely done under bilateral arrangement
but recently Utilities have started inviting tender even for banking arrangement giving new challenges
to the market participants. In this process traders have become restless and cutting their trading margin
to get the business.

Power Exchange:
Power Exchange is an electronic platform where bids are submitted by both buyers and sellers. The
price of power and volume to be cleared in the exchange depend on the demand and supply. Power
Exchange has come into being in India in 2008. It has given new dimension and direction to short term
power market. It has been proved now that even at the very last moment either power can be arranged
from Power Exchange or power can be sold in the platform of Power Exchange. Power Exchange has
been successful to rope in many small consumers to use the platform of Power exchange and optimise
their cost of production. The rate discovered in the day ahead market of power exchange has thrown
challenges to the generators. The delivery point of power available from for power exchange is
periphery of Central Transmission System

The short term market constitutes about 9-10% of the total power generation. Bilateral market is about
3 %, Power Exchange market is 3%, Direct bilateral market is 2% and rest is balancing market
(Deviation Settlement / earlier UI).

3. POWER TRADING BY NTPC VIDYUT VYAPAR NIGAM LTD:

NTPC Vidyut Vyapar Nigam Ltd. (NVVN) was formed by NTPC Limited on 1st November, 2002, as its
wholly owned subsidiary with a vision to be a catalyst in development of wholesale power market in
India enabling trading of surplus power and selling it to power deficit State Electricity Boards (SEBs) at
economical price ensuring the proper utilization of resources.
NVVN has been actively associated with the Power Trading activities since inception and has been
instrumental in offering best products & services required by our valuable Customers from time to time.
Power has been traded by NVVN as required in various products categorized on time of day basis to
meet evening peak, off peak, round the clock, night power, morning peak demand and as & when
available basis. NVVN has also tied up for different Power Swap arrangements (Banking) amongst
various States for deriving mutual benefit.
The Government of India designated NVVN as the Nodal Agency for Phase I of Jawaharlal Nehru
National Solar Mission (JNNSM) with a mandate for purchase of power from the solar power projects
connected to grid and for sale of such power bundled with the power sourced from NTPC coal power
stations to Distribution Utilities under Phase-I of JNNSM which envisaged setting up of 1000 MW solar
capacity. NVVN introduced transparent bidding process for selection of Solar Power Developers, which
helped to bring down solar tariff very significantly compared to CERC notified tariff at that time.
NVVN has been designated by MoP/ GoI as the nodal agency for cross border trading of power with
neighbouring countries: Bangladesh, Bhutan and Nepal. Presently NVVN is supplying power to
Bangladesh and Nepal. Cross Border Power Trading with neighbouring countries is expected to grow
at faster pace.
NVVN is trading member of both the power exchanges in India, IEX and PXIL. NVVN is trading both
power and RECs in the Power Exchange Platform on behalf of utilities and open access consumers.

4. DEVELOPMENT OF POWER EXCHANGE:

Power Exchanges were formed to provide an equitable and transparent trading platform, energy
contract and transmission clearance to be handled simultaneously through single window, to address
financial risk, hassles and cost so as to encourage the trading, to increase short term volume demand
with economical price.
One of the key points of power exchange is to nurture the development of competition. The idea of
trading through power exchange enables the traders to discover the best economical price in the
market and to find the optimum buyer or seller for trade.
The Central Electricity Regulatory Commission (CERC) had issued guidelines for the setting up and
operation of power exchanges in the month of February in 2007 and trading of electricity in India via
power exchanges has begun in June 2008. Currently, there are two power exchanges viz., Indian
Energy Exchange (IEX) and Power Exchange of India Limited (PXIL) functioning as per the rules and
Bye laws approved by CERC. These power exchanges are able to facilitate the optimum utilisation of
electricity generation capacity of the country. The Indian Energy Exchange is India‟s leading power
exchange with a market share of more than 90%. It offers products in three segments of the electricity
market consisting of day-ahead market, term ahead market and renewable energy segments. IEX
started their operation in June 2008. The second power exchange in India, Power Exchange of India
Limited, offers a number of products including day-ahead spot contracts, day-ahead contingency
contracts, weekly contracts and renewable energy certificates. It commenced its operations in October
2008 with the introduction of contracts in day-ahead electricity market with double side bidding and
clearing at uniform price. Power exchanges have been able to provide time and cost savings to its
participants. Besides efficiency, it has led to better utilisation of electricity generated in plants across
the various parts of the country.
For Power Exchange, the day-ahead energy market is based on a double-side auction for each 15 min
time block. Single side auction allows either buyers or sellers to submit their bids or offers respectively.
In double sided auction scheme, both power suppliers and consumers are allowed to submit volume-
price offers and bids respectively. Auction process can be open or closed (sealed). In open auction
participants repeatedly bid and know about the previous bids. In close or sealed auction, bids or offers
are not opened to the market participants. Power Exchange in India is double sided sealed auction
scheme. The price discovery depends on the demand and supply curve and thereby Market clearing
price and volume is determined. The concept of market splitting is introduced to accommodate the
effect of transmission congestion.
The bid may be single bid or block bid. Single bid will specify sequence of price and quantity pairs in a
portfolio manner. The quantity shall be assumed to vary linearly between two price pairs. A block bid is
used for the procurement or sale of power which is specific to a block of hours (e.g. base load, peak or
user defined). A block bid can either be a buy order or a sale order for a block of hours. Either all hours
of the block order are jointly successful or all of these block hours are jointly rejected. A block bid is
selected if the bid price is better than the average system price of power in respective block hours.
Term-Ahead-Market (TAM) provides a range of products allowing participants to buy / sell electricity on
a term basis. Currently, products in the Term Ahead Market include Intra-day, Day-ahead
Contingency, Daily and Weekly contracts.
Renewable Energy Certificates (RECs) are given in lieu of 1 MWh of electricity injected into the grid
generated from renewable energy sources. In India, RECs can only be exchanged at Power
Exchanges. Participants are gradually coming to REC market to meet their Renewable Purchase
Obligations.

5. ANALYSIS ON POWER TRADING MARKET:

Table-1 shows the data for total generation and total volume of short term transaction of electricity and
it is clear from the table that, for the last 5 years, short term Power trading in India accounts for 9-11%
of the net generation. The balance 89-91% of generation was procured mainly by distribution
companies through long-term arrangements.
Short term trading basically includes bilateral trading through traders, bilateral transaction between
Discoms, Power Exchange transaction and transaction through Deviation Settlement Mechanism
(DSM). For financial year 2015-16 Bilateral trading through traders and Discoms accounts for 52% of
total power traded, followed by 30% through power exchange and rest through balancing market.
TABLE-1
SHORT TERM MARKET DATA
Total volume
of Short-
term
Bilateral Bilateral
Total Short Total Transactions
Financial Trading Direct Power Balancing
S.No. term Electricity of Electricity
Year through through Exchange Market
transaction generation as % of
traders Discoms
Total
Electricity
Generation
1 2010-11 30 10 14 28 82 809 10%
2 2011-12 37 15 15 28 95 874 11%
3 2012-13 37 15 23 25 99 907 11%
4 2013-14 36 17 30 22 105 963 11%
5 2014-15 35 16 26 19 99 1045 9%
6 2015-16 36 24 34 21 115 1103 10%
% share in total
generation (2015- 3% 2% 3% 2% 10%
16)

Since 2010, the electricity transacted via power exchanges has been rising, the volume of transactions
via Power Exchanges was 14 BU in 2010-11 which rose to 34 BU in the year 2015-16. Table-1 shows
the historical growth in the volume of transactions via power exchanges from 2010-11 to 2015-16.
There has been a remarkable progress in terms of volume of transactions via power exchanges, with a
growth of 30.77% in the last year 2014-15 to 2015-16. For last five years the bilateral transaction
through traders is almost stagnant and does not shows any growth. Bilateral transactions through
Discoms have increased by 50% w.r.t last year.

TABLE-II
POWER EXCHANGE DATA

S.No. Financial Year Power Weighted Average Price

 Exchange Power Exchange Price Bilateral Trade (Rs./ kWh)
(BU) (Rs./ kWh)

1 2010-11 14 3.47 4.79

2 2011-12 15 3.57 4.18

3 2012-13 23 3.67 4.33

4 2013-14 30 2.90 4.29

5 2014-15 26 3.49 4.28

2015-16
6 34 2.56 3.90
(March-16)

From the Table-II, it is clear that the weighted average price of electricity traded in Power exchange is
much more economical than the bilateral trade. Due to cheaper power the purchasers are keen in
buying power through Power Exchange.

6. KEY ISSUES AND CHALLENGES:

Poor Financial health of DISCOMS
Discoms have been historically plagued by transmission and distribution ("T&D") losses (arising mainly
from theft of electricity, subsidized tariff for agricultural consumption, leakages in transmission and
distribution systems, etc.) and aggregate technical & commercial ("AT&C") losses (primarily due to
billing and collection inefficiencies). Discoms' accumulated losses as at March 2015 is estimated at Rs.
3.8 Lakh crore, a substantial part of which is debt funded by banks and financial institutions. The poor
financial health has had multiple negative implications such as poor quality of power supply due to
Discoms inability to procure adequate power and strengthen the network and delay in payments to
generators resulting in an adverse financial impact on the power generation sector.
The Ujwal Discom Assurance Yojana ("UDAY"), a scheme for the financial turnaround of power
distribution companies ("Discoms"), was unveiled by GOI, with an objective to improve the operation
and financial efficiency of State owned Discoms. The UDAY scheme intends to achieve this through
improving operational efficiencies of Discoms, reducing the cost of power generation by Discoms,
financial turnaround of Discoms through State(s) takeover of Discoms debts and financing future
losses and working capital of Discoms by State(s).

Inadequate Transmission Access

Inadequate transmission capacity between different regions in India has witnessed several instances of
transmission constraints the most important being the congestion between other regions and SR. In
spite of availability of surplus generation capacity in the other Region such as ER and the Western
Region (WR), SR is facing severe power shortage mainly due to inadequate transmission facility
between the regions. Recently it is seen that congestion is also faced when transferring power from
Eastern / Western to Northern region.
Growth in Renewable Sector:
GoI / MNRE have set the target of 100GWh of solar energy by 2020. New reforms of renewable
power sector are promoting the solar power developers and due to increase in completion in
renewable sector, the tariff of solar power has gone down substantially. Recently Finland-based
energy firm Fortum Finnsurya Energy had quoted Rs 4.34 per kWh tariff for setting up a 70-MW solar
plant under NTPC's Bhadla Solar Park tender. The solar power tariff is now comparable to the
conventional power tariff. Therefore the market for generator is growing which is beneficial to the
consumer‟s. Most of the solar plants installed in India are Solar PV projects and the availability of
Solar PV project is only in the day time therefore integration of solar power with the grid without
unduly impacting system reliability of grid is the major challenge.

Stiff Competition Causing Trading Margin to lower level

The substantial changes in regulatory environment have increased the number of participants
(generators, buyer and traders) in the power market. MOP Guidelines has made it mandatory for
purchasing power beyond 15 days by DISCOM through E-bidding and reverse auction mechanism.
This has created a situation that generators are forced to quote rock bottom rate. Where generators are
bidding in E-auction through trader in that case traders are forced to restrict their trade margin to
become successful in the E-auction. Hence traders are finding it difficult to remain in the market. In
case of Power Exchange business, Utilities are also inviting tenders and traders are participating in that
tender creating an environment of extreme competition. Due to this stiff competition, the price of power
in short term market is traded so low that trading margin has gone to abnormal low level.

7. SHORT TERM POWER MARKET EXPERIENCE:

EA 2003 paved the way for reforms in electricity market and created a platform where large number of
market players could participate and get benefit from the market. Power traders played a vital role in
development of electricity market. They in fact helped market to identify the availability of surplus power
at the same time deficit location and connect the both so that both are gained. Traders have
aggressively scouted the market thereby enabling the smallest utilities and entities to enter into the
short term market and get benefit out of it. With the spread of short term market many industrial
consumers started buying power from short term market mainly from power exchange subject to
availability of open access. This situation created a position where DISCOM became apprehensive as
large number of embedded customers started drawing power under open access. In order to prevent
this situation DISCOM started putting pressure on State Electricity Regulatory Commission to impose
Cross-subsidy surcharge / additional surcharge and many other means so that embedded customers
are refrained from obtaining power through open access. In spite all these, embedded customers in
many states find it cheaper to draw power market under open access and many states are not in a
position to provide 24x7 power to its customers hence permit no objection certificate (NOC) for
obtaining open access.
The states which allow consumers to draw power under open access they only permit to draw it on
round the clock basis not on bifurcated way that means consumer cannot draw power part of the day
only.
Under this situation many central sector generating companies are finding it difficult to get full schedule
of their capacity. This is creating availability of large quantum of Un-requisitioned Surplus (URS) power
.New Tariff policy issued by MOP paved the way for sale of URS power and many central generating
stations have started selling URS power in power exchange after overcoming lot of complex
commercial and technical issues. This sale of URS power has given new dimension in the short term
power market. Initially beneficiaries of central sector generating stations were reluctant to give NOC to
generating stations to sell URS power but initiatives of central generating stations helped to pursue
beneficiaries to obtain clearance on everyday basis. The gain obtained by central generating stations
by selling in power exchange is shared with beneficiaries as per guidelines. In this process central
sector generators have gradually increased their risk taking ability in a large extent which is a bold step
and will give benefit in the long run.

8. CONCLUSIONS AND WAY FORWARD:

IPPs who do not have long term power purchase agreement for their full capacity they are selling
power under distress condition to keep their machine running on every day basis. Few utilities are
forced to sell power at night time even at @ Rs 0.80 / kWh to avoid deviation charges. Central Sector
Generating Stations are not getting full schedule from beneficiaries and beneficiaries at the same time
are not giving NOC to sell power in power exchange on day ahead basis. DISCOMs are in tight spot
and their payment cycle is going beyond 120 days. Government and regulators are trying to bring
transparency in sell and procurement of power. But key challenges remain to increase demand of the
system and tariff at a point where generator at least can recover their generation cost. Let us hope that
this bad power market situation from demand side as well as commercial front will see improvement in
next two year time.

REFERENCES
1. Central Electricity Regulatory Commission (2014-15), Annual Reports, available at:
http://www.cercind.gov.in/.
2. Central Electricity Regulatory Commission (2015-16, 2016-17), Monthly Reports, available at:
http://www.cercind.gov.in/.
3. Indian Energy Exchange, “Bye‐laws, rules and business rules”, available at:
www.iexindia.com/.
4. Power Exchange India Limited. http://www.powerexindia.com.
5. Ministry of Power website http://www.powermin.nic.in.
6. Prabodh Bajpai and S. N. Singh: Electricity Trading In Competitive Power Market: An
Overview And Key Issues.
7. Kritika Mathur and Pankaj Sinha: Dynamics of Day-Ahead Trading of Electricity in India.
8. Report of the CAC Subcommittee on Congestion in Transmission June 2015.
9. Press Information Bureau, Government of India, Cabinet 05-November-2015.
10. Staff Paper Developing a Common Platform for Electricity Trading: CERC.
 POWER MARKET IN INDIA AND ITS POTENTIAL
Subir Bhattacharya, Assistant General Manager, Management Advisory Services (MAS) Division
U. K. Vishwakarma, Joint GM (MAS)
Subir Chattopadhyay, Director (Project), MECON Limited, Ranchi 834002, India

INTRODUCTION
Indian power sector is at the cross roads. Transformation of the sector was well supported by creation
of institutions to enhance efficiency through creation of markets via trading and later on in 2008
through trading on power exchanges. The electricity act 2003 laid down provisions for promoting
competition in power market by identifying electricity trade as a distinct activity along with regulations
1
from CERC brought about a paradigm shift in Indian power sector. Open access regulations at inter-
state and intra-state level opened up avenues for more participation from private and state owned
players and industrial customers with contracted load more than 1MW or above, in the vibrant market.
Power markets have historically dominated by long-term markets and the trend seems likely to
continue. However, long-term contracts usually fail to meet the full requirements of the market
participants as electricity cannot be stored, hourly consumption in the long-term without forecasting
errs is difficult to predict, long-term contracts for peak load requirement are economically inefficient
etc. Development of short-term trading markets is necessary to complement the long-term markets.
Recognizing these problems, in 2006, CERC initiated organising electricity market by creating power
exchanges. In five years of operations Indian Energy Exchange has turned out to be the leader with
92% market share in 2013-14, successfully provided a strong, competitive and efficient platform and
played the pivotal role in transforming the landscape of Indian power sector. The paper analyses the
operation of some power markets in USA, Europe, Australia vis-vis India and address the challenges
and opportunities of Indian exchange market which is the first electricity trading platform in India.

MARKET MODELS IN SELECTED COUNTRIES

Different countries adopted / designed independent market models for power market. Australia
(NEMMCO) and USA (PJM) are mandatory power markets while NZEM (New Zealand), Nordpool,
BETTA (UK) and IEX (India)are some voluntary market places. The section deals with design aspect
of some important power markets in Europe, USA, Australia and India.

Nord Pool, Europe

In Europe, trading arrangements are mostly bilateral and most wholesale trade is in Over the Counter
(OTC) markets, often supplemented with day-ahead auction trade (Leonardo and Belmans, 2007)

Nord Pool is jointly operated by two transmission System Operators (TSO) Statnett in Norway and
Savenska Kraftaunt in Sweden. It also operates a spot market called Nord Pool Spot. Nord Pool has
transformed all clearing settlement operations to a wholly-owned clearing company called Nord Pool

1
CERC : Central Electricity Regulatory Commission
Clearing House ASA (Flatabo and Doorman, Grande and Raden and Wangensteen, 2003). The day-
ahead spot market in Nord Pool by Elspot offers contracts for the next delivery. The Elspot exchange
2
price, done using area pricing approach , is taken as reference price for financial contracts offered by
other financial power markets. The market following Elspot is Elbas which enables power generators,
distributors and brokers to fine tune their portfolio of their electricity delivery contracts. Nord Pool
ASA offers contracts of up to six year's duration with contracts for days, weeks, months, quarters and
years. The Nord Pool power market structure is depicted below (Figure 1) :

Figure 1 : Market structure in Nord Pool

Financial Forward Prices

Derivatives
Market

55%
CMD Market
Bilateral
(Zonal Price Differences)
Contracts
Day-ahead Energy
Market (Elspot)
OTC Day-ahead Zonal MCP
Clearing

Average Single Price

Hour-ahead Energy
Market (Elbas)

Real-time Zonal Balancing MCP

Balancing Market

P J M, USA

This is a common market for Pennsylvania, New Jersey and Maryland (PJM) and was the first
wholesale market designed in USA. The Federal Energy Regulatory Commission (FERC) identified
PJM market designed as standard market design. There are more than 500 companies covered by
PJM market. It serves about 51 million people. It serves a peak load of 144,644 MW and generation
capacity of 164,905 MW. PJM transmits through 49,970 miles of transmission line. Annual energy
sold is about 729,000 gWh. It covers 14 states.

2
where market is split in different price areas when congestion occurs
 3
PJM operates a day-ahead market, a real-time energy market , a daily capacity market, monthly and
multi-monthly capacity market, a regulation market and a monthly Financial and Transmission Rights
(FTR) auction market. Day-ahead market calculates market clearing price and volume for each hour
taking into account all generation offers, load bids, bilateral transactions, incremental and
4
decremental bids and virtual bids . The balancing market is real-time energy market in which hourly
clearing pries are determined based on actual bid, least cost, security constrained unit commitment
dispatch. Load serving entities (LSE) pays balancing prices for any demand that exceeds their
scheduled amount but will receive revenue for demand deviations below their day-ahead amounts.
Transmission customers pay congestion charges (or receive congestion credits) for bilateral
transaction quantity deviations from the day-ahead schedule.

A LSE has the obligation to own or acquire capacity resources greater than or equal to peak load plus
5
a reserve margin of 18%. LSEs have flexibility to acquire capacity in various ways . Transmission
customers are hedged against real-time congestion by matching real-time energy schedules with day-
ahead energy schedules. FTRs can also provide hedge for market participants against the basis of
risk associated with delivering energy from one bus to another.

PJM seems to be a complex market and needs modern systems in different market segments and
sophisticated data recording system.

National Electric Market, Australia

National Electricity Market Management Company Limited (NEMMCO) was established in 1996, to
administer and manage the market and improve efficiency. Members of NEMMCO are - Queensland,
New South Wales, Australian Capital Territory, Victoria, South Australia and Tasmania. The
Australian electricity market is completely competitive with any participant able to purchase from any
other. Participants in the NEM can take part in any combinations of two levels of reading :

 Spot trading with energy traded through a pool and spot price set every half an hour by the
6
last generator selected to run. All wholesale electricity is accounted for through the pool .

 Short-term forward market trading in which purchasers lock in energy prices through hedging
contracts.

3
These two are part of two settlement system of PJM market in which day-ahead market acts as a financial
market and provides a hedge against price fluctuations in real-time market.
4
Virtual bids are bids from the load side and its purpose is to increase the generation availability in real-time
and reduce the system price.
5
Capacity can be acquired by building units, by creating bilateral agreements, by participating in the capacity
credit markets operated by PJM. These together known as Installed Capacity Market (ICAP)
6
This is called gross pool or, energy-only pool.
Under hedging contract, the purchaser (generally retailer) agrees to purchase specified quantity of
energy from the spot market at set price called Strike Price. If the actual price paid in the spot market
by the purchaser is higher than the strike price, the counter party to the contract (typically electricity
generator) pays the purchaser the difference in cost. Conversely, if the price paid is lower than the
strike price, the purchaser pays the counter party the difference.

From the bid submitted, NEMMCO's systems determine which generators are required to meet
demand and at what time, and their production levels in a process called Scheduling. Offers to
generators are stacked in order of rising price and then scheduled and dispatched into production.
More expensive generators are scheduled into production as total demand increases. Market
structure of NEM is depicted
below :
igure 2 : Market Structure of NEM

Reserve Market FTR (Settlement

(Tenders) Residue auction

(t

Day-ahead pre- Forecasted Zonal MCP

dispatch
Financial
Bilateral
Hedge
contracts

Real-time 100% Zonal MCP and

Balancing Dispatch
Market

COMPARATIVE ASSESSMENT NORD POOL, PJM AND MEMMCO

A comparative assessment of the different electricity market structures are systematically presented in
Table 2 below :

Table 2 : Comparative assessment of the different electricity market structures

Item Nord Pool PJM MEMMCO
Participation Voluntary for day- Compulsory for day- Compulsory for day-
ahead adjustment ahead market ahead market
market
Market Offerings Day-ahead spot, Hour- Day-ahead spot, Real- Day-ahead spot and
ahead, Forward time balancing, Short-time forwards
Capacity credits
Bidding type Double sided Double sided Double sided
Adjustment market Elbas, intra-day auction Bid quality can be
market changed till the gate -
closure
Real-time / Counter trade for real- Deviations are traded Through purchase of
Balancing Market time, Participants are in real-time ancillary services,
given MCP reserve capacity
buying
Pricing Rule Zonal pricing Nodal pricing Zonal pricing
Pricing Type Ex-ante Ex-post Ex-post
Risk Management Forward, Futures, FTRs, bilateral OTC, Bilateral OTC,
Options Multi settlement Derivatives on Sydney
market, Virtual bidding, futures exchanges
Financial trading
Congestion Area splitting Security constrained Locational transmission
Management economic dispatch for transmission tariff
Transmission Loss Included in Zonal price Included in real-time To be purchased by
LMP generators
Time blocks Hourly block Hourly block Half-hourly block

INDIAN POWER MARKET

In India, electricity reform re-evaluation of Electricity Supply Act, 1948 and Indian Electricity Act, 1910.
This led to Electricity Act, 2003 which has been brought about to facilitate private sector participation
to complement cash constrained State Electricity Boards (SEB) to meet the electricity demand. The
act envisages transmission towards a competitive electricity market structure in India (Figure 3).

Figure 3 : Transmission towards a competitive electricity market structure in India

2008 January. Guideline for collective transaction

June. Scheduling of transaction on PX
October. Instruction for multi exchange scenario
 2007 February, Guideline on setting up of PX

2006, CERC issues staff paper on Power Exchange (PX)

2003, June, Enactment of Electricity Act

Source : Mercados Energy Market India Pvt Ltd. 2014

Power Exchanges have evolved rapidly to compliment and supplement the needs of the wholesale
power markets in a transparent and efficient manner. Trading on exchanges has matured despite
initial low volumes and high prices. After six years of operation, markets are now more efficient, liquid
and promote investment as well as better utilisation of national resources. IEX, as the power
exchange with maximum volume and largest participation, has played an important role in furthering
the objectives of the Electricity Act 2003 by enhancing competition, implementing open access and
through realisation of the impact of de-licensing of generation. Creation of national grid has been
supported by commercial contracts wherein huge volumes of electricity have been transferred across
India to improve the reliability and security of supply in both the surplus and deficit regions. The
exchanges have aided in better utilisation of national resources, reduced unmet demand and
consequently reduced economic losses and improved energy security of the nation. Huge bottled up
captive generation has also been brought into the national market to facilitate its most productive use
of the economy.

The Electricity Act, 2003 is for promoting competition in electricity market, protection of consumers
'interest and power for all. The act recommended National Electricity Policy (NEP), open access in
transmission, phased open access on distribution, mandatory State Electricity Regulatory
Commissions (SERC), licence free generation and distribution, power trading, mandatory metering
and stringent penalty for theft of electricity. Another step we have seen is the implementation of
Availability Based Tariff (ABT) which brought about the day-ahead scheduling and frequency sensitive
charges for deviation from schedule for efficient real-time balancing.

ABT treats the fixed and variable costs separately. The fixed cost, known as capacity charge is
associated with plant and its capacity to deliver MWs on day-to-day basis. Variable cost, known as
energy charge, and the total amount paid to the generators is based on their scheduled energy
production rather than actual production. ABT has a third component called Unscheduled Interchange
(UI) which is the payment for deviation from schedule and rate is decided in accordance with system
frequency (e.g., Figure 4).

Figure 4 : UI Price vector with effect from 29/12/2007

 Kink at 49.8 Hz

Source : Prepared from data available in <www.cercind.gov.in>

Beneficiaries are paid for under withdrawal or charged for over withdrawal according to the system
frequency. UI mechanism acts as balancing market in which real-time price is determined by system
frequency.

To promote power trading, CERC approved the setting up of IEX. It is designed on the basis of the
most successful international power exchange Nord Pool. The exchange has been developed as
market based institution where the participation in exchange operation is voluntary. Presently, IEX
offers day-ahead contracts which has time line set in accordance with regional laid dispatch centres
(RLDC). IEX co-ordinates with National Load Dispatch Centres (NLDC) / RLDCs and State Load
Dispatch Centres (SLDC) for scheduling of traded contracts.

The day-ahead market of IEX is double sided auction and discovers the price incorporating supply
and demand side bidding. In the year 2008 and the first half of the year 2009, when the participants
presented in each hour were relatively less, high prices were discovered not due to monopolistic
behaviour of suppliers but because of the inelasticity of demand. This is typical of economies where
demand exceeds supply and supply curves need to be extended vertically to discover the market
clearing price as shown in Figure 5. Hence the prices were „high‟ because of the inelasticity of
demand and a strictly positive gap between the demand and supply. Though such high prices are not
desirable from political and social considerations, from an economics perspective this indicates
functioning of the market in accordance with the principles of social welfare maximisation as
enunciated in the regulations governing the operation of IEX. However, the incidence of such
phenomenon have declined significantly. Thus fewer price peaks together with declining volatility is
an indicator of short term markets achieving higher liquidity. In the current market scenario, given the
low prices on the exchange, the price is close to the marginal costs of generation thus reflecting any
perceived lack of market abuse.
10

8
Price
Rs/kWh 7

3
Supply curve extended upward by exchange for
2 demand and supply curve interaction

0 50 100 150 200 250 300

MW
Supply Demand
Figure 5 : Demand and supply curve at IEX during initial period
Network constraints are considered in deriving the price and market splitting approach is used to clear
the market with congested lines. The exchange, at present, offer only day-ahead contracts of an
hourly time block. However, the exchange envisage plans to offer the adjustment contracts and
long-term contracts like forwards and future to hedge the risk against electricity market uncertainty.
Indian electricity market mechanism can be describe as follows (Figure 6) :

Long-term PPAs

IEX

Day-ahead scheduling

RLDs
Intra-day Bilateral
contracts

Upper price cap on UI

Real-time balancing Congestion charges
through UI & Load (Rs 3.0 / kWh)
shedding

Figure 6 : Indian electricity market mechanism

Specific features of IEX are as given below (Table 3) :

Table 3 : Specific features of IEX

Participat Marke Biddin Real- Prici Prici Risk Congestio Transmissi Time
ion t g type time / ng ng Manageme n on blocks
offerin Balanc rule type nt Manageme Loss
g ing nt
market
Voluntary Day- Double UI Zonal Ex- Bilateral Area To be Hourly
ahead sided charge ante OTC splitting purchased blocks
spot s by
participants

POTENTIAL OF INDIAN POWER MARKET

Indian power market is still to achieve full potential. In 2012-13, India's buying potential was 15.35%
while the selling potential was 4.57% at the national level. If 10% load shedding is considered, the
potential size increases to 23.5%. This potential is only on account of co-skewness of the demand
met in each state.

The actual potential is however higher and would be 23.5% if load shedding in energy terms,
assumed conservatively to be 10% is addressed. The potential would also increase if all the states
were to allow their large industrial customers (greater than 1 MW) to procure from markets. The
supply side potential is also high because (a) the private sector plants – e.g. sterlite, Jindal, JSWL,
etc. sell a fixed percentage of their output in short term markets, (b) the un-requisitioned capacity of
central sector plants (which the staff paper of CERC on Ancillary services Market proposes to be used
for providing Frequency support Ancillary services) is also available in short term markets.

There is huge untapped potential which provides opportunity for further development of power market
7
in India. Given the impact of NEW and SR grids and CERC Regulation 2014 , the size of the day-
ahead market is expected to increase over time.

Gap between demand and supply from capacity tied up under long-term contracts, indicates that long-
term contracts of utilities will be sufficient to meet entire demand across various states. States will
continue to depend on markets for meeting their power requirements on real-time basis. In this
context, power exchanges would play a lead role.

Achieving full potential has some impediments also. The state level demand reported is usually the
constrained demand that does not take into account the latent demand or un-served demand that is

7
Deviation Settlement Mechanism & related matters and Indian Electricity Grid Code
not recorded in the CEA / Load Dispatch Centres (LDCs) recording systems. Demand currently
reported does not capture demand of the large industrial and commercial open access consumers,
which is met through captive diesel generating sets. The state level supply ignores the power 3.42%
that is sold on merchant basis. only firm tied

Trading in the short term markets is governed by the differences in the load curves of various trading
utilities/entities in the country. It may not, however, always be possible to transmit power - from a
region which has a peaking capacity, during other than peak periods - to another region where there
is a peak requirement, due to transmission constraints. In these conditions the local distribution utility
facing peaking conditions may need to tie up with a local peaking generator for short term. Therefore,
short term planning is distinct from long term planning and involves consideration of both the local
peaking resources and transmission from other regions for the
reasons of economy.

REFERENCES
Flatabo, D. Doorman, G., Grande, O., Raden, H. and Wangensteen, I. (2003). Experience with Nord
Pool design and implementation. Institute of Electrical and Electronics Engineers (IEEE)
Transaction on Power Systems, 18 (2), pp:541-547.
Lornaldo, M. and Belmas, R. (2007). Is the prevailing wholesale market design in Europe and North
America comparable?. IEEE Power Engineering Society General Meeting, pp: 24-28.
Mercados Energy Market India Pvt Ltd.( 2014). Indian Power Market : Journey so far and way
forward. June, pp:6.
 DISTRIBUTION REFORM- A PANACEA
TO ALL ILLS OF POWER SECTOR IN INDIA
By P K Jena, AGM, NVVN, CC

Abstract:
In view of present power scenario in the country and power sector being central to any growth
& development, the performance of the power sector has become paramount. Govt. is giving
all priority to plague the ills of the sector. This article has made an effort to look into historical
back grounds of power distribution sector & effort by successive governments to make the
sector viable and self-sufficient. Distribution sector, the end link of the power value chain, is
no doubt has become the central to the success of the sector & needs urgent attention of
every stake holder. It is not denying that three pillars of the power sector, Generation,
Transmission & Distribution should have balanced attention & parallel action. Some remedial
measures are also suggested to make the sector viable and self-sustaining.

Historical Back Ground of Power Distribution in India

Electricity, as we know it, is largely a product of eighteenth and nineteenth century scientific and
engineering developments. The US was the first country to commercially generate electricity in the
year 1882 followed by the United Kingdom in 1888. Even though the first demonstration of electric
light in India was held in Kolkataon 24th July 1879 by P W Fleury & Co,the electrification of Kolkata
city took place only seventeen years after New York and eleven years after London. On 7th January
1897, Kilburn&Co secured the Calcutta electric lighting licence as an agent of the Indian Electric Co.&
later, the company was renamed as the Calcutta Electric Supply Corporation (CESC). It commenced
the power generation and distribution in Kolkata, in the year 1899. The power plants at Darjeeling
and Shimsha (Shivanasamudra) were established in 1898 and 1902 respectively and are one of the
firsts in Asia. The 4.5 Megawatt hydroelectric power station near Sivasamudram, which falls of
Cauvery River in Karnataka was the first major power station in India. Enthused by the success of
electricity in Kolkata, power was thereafter introduced in Mumbai. Mumbai saw electric lighting
demonstration for the first time in 1882 at Crawford Market. The Bombay Electric Supply & Tramways
Company (BEST) set up a generating station in 1905 to provide electricity for the tramway. The first
electric street lighting in Asia was lit on 5 August 1905 in Bangalore. The first electric train ran
between Bombay's Victoria Terminus and Kurla along the Harbour Line, in 1925.
Post-independence, the Government of India decided to entrust the development of the electricity
sector which were predominantly on Hydro sector, to respective states through the creation of State
Electricity Boards (SEBs). SEBs were expected to develop networks of transmission lines which till
then had been quite under-developed, and add generation capacities. But SEBs fared miserably and
by the 70s, many of the SEBs started incurring huge losses because of factors like direct political
interference in SEBs operation by the state governments, mismanagement, poor technology
adaptations, poor industrial relations etc.
The low tariffs for agricultural sector were sought to be cross subsidized through higher tariffs on
industrial and commercial consumers. But the distortions of such cross subsidization, resulted in
increasing theft and leakages, loss of accountability of revenue and misreporting of energy
consumed. Losses of the SEBs mounted and this led SEBs to increasingly dependent on budgetary
allocations from their respective governments & reducing their ability to add generating capacities, to
carry out the routine periodic maintenances of running plants, upkeep of their distribution assets &
meet the increased demand.

Major Initiatives in the Development of Power Sector

Electricity is in the concurrent list of constitution which allows centre to formulate policies for the
country and States can have their own policies but not in conflict with the centre. Power sector has
seen many developmental initiatives mostly by the central agencies starting from Electricity Act-1910
to foster the growth of the power sector in India.
Despite efforts by central & state governments over the years till 1980s, huge energy shortages and
poor financial health of SEBs continued. This led to almost stalled growth not only in power sector &
also adversely affecting the other sectors. The urgent need ofcontrolling the fiscal deficit led to
initiation of various reforms in the Electricity Sector in early 1990s with opening of the sector for
private Independent Power Producers (IPPs).
Following the liberalisation in industrial sector and reform of the economy in 1991-92, the electricity
sector too witnessed major policy and regulatory initiatives. Recognizing that electricity and other
infrastructure sectors required substantial investments in the face of resource constraints, investment
by the private sector (including foreign capital) were allowed in electricity generation. The major policy
frameworks started with institution of independent regulatory authorities, the Central Government‟s
guidance and direction on policies & reform efforts, unbundling of the sector & allowing private
operators in the distribution sectors, legal initiatives to bring in competition among the stake holders,
programmes to improve technical and operational efficiency of the sector to effectively procure power
on a long term basis on behalf of state governments, have been initiated since then.
The most important amongst all the policies announced by the government is the enactment of the
Electricity Act in the year 2003 which ushered a new era & set the ball rolling for reforms in the
Electricity Sector in India. With enactment of the Electricity Act-2003, the replacement of the legal
frameworks for the sector hitherto governed by the Electric Supply Act of 1948 and the Electricity
Regulatory Commission Act of 1998 began. In pursuance of the provisions of the Electricity Act 2003,
the Central Government came out with National Electricity Policy on 6th February 2005. Over the past
few years, the Government of India has undertaken several legislative measures and carried out
extensive policy reforms with a view to accelerating the growth of the power sector and encouraging
greater private participation. Some of these measures include National Tariff Policy, National
Electricity Plan, and Competitive Bidding Guidelines for power purchases by Discoms, and Ultra
Mega Power Projects.
The changes that these initiatives have brought about, while significant, have not necessarily been in
the direction intended, and the core problems of leakage, viability of distribution, tariff reform and
competition still remain to be addressed successfully. Financial Reform Programme (FRP) initiated by
Govt. In 2012 did not yield the expected result.
To boost the growth in the sector, 100 percent Foreign Direct Investment (FDI) is also allowed in
generation, transmission and distribution segments. Further Incentives are also given to the sector
through waiver of duties on capital equipment under the Mega Power Policy.
The Union Govt has approved a new scheme moved by the Ministry of Power - Ujwal DISCOM
Assurance Yojna (UDAY). UDAY provides for the financial turnaround and revival of Power
Distribution companies (DISCOMs), and more importantly, will ensure a sustainable permanent
solution to the problem.

Performance Statistics of Discoms.

Despite so many major initiatives by central agencies i.e CERC, MOP, CEA etc. directly/indirectly,
the performance of DISCOMs controlled by states have not improved as envisaged. This has severely
affected the growth & progress of the Sector. Some of the important considerations below speak how
Discoms are operating in India vis-a-vis the world.
1. The biggest challenge for any Discom is availability of quality data. Within the urban DISCOM
scenario this appeared somewhat possible but it became obvious that data would typically be
incomplete/overstated/understated when dealing with the rural Discoms. In developed countries
on-line monitoring of loads at each & every consumer point is taken thru smart grids & IT
networking.
Power requirement & measure initiative under taken by GOI for organising Common Wealth
Games (CWG) in 2010 is fitting case of exaggeration of demand & asset creation leading to huge
loss & recurrent liabilities for Discoms.
2. Discoms are trapped in a vicious cycle with operational losses being funded by debt. Outstanding
debt of DISCOMs has increased from about Rs. 2.4 lakh crore in 2011-12 to about Rs. 4.3 lakh
crore in 2014-15, with interest rates upto14-15%.
3. Annual loss of Discoms are around Rs. 85,000cr
4. Aggregate technical & commercial losses of Discoms in India as per CEA March‟16 is as below
 T&D loss in India is one of the highest in the world as far as global standards are concerned.
China operates with 7% & UK with 8% of T&D loss & majority of developed countries with less
than 14%.
In the last 4 years there has been very little change 10.4% & 13.8% in the T&D and AT & C losses
respectively which indicates very little or no efforts were given in this direction or India is losing
nearly 100BU/yr of electricity generated more in comparison with global standard.

5. Cost of power supply is one of the lowest in the world( USD ,Cents/kWh at 2011)

xxxiv
Source: IEA, EIA, National Electricity Boards, OANDA

6. State wise consumer tariff & cost of supply as per 2015-16 Economic Survey of India
The 8 states Rajasthan, Jharkhand, Punjab, UP ,TN, AP ,MP & Haryana where cost of supply is
more than the average tariff, are incurring huge losses every year, total cumulative loss of these 8
states amounts to75% of the total Discom losses .

7. Average per unit realisation & cost of Supply as per CEA (March‟2016)

Average over all realisation from supply to all categories of consumers is Paise 125/unit less than
the cost of supply. For agriculture the average realisation paisa 148.67/unit which is paisa
352.33/unit less than the actual cost of supply. This speaks the volume of losses Discoms are
taking. Some of the State Govts. have announced free power up to 200 units, which is adding
financial burden of Discoms. The biggest casualty of this approach has been the expansion of
networks, availability of equipment spares for routine & breakdown maintenances and renovation
& modernisation of substations & distribution networks. There are instances prevailing on many of
rural Discoms where a small distribution transformer replacement is taking a year or even more
putting all consumers into grave darkness.

8. Reliability & assurances of the existing sources of supply is a major cause of concern for Discoms.
Under present market structure in India 89% of power are being tied up under long term & 11% of
power are under short term which includes bilateral sale & purchase, Banking, Power exchange &
Deviation Settlement Mechanism(DSM). Long term power carries the fixed cost liabilities whether
Discoms are availing power or not. Similarly, short term bilateral & banking contract are carrying
 take or pay liabilities. The reliability of most of the long term contract of Discoms are not upto the
mark which it should have been, resulting in excess /under tie ups by Discoms under short term &
offsetting the power & financial balances.

9. Representative tariff Schedule as per ESI-2015-16, depicts a picture of wide variations starting
from Rs.0.00/kWh for Dry land farmers to Rs.11.58/kWh for Advt. Hoardings. When we have
increasing average input tariff and more than 100 output tariff with most of them lower than input
tariff, it clearly threatens the viability of operation and existence of the entity. Secondly, the tariff of
certain categories of consumers are not increasing for years and even getting totally waived off
due to reasons other than economic. Discoms have no other means to get these tariffs back
except from state government‟s grants.
10. Cross subsidy charges to industrial consumers availing the open access (State wise as per 2015-
16 Economic survey of India)
Majority of the States are charging additional surcharge from Paise 00.00/kWh to Paise 338/kWh
from the industrial consumers, who are availing power from open market. It is basically to recover
the part of tariff subsidies given to agricultural and domestic consumers at much discounted price
power purchase price.
.

11. Industrial Tariff per capita of GDP comparison of different countries as per 2015-16 Economic
survey of India

Summarising & analysing above facts & figures, we can safely conclude that all is not well with
Discoms‟in any fronts. Discoms demand of data collection and projection on yearly basis is a major
cause of concern. No scientific analysis of available data is taking place while projecting the future
demand. Power is also arranged/availed due to extraneous factors which have nothing to do with
technical or commercial prudence. Hence, many a times, Discoms are becoming surplus due to
excessive purchases, and are forced to sell power at much lower than purchase price due to strict
grid discipline and Demand Side Management (DSM) regime in certain areas leading to self-
implicated contributions to mounting revenue losses. Other performance parameters like tariff fixation,
cross subsidies, revenue collections, and reduction of AT &C losses & etc. are much lower than
global performance standards. Empowering of line executives to harness the market dynamics is
missing in most of thestates.
Adding to woes of the Discoms, is the volatility in short term market position in terms of price which
creating a dilemma while scheduling the power from Central Generating Stations (CGS) and
scheduling state own generations.

Suggestions for Remedial Steps

Measures under taken by the central government to improve the financial health of Discoms had
faced many hurdles i.e. political, financial, geographical and infrastructural from various State stake
holders. The efforts could not achieve the desired results and Discoms are languishing in the vicious
circle and going from bad to worse with each passing day. Few suggestive methods to improve the
health of Discoms are given below.

a. Adequate accessibility and last mile connectivity

The country already has adequate generation and transmission capacity to meet the full demand
temporarily and spatially. However, due to lack of last-mile link-up with all electricity consumers
and reliable power supply, many consumers depend on DG sets using costly diesel oil for
meeting unavoidable power requirements. Also, more than 10 million households are using
battery storage UPS as back-up in case of load shedding, 47,000 MW captive users & 75000
MWDG set more than 100KW capacity users are still using uneconomical & inefficient power
generation technologies only for ensuring reliability. Ensuring connectivity and reliability to
replace such high cost power will improve the financial capability of Discoms to a great extent
due to high consumer dependability on state sector.

b. Reduction in technical outages/load shedding

Even though most of the Discoms have undertaken the unbundling activities in line with
Electricity Act-2003 & created separate entities for generation, transmission, distribution and
even privatising the distribution activities to improve the performances, nothing substantial has
been achieved.
Renovation & modernisation activities of old substation must be carried out in full stream to
accommodate the ever increasing number of consumers and the increasing demand of existing
consumers due to improved economic conditions. States are managing the demand through load
shedding to avoid complete black outs due to over loading of the systems. That is hugely
affecting the technical as well as commercial activities of Discoms denying them the market
leverages. Consumers are not averse to pay timely the right price for reliability, quality and just
cost.
c. Abolishing cross subsidy and giving financial compensation to farmers
Lower domestic (Below Poverty Line) and agriculture tariffs are leading to wastage of electricity,
and power is being diverted /misused in activities other than agriculture. There are no checks
and balances on the quantum of energy consumed by the consumer, hence Profiling of actual
demand of each and every consumer based on his requirement and transferring cash into his
account by Govt. will allow the Discoms to have uniform tariff category wise for 3-4 category of
consumers. This one action will compensate maximum to the needy and industrial activities will
pick up without any delay.

d. Performance Bench Marking

Benchmarking process can reveal potential areas where a particular DISCOM‟s performance is
lacking and point to directions for further detailed examination to identify any underlying
contributing causes or mitigating factors to the performance gap. Having a clear assessment of
its strengths and weaknesses, a DISCOM can formulate a better corporate strategy to improve
its competitive position in the marketplace.
While the forms of performance benchmarking vary, their use is commonplace in the United
States, Europe, Japan, and other developed countries. Utility managers use quantitative
measures to compare operational performance among their distribution units to ensure that they
provide a uniform quality of service, anticipate problems, guide capital expenditures, and
increasingly to monitor their competitiveness.
Regulators can rely on cross-utility studies of service quality and cost of service for a wide variety
of functions every time they consider a utility‟s application to increase consumer tariffs. Investors,
bond rating agencies, and others in the financial community also track each utility‟s performance
against benchmark indices to evaluate management performance, company risk, and other
factors that determine cost of capital.

e. Dis-cell within the Discoms

Creating separate entity Distribution Cells (Dis-cells as Profit centre) within the Discoms at
66KV/33KV voltage level with a consumer base of 1 lakh will be an important step in keeping a
tab on the billing realisation and power theft issues. These cells will draw power from Discoms
and pay to Discoms for the power drawn. Cells will be keeping tab on losses, power drawn by
individuals, theft, and outages etc. Due to small in size, cells will be in a better position to
evaluate their bottlenecks and improve overall performances with use of SCADA (Supervisory
Control And Acquisition of Data) at substation 11KV/6.6KV/3.3KV levels. Dis-cells can promote
the TOD (Time of Day) metering and incentivise consumers for consuming less than contracted
demand to reduce the overall consumption and quantum of purchase at high cost and selling at
lowcost.

f. Demand Management to reduce the purchase quantum hence reduced loss

 Projecting future demand based on factual data, implementing the modern monitoring tools like
SCADA at distribution and Sub-distributionlevels, and promoting energy conservation at end user
level involving housewives and school children, will effectively reduce the overall power
consumption, hence savings and loss reductions.

g. Creating a dynamic consumer base

Due to rapid capacity additions in generation & transmission sector, surplus short term power is
available on as and when required basis. Certain consumers/industries donot require power on
continuous basis, however they are forced to pay connectivity related Maximum Demand
charges even without availing any power for a given period. Discoms are forced to make
available by contracting high cost power quantum from the market even though the consumers
donot need them and pay less than the purchase cost. Dynamic pool consumers can avail the
power for the period by giving notices 4 hours early and paying advance plus extra (more than
the purchase cost of power) for using the distribution networks. The details can be worked out
based on the dynamic consumer base. This will create a dynamic demand situation, improve the
liquidity of the Discoms, and reduce the theft, and help in flattening the load curve.

h. Mobile vans and prepaid meters for all segments of consumers.

Best way to get rid of power theft and billing realisation issues is to convert all the existing meters
to prepaid tamper proof meters. Consumers can be allowed to up to the security amount after
existing balance is elapsed. When charged, the security amount gets recouped first and balance
will show as the account balance. Alarm/warning before exhaust of account balance amount will
help the consumer for timely recharge. Charging coupons of various denominations may be
made available with the area electrician or in the local post office or through mobile pre-paid
cards charging vans for the convenience of consumers.

i. Smart Metering Mandatory for all new connections & phasing out of old meters with new
smart meters.
Discoms are losing crores of rupees due to power theft and tampering of meters. By installing
smart meters the power theft can be reduced drastically and consumers can be taught to
manage their consumption such that Discoms load curves are more flattened. Electricity thieves
come from across segments: domestic users, commercial and industrial establishments, rural
areas and large cities. Most of the time, this theft happens through tapping of electricity from live
wires, which also poses risks to people‟s lives.
In a smart meter, metering unit lies in Discom premises and display unit lies in consumer
premises, this will prevent any scope for tampering with power consumption, loss due to theft,
enable power disconnection due to billing issues etc. 100% metering will enable high collection
efficiency and improved financial health of Discoms.

j. Separation of Carriage & Content in the Distribution Sector

  Distribution and supply businesses to be recognized as separate licensed activities
 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
 Incumbent supply licensee
 To be carved out of the existing distribution licensee
 Responsible for arranging supply of electricity for all the consumers in its area of
supply
 Subsequent supply licensee
 Licenses to be granted to other applicants in the area of supply of the incumbent
supply licensee – at least one company to be a Government Company.
 Existing Distribution licensee and Franchisee shall continue as per the terms of their
on-going license/ contract.
 Intermediary Company to hold all the PPAs as per re-organization scheme
 Supply licensees so designated by Appropriate Commission to be Provider of the last
resort
 Tariff for consumers not to be regulated – only ceiling tariff.

k. Creating public awareness

Informed consumers are the key for quality service delivery in an economy. Public participation is
central to make the aforesaid strategies and measures effective which necessitates strong and
apolitical public awareness programme, especially since tariff has been a contentious issue in
political circle. The regulatory commissions should make use of the electronic and print media
and information technology to reach out to the consumers. The government may stay away from
such public awareness programmes to avoid politicization of the issue.

CONCLUSION
The bedrock of problems in the Indian Power Sector lies in its Distribution segment. Of late some
efforts were made to reform the power sector but the desired results are still awaited in the distribution
sector. One reason could be that so far an integrated approach to address the problem has been
missing. India needs to quickly adopt the best practices across the world to overcome this problem.
Let us recognise that Discoms are the pivot for the performance improvement of power sector. We
have already been feeling the heat by the way of more than 50,000 MW lying ideal for lack of demand
and high AT& C losses further aggravate the problem.
GOI & State Govts. should work in tandem involving consumers and evolving co-operative models
wherever possible to address the issues of subsidies, losses, billing and payments. It is high time to
link the performances of States‟ power sector for allocating central funds and incentives to States
performing better.
The recent initiative of Govt of India under UDAY scheme is one such ray of hope for better days
ahead...
REFERENCES
 http://indiabudeget.nic.in/
 http://www.cerc.gov.in/
 http://www.pfc.gov.in/
 http://powermin.nic.in/
 http://indianpowersector.com/home/electricity-regulation/government-programmes/
 www.cea.nic.in/
 http://pib.nic.in/newsite/PrintRelease.aspx?relid=78627
 http http://articles.economictimes.indiatimes.com/2013-01-09/news/36237873_1_state-
discoms-discom-debt-debt-rejig
 http://economictimes.indiatimes.com/industry/energy/power/punjab-becomes-seventh-state-to-
join-uday-to-save-rs-5000 Crore
 http://www.poweradvisor.in/discoms/state_discoms/64
 http://www.business-standard.com/article/economy-policy/uttar-pradesh-joins-the-uday-power-
discom-revival-plan-115121800762_1.html
 http://www.moneycontrol.com/news/economy/rajasthan-3rd-state-to-join-uday-to-save-rs-
21000-cr3-yrs_5174401.html?utm_source=ref_article
 POWER SURRENDER – CHALLENGES - MITIGATION –
UTILISATION

C. Lizzielet Sabrina,
ADGM/Electrical, Commercial Dept., NLC India Ltd., Neyveli)

INTRODUCTION
India has made impressive progress in power sector and the energy sector has undergone a
turnaround with progressive policy-level changes and power reforms. Enactment of the Electricity Act-
2003 brought sweeping changes in the power sector and opened up the constrained electricity sector
to new heights. It opened the way for third party sales by introducing the concept of “Open Access”
and created an enabling environment for competition among generators and traders to choose their
customers and distribution companies and consumers to have a choice of suppliers thereby giving
birth to “Multi buyer model” concept from the earlier “Single buyer model” where the power producers
were forced to sell only to the State Electricity Boards (SEBs).

Thrust given for capacity additions have fructified and the day has dawned where the challenges
hitherto witnessed has shifted from those related to power deficit scenario to challenges related to
power surplus regime with huge power generation capacity idling for want of electricity demand.

In the CEA-Load Generation Balance Report (LGBR) 2016 report ( Table-1) a base load energy
surplus and peaking surplus of 1.1% and 2.6% respectively has been projected for the fiscal year
2016–‟17 with some regions portraying shortages however.
Table - 1

Source: CEA – LGBR-2016

The NEW and SR Grid, were synchronously connected in December 2013 resulting in a National
Grid. Nevertheless, as of now there are persisting congestion problems and corridor bottlenecks
constraining the exchange of power from surplus regions to deficit regions. Formation of National Grid
and third party sales has facilitated economy interchange with cheaper power replacing costlier power
and costlier power made to lie idle.
POWER SURPLUS – POWER SURRENDER
 India has become a power surplus nation with more than 3 lakh MW of installed capacity as
on July 2016 to its credit.

th
Power surplus scenario has led to about 1/ 10 of the capacity lying stranded for lack of
power purchase agreements and day to day scheduling of power is also witnessing heavy un-
requisitions by the beneficiaries.
 Renewable power penetration with wide seasonal changes and its variant nature further
aggravate the power surrender.
 When a beneficiary un-requisitions its entitled energy in a power station and surrenders the
same, a generator would have at its disposal the un-requisitioned power as surplus capacity.
 The present trend of region wise un-requisitions for the month of April 2016 and July 2016 are
depicted in Figure 2 and Figure 3 respectively.

Figure - 2

WR SR NR ER AR
80000
URS of
70000 APRIL 2016

60000

50000
MWhr.

40000

30000

20000

10000

0
Day
3
1

5
7
9
11
13
15
17
19
21
23
25
27
29

URS for April 2016 (in Million Units) as per Fig 2

WR SR NR ER NER Total
477 98 1448 286 53 2362

Figure - 3
 WR SR NR ER AR
140000
URS of
120000 JULY 2016
100000

80000
MWhr.

60000

40000

20000

0
1.7.2016

3.07.16

05.07.16

07.07.16

09.07.16

11.07.16

13.07.16

15.07.16

17.07.16

19.07.16

21.07.16

23.07.16

25.07.16

27.7.16

29.07.16

31.07.16
Day

URS for July 2016 (in Million Units) as per Fig 3

WR SR NR ER NER Total
1471 724 2468 660 95 5418

Source: NLDC
 The total power surrender of the nation has increased in leaps and bounds and in 2016-„17 it
is seen that power surrender is increasing from month to month. The surrender in July 2016
w.r.t to the month of April 2016 has more than doubled being 2362 mu (3281 MW) and 5418
mu (7282 MW) respectively.
 Un-requisitioned surplus (URS) power is dynamic and is ever under the risk of the „un-
requisitioning‟ beneficiary, recalling their share at any time since it is their entitlement for
which they continue to pay the capacity charges.
 Thus the ownership of the original beneficiary over the URS power dissuades the generator in
utilising the same.

ADVERSE IMPACT OF URS POWER

 When a thermal generator is required to back down the generation, on account of un-
requisitions, the sales revenue from energy charges decrease.
 The Plant Load Factor which is a function of the scheduled generation decreases and the
incentive realisation applicable for generation above the normative plant load factor becomes
lesser.
 The generating units are subjected to cyclic load fluctuation and thermal stress deteriorating
the machine health and life in the long run.
 Cost of production gets increased due to degradation of operational parameters consequent
th
to low unit loading. Albeit, compensation for degradation has been introduced in the IEGC 4
 amendment, the generator is deprived of the entitled compensation as compensation is
restricted to lesser of the difference between actual energy charges and normative energy
charges. Further degradation eats away the efficiency gains of the generator as there is no
compensation when actual energy charges are lesser than normative energy charges.
 For mining-cum thermal generation company there is another unfavourable condition. NLCIL
being an integrated mine-cum-power company, the un-requisitions / power surrender affects
the performance of the Mines also since due to backing down of the generation in the Power
Plants, the production of lignite in the Mines also needs to be reduced.
 If reduction in mining results in capacity utilisation factor (CUF) lesser than the normative 85%
(CUF) in the mines, there will be under recovery of the fixed charges of the lignite price which
has cascading impact on the financials of the company.

IMPACT OF POWER SURRENDER - MITIGATION

 Surrender of power would be alleviated consequent to increase in demand for power,
strengthening of transmission corridors and addressing congestions concerns in transmission
lines facilitating power flow from surplus regions to deficit regions.
 Further, creation of avenues for utilisation of the URS power would mitigate the impact.
Demand side increase:
 National annual per capita consumption is one of the indicators of the demand situation of a
nation. The National Electricity Policy 2005 advocated a per capita consumption target of
1000 kwh per annum by 2012.
 The per capita electricity consumption in India crossed the 1000 kwh mark in 2014-„15 and
has reached 1075 kilowatt-hour (kWh) in 2015-„16 but still it is far behind when compared to
the rest of the world with China having a per capita consumption of 4,000 kWh, and
developed nations averaging around 15,000 kWh per capita. Economic growth and access of
electricity to all accelerates the per capita consumption.
 A comparison of per capita consumption of some nations in the year 2013 shown in Figure 4
portrays the lagging position of India.
Figure - 4
 Per Capita consumption in 2013

18217
20000

15519
18000

12988
16000

10428
10134
14000

8741
12000

7967
7836
7807
Kwh.

7374
7019
6559
10000

6040
5407
5159
5029
4512
8000

4326
3762
3104
6000
4000

957
2000
0

Malaysia
South Africa
USA

France

China
Korea
Bahrain

Belgium

India
Australia

UK
Saudi Arabia

Greece
Israel
Denmark

Italy

World
Japan

Germany
Switzerland
Canada

Source: World Bank data

(Note: Per capita of India shown in the graph is the prov. figure given in CEA - Jan.‟16 report)

 Power surplus or deficit is determined by calculating the difference between the demand for
power and availability. Since only people who are connected to the grid and have access to
electricity would come into consideration, when in reality about 300 million people still do not
have access to electricity, the demand declared is rather distorted.
 The actual demand also gets suppressed as State Electricity Boards (SEBs) are hesitant to
procure electricity for 100 % needs because of their weak financials due to low tariffs and
subsidies, high losses due to pilferage, average power purchase cost being higher than
realisation, poor collection efficiency and crippling debt.
 Addressing these issues will increase the demand position.

Utilisation of URS Power

The Central Electricity Regulatory Commission (CERC) and Central Government have initiated and
implemented avenues for tapping the URS power some of which are given below.

Avenues prior to 2015-’16

i. Re-allocation of Surrendered Capacity: The beneficiaries can propose to surrender part of
their allocated firm share to other states within / outside the region and in such case the same
can be re-allocated by Central Govt. for a specific period. The capacity charges for the
capacity surrendered would be paid by the states to whom the power is re-allocated and not
the original beneficiary.
ii. Re-allocation of power on temporary basis: In this mode un-requisitioned power of the original
beneficiary can be scheduled to beneficiaries/ Utilities of the same power station only and at
the tariff rates and can be revised if the original beneficiary recalls in line with the provision in
 IEGC. The capacity charges for the reallocated portion would be paid by the beneficiary to
whom it is temporarily re-allocated till such period and not the original beneficiary.
iii. Scheduling under Short Term open Access (STOA: Utilization of URS power under STOA is
marginal as the two days notice requirement for revision of schedule under STOA is deterrent
to address immediate call back option for its rescheduling to the original beneficiary.

Avenues introduced in 2015-‘16

The alarming trend of power surrenders has made the regulators and Central government to
consider more avenues for utilisation of URS during the year 2015-‟16. Two avenues created in the
year 2015-„16 are detailed below.
iv. Reserves Regulation Ancillary Services (RRAS):
• CERC notified Ancillary Services Regulations on 13.08.2015 facilitating scheduling of URS
power to anyone under Reserves Regulation Ancillary Services (RRAS).. In this
mechanism a Virtual Ancillary Entity (VAE) is created for each region. When the grid
starves for power, the power is scheduled from the RRAS Provider (who are eligible
regional generating entities) to VAE and when the grid has excess power it is scheduled
from the respective VAE to the RRAS Provider. The RRAS provider is selected on the
principle of Merit order stack from lowest to highest variable cost for Regulation Up and
vice-versa for Regulation Down service. In this mechanism, the generator is ensured of a
mark-up cost @ 50 ps./kwh for Regulation up service and 25 % variable charges for
Regulation down service in addition to variable charges. The original beneficiary also
stands to gain since the capacity charges paid by them for the surrendered portion gets
reimbursed.
• Although this regulatory mechanism is beneficial to both generators and procurers with
minimum risks and operate within set principles, the power being scheduled under RRAS
is rather low. The maximum power and energy scheduled under RRAS (Regulation Up) is
illustrated for the month of June 2016 in Figure 5 and Figure 6 respectively . As can be
seen in Figure-6, the quantum scheduled under RRAS for the month of June 2016 in
respect of NLC India Ltd. is only 9.828 mu and that of NTPL a subsidiary of NLCIL is
1.953 mu.
Figure - 5
 Source : NLDC
Figure - 6

Source : NLDC

v. Sale of URS in Market:

 The new Tariff Policy issued by Ministry of Power vide Resolution dated 28/01/2016
facilitates sale of URS power in the market. It empowers the power generators to sell the
URS in the market and requires the procurers to communicate, at least twenty four hours
before 00.00 hours of the day when the power and quantum thereof is not requisitioned.
As per the policy, gains if any from such sale are to be shared with the beneficiaries in
the ratio 50:50.
 Sale of URS power in the market is a win-win situation for the buyers as well as for the
sellers, saving generators from the adverse effects of un-requisitions leading to optimum
utilisation of generation capacity and beneficiaries from getting a portion of the capacity
charges of the surrendered portion reimbursed.
NLC INDIA – STEPPING INTO POWER MARKET
 Power Market Regulations 2010 defines Market as a forum / platform where buyers and
sellers directly or through Electricity trader or through electronic exchange buy or sell
electricity or its related products -An Exchange is a platform on which buyers and sellers
come together to transact. It is not the market but a host to the market and a Power
Exchange is the electronic Exchange for trading of power. Its core function is to ensure
fair and transparent transactions as well as efficient dissemination of price information to
its stakeholders.
 The Indian market design is coupled by default and split only by exception since in the
Power Exchanges the price discovered is a single price for the entire country and the
market is split only in the case of congestion, when different prices are
discovered.

POWER MARKET

Bilateral transactions Collective transactions Imbalances

( STOA) (STOA) in Power (Deviation
Exchange Settlement)

 Although Deviation Settlement Mechanism (DSM) is not a market mechanism, electricity

transacted under DSM is often considered a part of short-term transaction. Also,
electricity transacted bilaterally directly between the distribution companies (without
involving trading licensees or power exchanges) is also considered a part of short-term
market.
 Considering that URS Power is dynamic and cannot be supplied on sustained basis to
buyers under one to one transaction, NLC India opted to sell URS power in Power
exchange (Collective transactions) under Day-Ahead-Market (DAM) to start with.
 Trading of URS power of TPSI Expn. and TPSII (Stg.I & II) was commenced on
19.06.2016 in IEX Power Exchange as a Client to Member of NVVN after obtaining “No
Objection Certificate” (NOC) from SRLDC to sell the URS of the beneficiaries who had
given consent for the same.

Mounting Power Surrender - Declining revenue

 In the current fiscal year 2016-„17 (as on 31.07.2016), NLCIL has suffered enormous
power surrender of about 500 mu in respect of its regional power plants at Neyveli.
 The impact of power surrender on the Company is double fold and unique since scaling
down the generation reduces the lignite consumed which in turn requires lignite
 production to be reduced. Thus not only the power sales but also the revenue on the
mining side drops unlike plants which procure fuel for the generation.
 Reduced mining would result in under recovery of the lignite cost if the actual capacity
utilization factor becomes lesser than the normative CUF.
 The high moisture content to the tune of 50% in the lignite and its susceptibility to
spontaneous ignition are not conducive for transport over long distances or stocking and
necessitate consumption of the lignite mined at the point of excavation.
 The related loss in the linked mines for an anticipated power surrender of 1200 mu in
2016-„17 is illustrated below:

o Total capacity of pooled lignite mines at Neyveli (mill.ton) : 22 (excl. stand-alone)

o Normative Capacity at 85% capacity utilisation ( mill.ton) : 18.7
o Base Price to be adopted for 2016-17 (Rs/ ton) : 1949
o Base Price in (Rs-Cr. ) : 3645
o Anticipated URS in 2016-17 ( mill. Units) : 1200
o Specific Lignite Consumption (approx.) kg./kwh : 1.08
o Reduction in lignite prodn. due to un-requisitions (mill.ton) : 1.296
o Loss due to under recovery of lignite rate (Rs-Cr.) : 252.6

 Thus, in addition to reduction in sales revenue to the tune of about Rs.360 Cr. assuming
an energy charge rate of Rs.3 per kwh., on thermal power side, there would be a loss of
about 250 cr. on Mines side due to reduction of mines capacity utilization.

Hurdles on the Way

 The energy charges of the thermal power stations at Neyveli are rather high due to the
high lignite mining cost of the linked mines.
 The selling price discovered / cleared in the market being generally lesser than the
energy charges, the percentage of URS power sold in market is not significant despite
heavy surrender.
 Furthermore, as per the present practice a generator is assured of a minimum schedule
from beneficiaries (SG) corresponding to the Technical Minimum (presently 70 % of ex-
bus in NLCI plants pending implementation of the revised 55 % MCR) when SG is lesser
than the Technical Minimum (TM).
 However when RLDC restricts the un-requisitions of the beneficiaries to technical
minimum level for the generator, the un-requisitions of the beneficiaries and the URS
sold in market is considered collectively which is disadvantageous to the company as
explained below.
 Let „SG‟ be the scheduled requisitions of the beneficiaries, „URS‟ be the un-
requisitioned surplus power sold in market and „TM‟ be the Technical Minimum limit.
  One of the concern in URS sale is that when total schedule (SG+URS) < TM, the
summation of both SG and URS will be considered together for restricting the un-
requisitions of the beneficiaries for the technical minimum protection and not „SG‟
alone had it been the case if there had been no sale of URS . In other words, the URS
power that is below the technical minimum replaces the „SG‟ to that extent.
 Hence the traded URS quantum that falls within / below the technical minimum datum
will not get accrued either as additional revenue in thermal side (except during the
blocks when the market cleared price is greater than energy charges) or contribute to
increase in the thermal unit loading or contribute to increase in capacity utilization of
mines.

Way Out
 To promote URS sales it is essential that when SG+URS sold < TM, the un-requisitions
are to be restricted such that SG=TM and not SG+URS sold = TM viz: URS sold in
market should be taken out of the purview of technical minimum schedule, so that the
URS sold would always lie above the Technical Minimum subject to the condition that the
total schedule including URS sold does not surpass the declared capacity. It may be
noted that since the un-requisitioned power is sold with the consent of the concerned
beneficiaries the possibility of total Schedule exceeding the declared capacity on account
of recall by the beneficiaries would not emerge.
 In the URS transaction, when SG+URS > TM, the URS quantum lying above the
Technical Minimum will be (SG + URS – TM) (until such time URS sold is taken out of
the purview of technical minimum in entirety). Considering that only the URS sold above
the technical minimum would contribute to increase in sales revenue (except during the
blocks when the market cleared price is greater than energy charges), increase in
thermal unit loading and augmentation of mines capacity utilisation, it becomes
necessary that more URS volume is traded so that more URS portion would fall above
the Technical Minimum.
 Against this background it is vital that the URS power is not left idle and untapped but a
strategy balancing the loss due to under utilisation of mining capacity vis-a-vis bidding
rates is analysed to assure significant quantum of URS sale.
 Another way to increase the URS sale quantum is to make the energy charges
competitive with reference to the market discovered price by taking measures to curb the
lignite transfer price.

CONCLUSION
Indian Power Sector has come a long way in bridging the gap between supply and demand.
Enactments, legislations, edicts and regulations have reformed and transformed the power sector and
the sector has become competitive moving away from a regulated tariff regime to competitive bidding
tariff to price discovery by market forces. The crippling shortages have given way to surplus
capacities lying stranded for want of procurers dictating the need for a shift of focus, from tackling the
energy shortages to tapping the energy surplus. The initiative of the Central Government to provide
24X7 power for all and improving the quality of life through higher electricity consumption and
ensuring economy growth by stimulating growth of all sectors has to be taken forward with aggressive
determination, fortitude and resolve and avenues for utilization of the untapped potential be it a
surplus power due to un-requisitions or lack of procurers or non-availability of transmission corridor
need to be promoted.

SUMMARY:
India has become a power surplus nation resulting in significant amount of the installed capacity lying
stranded for lack of power purchase agreements and day to day scheduling of power witnessing
heavy un-requisitions by the beneficiaries leaving at the disposal of the generator reserve capacity as
un-requisitioned surplus (URS) power. The heavy power surrenders erode the revenue of the
generating company and the health of the generating units and degradation of operational
parameters, efficiency and increased cost of production. For integrated mining-cum power generation
companies the impact is still more as the production capacity of the linked mines also gets reduced
leading to under recovery of fuel cost. This paper discusses about the need to increase the per capita
consumption which is an indicator of the demand position by providing access of power to every
corner of the nation, economic growth, strengthening transmission corridor and mitigating the adverse
impact of URS by creating avenues for utilisation of the un-requisitioned power. The existing
provisions and policies available to tap the URS power by way of scheduling mechanism and Short
term Open access (STOA) transactions in power market has been elaborated. The experience of NLC
India in power market for URS sale and the impact on the revenue and profit of the company has
been discussed. The hurdles faced on the way to URS sale and the “Way out” of such impediments
and the need to increase trade in the market in a big way has been examined.
 INITIATIVES FOR NET HEAT RATE REDUCTION
AT TPS-I EXPN, NLC INDIA LTD, TO MEET PAT TARGET
B.GOUTHAMAN, Chief General Manager /TPS-I Expn.(Rtd), NLC Ltd, NEYVELI. civayanama.bg@gmail.com
A.SURYANARAYANA, GM/TPS-1 EXPN, NLC India Ltd., NEYVELI
S.PANDARASIVAN, Chief Manager/OPERATION SERVICES/TPS-I Expn., NLC Ltd, NEYVELI.
pandarasivan.s@nlcindia.com, pandarasivan_s@yahoo.com

SYNOPSIS
In line with the energy conservation and efficiency policies, Bureau of Energy Efficiency (BEE)
under the Ministry of Power launched the Perform, Achieve and Trade (PAT) scheme under
the National Mission for Enhanced Energy Efficiency (NMEEE) in 2012. In Thermal Power Plant
sector in the first PAT cycle, 144 designated consumers from various states have been identified and
reduction targets from their existing Net Heat Rate have already been notified. Neyveli Thermal
Power Station–I Expn (TPS-I Expn), with 2 units of 210 MW rating is coming under PAT Scheme.
BEE had notified the Target Net Heat Rate for TPS-I Expn as 2938 Kcal/Kwhr at the end of 2014-15,
with Reduction Target of 61 Kcal/Kwhr in 3 years, from the Base Line Net Heat Rate of 2999
Kcal/Kwhr.
Reduction in Net Heat Rate (NHR) can be achieved by reducing Gross Heat Rate (GHR) as
well as Auxiliary Power Consumption (APC). Reduction in GHR and APC can be achieved through
process optimization, more aggressive maintenance practice and equipment design modifications.
In this paper two important optimization works carried out in TPS-I Expn, to reduce both GHR
and APC were discussed in detail:
1. Introduction of an additional valve in Reheater spray common line to contain excess
spray water and to maintain rated RH steam temperature.

2. Optimization of usage of Cold Gas Recirculation System.

Due to these efforts, TPS-I Expn successfully achieved Target Net Heat Rate notified by BEE
and performed better than target at the end of first PAT Cycle, on 31-03-2015. Hence PAT Monitoring
and Verification Audit Team recommended for 3212 numbers of Energy Savings Certificates worth Rs
3.26 Crores of Indian Rupees.
To meet the reduction targets in Specific Energy Consumption (Net Heat Rate) notified by
BEE under PAT scheme and to avoid penalties, all Power Plants should gear up to Operate their
Plant efficiently. Carrying out Energy Efficient Renovation and Modernisation (EE R&M) also allows
suitable performance optimisation of the plant and helps in reducing the Station Heat Rate. Continual
Improvement being order of the day, all O & M Engineers should strive hard to operate their Units at
rated parameters and should identify process wastages and eliminate them. In this regard, in every
power plant, Energy Conservation Cell shall be motivated to the maximum level so that several brains
work together for achieving the target energy savings.
1.0 INTRODUCTION OF AN ADDITIONAL VALVE IN RH SPRAY COMMON LINE TO CONTAIN
EXCESS SPRAY WATER AND TO MAINTAIN RATED RH STEAM TEMPERATURE:
1.1 Reheater Steam Temperature Control at TPS-I Expn:
The general requirement in any Thermal Power Station is that the steam temperature should
be constant at the outlet of Superheater and Reheater at loads in the range of 70% to 100% of
maximum continuous rating. Higher steam temperature will lead to impermissible metal temperature
and consequent metal failure. Lower steam temperature may lead to condensation of steam in last
stages of turbine apart from reducing the system efficiency. Hence, steam temperature control has to
be effected to prevent failures of Superheater / Reheater tubes and last stages of turbine and also to
maintain overall cycle efficiency.
0
At TPS-I Expn, in order to get a constant Reheater steam temperature of 540 C,
desuperheaters are provided between Reheater 1 & Reheater 2. These desuperheaters located one,
in each side control the reheated steam temperature through spray water. The spray water required
for the desuperheaters is taken from the Boiler Feed Pump inter- stage tap-off arrangement; i.e. after
the third stage of the feed water pumps. Reheater location and heat transfer areas are so designed
that the attemperation spray quantity required is kept at minimum because increase in the Reheater
Spray Water quantity would lead to lower thermal cycle efficiency.

1.2 Problems in Reheater Steam Temperature Control at TPS-I Expn:

As per the Boiler Design Data Sheet, Maximum RH Spray Water Flow through each
Temperature Control Valves is only 6.5 T/Hr. But during the operation of the valves, it was noticed
that about 5 T/Hr flow occurred even at 1 to 2 % of valve opening. As the Total RH Spray Flow
Requirement as per design is 9 T/Hr, when the RH temperature control valves were put in Automatic
Control system, due to the high flow during initial opening, valves were operating between 0 to 10%
only.
Normally any Control Valve should be operating in its mid range (40 to 60%), for fine control
and for healthiness of valve internals. But all RH Spray Temperature Control Valves were always
operating at less than 15 %, due to more flow than design value. This had resulted in damages to the
valve internals (scoring marks in valve disc and damages to valve seat, due to erosion) and
subsequent passing through them within few months of overhauling. Due to this valve passing,
0
required steam temperature (540 C) could not be achieved, as the RH Spray Flow is more than the
requirement. The higher RH Spray Water Flow and lesser RH Steam temperature resulted in loss of
Thermal Cycle efficiency.

1.3 Actions Taken to eliminate problems in RH Steam Temperature Control at TPS-I Expn:
During warranty period, OEM has changed Control Valve seats few times. Every time after
few months of operation, valves‟ passing started and resulted in more spray water quantity and lesser
RH Steam Temperature.
After warranty period, during every annual maintenance, RH Temperature Control Valve
internals were inspected and repair works such as lapping as well as replacement with new valves
were carried out by NLC Maintenance Team. But the results were same, effective only for few
months.

PP
PI
M
PP
P P
RH Spray Water Scheme

M PIR PP Pd=128 Td=195 P

PI
Po=100 To=173
F=2.5
TO DESUPER HEATERS INCHING TYPE FROM FEED WATER
IN BETWEEN RH1 & RH2
PI PP PP INTER STAGE
M P P

INCHING TYPE PREPARED BY COMMISSIONING GROUP/ TPS-1 EXPN

1.4 Introduction of additional valve in Reheater Spray common line:

It was suspected that higher differential pressure, about 60 bar, across the Temperature
Control Valve might be the main reason for frequent failure of valves‟ internals. Hence as a trial basis,
isolation valve available in the Boiler Feed Pump Interstage Tap Off to Spray Water System was
partially closed to reduce common RH Spray Water Inlet Pressure. This had resulted in improvement
in the percentage opening of Control Valves, as well as reduction in passing through valves. After few
months of study, a new Globe Valve was introduced in the Common Line from BFP‟s Interstage Tap
Off Line during Annual Maintenance Shut Down of 2013, to regulate the pressure of RH Spray Water
for maintaining desired temperature comfortably. After introduction and operation of the new valve,
always RH Steam Temperature is maintained at rated values. Also RH Spray Water quantity has
come down by about 6 T/Hr. Also valve internals were found to be healthy, without any passing during
Annual Maintenance Shut Down Inspection of 2014.

1.5 Energy Savings Calculation:

Reduction in RH Spray Water Quantity = 6 T/Hr
0
Increase in RH Steam Temperature = 15 C
Turbine Heat Rate Reduction (0.4% change from Design GHR for 6T/hr Spray Water Increase +

0.3% change from Design GHR (1944) for 150C drop in RH Steam Temperature) = 13.608 Kcal/Kwhr
Unit Gross Heat rate Reduction = 18.9 Kcal/Kwhr
Unit Net Heat Reduction = 20.6 Kcal/Kwhr
Thermal Energy Saved = 69690 Million Kcal
Reheater Spray Control Station New Regulating Valve Provided in Common Line

2.0 OPTIMISATION OF USAGE OF COLD GAS RECIRCULATION SYSTEM:

2.1 Cold Gas Recirculation System in TPS-I Expn:-
Due to severe slagging problems encountered in other power stations of Neyveli, care has
been exercised in the design of TPS-I Expn boilers. According to the NLC‟s design requirements, the
following criteria have been considered for the furnace and firing system design
0
 Maximum Flue Gas temperature at the furnace outlet should not exceed 980 C.
0
 Maximum flame temperature in the active burning zone should not exceed 1250 C.
3
 Emission of NOx not higher than 400mg/Nm
Accordingly several improvements were incorporated in the combustion system compared to
other boilers of NLC. One such improvement is the extensive use of Cold Gas Recirculation (CGR).
This system is a new concept among all the existing lignite fired boilers of NLC Ltd, Neyveli. Hence
various attempts are made to analyze the performance of the CGR system under different operating
conditions for optimization of CGR system.
TPS-I expansion boilers are provided with 2 Centrifugal Type Cold Gas Recirculation (CGR)
fans, which suck up to 10% of the flue gas after dust precipitation at ESPs and feed the same into the
furnace. The CGR system consists of a common circular suction duct tapped off from the flue gas
ducts after ESPs and ID fans. The suction duct feeds the gas to the two CGR fans located side by
side through dedicated suction dampers.
The gas flow through the fan is controlled by inlet van controller. The gas that flows through
the fan is fed to the header through dedicated discharge dampers from where it is tapped to following
users:
 1. Cold Gas Recirculation Nozzles – Located at the topside of the furnace just above upper
level burners of mills for reducing the Active combustion zone temperature and Furnace outlet
temperature to limit thermal NOx Formation and Slagging.
2. Sealing Gas to Pulverized Fuel burners tap off from the furnace for sealing the furnace
opening from the atmospheric cold air entry.
3. Sealing Gas to Resuction Ducts tap off from furnace for sealing the furnace opening from
the atmospheric cold air entry.
4 Mill Tempering Gas – To mix with flue gas at Resuction Ducts to control the mill
outlet temperatures.
Six Cold Gases Recirculation (CGR) nozzles (one each on boiler left and right side wall, and
two each on boiler front and rear wall), each one equipped with its own related control damper and
ON/OFF damper, are installed at the Furnace. The Cold Gas Nozzles are installed in such a way that
they form tangents to an imaginary circle larger than fire ball of the Tangential Firing System and also
will rotate opposing the fire ball. The Cold Gas forms a blanket over the combustion zone. Because of
this blanket action, radiant heat is confined mainly to the water wall tubes present as four walls of the
furnace there by reducing the Furnace Exit temperature.

2.2 Data Sheet of CGR Fan:-

1. Type of Fan : 15070B/1200
2. Manufacturer : TLT Engineering India Pvt. Ltd, India.
3
3. Volume Flow at Inlet : 51.7m /sec
4. Gas Temperature : 177°C
5. Pressure Rise : 1913 Pa
6. Fan Speed : 980 rpm
7. Motor Power : 160 KW
8. Type of Control : Inlet Vane Control

2.3 Problems faced in CGR System:

1. As the Flue Gas at a temperature of about 160°C travels from ID Fan discharge to the Sealing
Gas and CGR Nozzle Ducts, due to temperature drop, Sulphuric Acid (Acid Dew Point 140°C)
Condensation takes place, which corrodes the duct plates especially expansion bellows,
resulting in Flue Gas leakages inside the Boiler House.
2. Also due to same effect of corrosion, unbalance of the rotor is created causing failure of the
CGR Fan frequently with vibration.

2.4 Testing for Optimisation:-

Since commissioning, normally both CGR fans were kept in service as per the advice of
OEM, so as to maintain Cold Gas Header pressure of 25mbar in the common ring header. During
Optimisation analysis, by analyzing various parameters it was concluded that all the operating
requirements can be satisfied with one CGR Fan only in service, keeping other Fan in standby. This
saves about Rs 29.65 Lakhs per annum in terms of electrical energy conserved. This has been
already implemented in TPS-I Expansion since 2006 and working properly.
For further optimization of the Cold Gas Recirculation usage at TPS-I Expn, a study was
conducted with and without CGR Fan. During the study, operating parameters affected by the CGR
system were recorded and analysed. The parameters were compared and listed in Table - 1

Table -1
Comparision of Parameters with / without CGR fan
Sl.No Measurement Unit Value with One Value with No
CGR Fan CGR Fan
1 Date 14/8/12 13/8/12
Time 10:20 hrs 15:20 hrs
2 Load MW 203 203
3 Lignite Flow T/Hr 196 192
0
4 Mills B,C,D, E C 275,248,235,290 283,267,260,323
Inlet Temperatures
0
5 Mills B,C,D, E C 117,111,114,117 131,125,125,126
Outlet Temperatures
6 SH Spray Water Flow T/Hr 60, 46 64,49
Stage I/II
0
7 Furnace Outlet C 834 857
Temperature
0
8 Flue Gas Temperature to C 162 157
Chimney
9 ID Fans 1/2 Currents Amps 163, 198 146,184
10 CGR Fan Current Amps 237 0

2.5 Precautions taken during testing:-

1. Testing period was selected in such a way that the load schedule was at full load.
2. The openings of the man holes/peep holes etc. were avoided during the period of test.
3. Necessary instrument readings were checked for its accuracy before the start of the test.
4. Care was taken that the quality of lignite did not undergo much variation.
5. All special operations like SSB, WL, RAPH blowing etc. were not done during the time of test.
6. Blow down levels was not altered.
7. Same set of Mills were kept in service during testing.
8. Measurements were recorded after attaining steady state operation.

2.6. Analysis of Parameters with / without CGR fan:

2.6.1 Mill Inlet Temperature:-
 When one CGR fan is in running condition, there is some flow of cold gas to the resuction
duct for tempering of hot flue gas into the Mill depending upon the requirement. During the absence of
CGR fans in service, tempering gas is not available. Even though primary air is also there for
tempering of Mill inlet gas, in case if it is not sufficient, there is a possibility of increase in Mill inlet
temperature. Increase in Mill inlet temperatures may be observed from the measurements shown in

Table. But as long as this temperature is within allowable limits of 5000C, this is not harmful to Mills.

2.6.2 Mill Outlet Temperature:-

Mill outlet temperature depends upon the Mill inlet temperature and Lignite Flow into the Mill.
As the test was conducted almost similar conditions, Lignite Flow remains same. Due to increase in
inlet temperatures, outlet temperatures increased. But as long as this temperature is within allowable

limits of 1800C, this is not harmful to Mill / Boiler.

2.6.3 Furnace Exit Temperature:-

The very purpose of CGR is reduction in Furnace Exit Temperature due to dilution of Furnace

Flue Gas at above 10000C with cold flue gas at about 1500C, to avoid slagging in water walls. During

stoppage of both CGR fans, about 500C rise in the furnace temperature is observed at Full Load
operation.

2.6.4 Flue gas Temperature to Chimney:-

About 50C drop is observed in the Flue gas Temperature to Chimney during stoppage of both
CGR Fans. This may be due to heat transfer difference across heat transfer elements such as
economizers and RAPH because of handling of more air by FD fan to make up for tempering gas to
Mills and less flue gas by ID fan due to non availability of gas recirculation. This drop in exit flue gas
temperature improves Boiler Efficiency by about 0.5% and thereby reduces station gross heat rate.

2.6.5 CGR fan current:-

When using one CGR Fan there is a current consumption of about (237 amps). If no CGR
Fan is in service, we can conserve this energy fully.

2.6.6 ID fan current:-

While CGR fans are in service, handling of flue gas rate will increase due to recirculation of
gas into the furnace. Due to high gas flow rate the Induced Draft Fan current also will increase. If no
CGR is available the gas flow rate gets reduced. This leads to a reduced current consumption of
about 10 Amps in each ID Fan.

2.7 Energy Savings Calculation:-

Daily Energy Savings from CGR Fan Stoppage = 1.732x440x237x0.85x24 = 3684 KWHR.
Daily Energy Savings from drop in ID Fan currents =1.732x6600x20x0.85x24=4664KWHR
Total Energy Savings per day = 8348 KWHR
Reduction in Auxiliary Power Consumption = 0.166%
Annual Energy Savings for 2 units @ 80%PLF = 8348 x 365x0.8x2 =48,75,232 KWHR
Annual Revenue Gain (assuming Rs 2/= perKwhr) = Rs 97.50 Lakhs
Comparision of Parameters with / without CGR fan

2.8 Final Optimization

On further study for few times over a period of few months, it was proved that by stopping
both CGR fans also keeping the boiler at full load operation at rated temperature was possible and no
slagging problems were faced. Hence it was decided to stop the CGR Fan and to keep CGR System
0
as stand by, to use during increase in Furnace exit temperature above 980 C (or) during other
indications of slagging in furnace. This has been implemented from April 2014 onwards. This has not
only saved electrical energy to the tune of 8348 units per day (reduction in Aux Power Consumption
by 0.166%), increased Boiler Efficiency by 0.5%, but also avoided CGR related problems in boiler
area.

CONCLUSION :
To meet the reduction targets in Specific Energy Consumption (Net Heat Rate) notified by
BEE under PAT scheme and to avoid penalties, Reduction in GHR and APC can be achieved through
process optimization, more aggressive maintenance practice and equipment design modifications.
Normally OEMs design and supply Power Plants based on certain standard proven practices and
codes for some reference conditions / parameters. But during the actual Operation and Maintenance
of the plant, lot of variations occur in the reference conditions such as fuel quality, atmospheric
conditions etc leading to the change in rated parameters and subsequent increase in GHR and APC.
In any Power Station with several units, performance of each unit differs from other units due to
various reasons.
 Hence, more opportunities exist for improvement in the Operation and Maintenance activities
in the boiler, turbine cycle and heat rejection system. The overall level of heat rate improvement which
can be achieved varies with unit design, maintenance condition, operating conditions and type of coal.
Carrying out Energy Efficient Renovation and Modernisation (EE R&M) also allows suitable
performance optimisation of the plant and helps in reducing the Station Heat Rate.
At Neyveli TPS-I Expn, efforts taken by O & M Engineers have yielded results to meet the Net
Heat Rate Target set by BEE and also paved way for earning the Energy Saving Certificates and to
increase financial gain to the organization. Continual Improvement being order of the day, all O & M
Engineers should strive hard to operate their Units at rated parameters and should identify process
wastages and eliminate them. In this regard, in every power plant Energy Conservation Cell shall be
motivated to the maximum level so that several brains work together for achieving the target energy
savings.
 SMART GRID IN INDIA: INITIATIVES,
OPPORTUNITIES AND CHALLENGES
K. Muthukumar and Dr. M. Ravichandra Babu,
National Power Training Institute, MoP, GoI, Neyveli

1.0 INTRODUCTION:
Smart Grid is an evolving set of various technologies, especially information and communication
technologies, working together to improve the present grid. The applications of smart grid shall
depend on the location and the requirements of the Power system. It is an electricity network that can
intelligently integrate the actions of all users connected to generators, consumers in order to efficiently
deliver sustainable, economic and secure electricity supplies. Smart Grid deployment must include
not only the technology, market and commercial considerations, environmental impact, regulatory
framework, standardization usage, ICT (Information & Communication Technology) and migration
strategy.
A Smart Grid employs innovative products and services together with intelligent monitoring, control,
communication, and self-healing technologies to:
 better facilitate the connection and operation of generators of all sizes and technologies;
 allow consumers to play a part in optimizing the operation of the system;
 provide consumers with greater information and choice of supply;
 significantly reduce the environmental impact of the whole electricity supply system;
 Deliver enhanced levels of reliability and security of supply.

The aim of smart grid is to provide real time monitoring and control, and thus improve the overall
efficiency of the entire system apart from inclusion of renewable energy resources into the system.
The components of a Smart are shown in figure 1.

1.1 Role and Function of Smart Grid:

The Smart Grid is a transition of the present energy system into a new era of reliability, availability
and efficiency. To enable proper information sharing between the projects, there is a need to have a
defined functionality and characteristics. Accordingly, the Smart Grid is characterized by following
goal and functionalities:
1. Consumer Participation
1. Real Time Monitoring of consumption
 2. Control of smart appliances
3. Building Automation
2. Real Time Pricing
3. Distributed Generation: Incorporation of renewable energy resources into the grid
4. Power System Efficiency
1. Power Monitoring
2. Asset Management and optimal utilizations
3. Distribution Automation and Protection
5. Power Quality
1. Self Healing
2. Frequency Monitoring and Control
3. Load Forecasting
4. Anticipation of Disturbances

1.2 Working of Smart Grid:

The present electricity grid delivers electricity from generator to consumers through transmission and
distribution system. A smart grid allows new large scale renewable energy projects to connect to the
grid. On the distribution side, the smart grid integrates new digital technology into local electricity
distribution networks which helps to manage the demand of appliances and other end-use
equipments with better information about electricity use in homes, businesses, and public institutions.
The working model of a Smart Grid is shown in figure 2.

The smart grid will also provide the pricing and control system to flexibly integrate new distributed
energy resources solar panels, energy storage devices, and electric vehicles close to the point of
demand. Users could charge up their plug-in cars at night to later feed that power back into the grid
as their cars are parked at work or at home during the day.

1.3 The smart grid technology grouped under following key areas:
1. Integrated Communications
2. Sensing and Measurement-Smart Meters, Phase Measurement Units
 3. Advanced Components-Superconductors
4. Advanced Control and Pricing Mechanism-Real Time Pricing
5. Distributed Generation- Feed-in Tariff, Renewable Energy Resources.
6. Energy Storage and Electric Vehicles
1.4 Smart Grid Mission
The smart grid mission involves a uniformly integrated communication system with the present power
system. Present communication systems have evolved over a period of time and lack uniformity and
thus interoperability. The communication system shall be a two-way system where the load can be
controlled remotely from a control centre and also read the real time power consumption of the load.
To enable this real time monitoring, advanced devices like smart sensors, smart meters and phase
measurement units will be required to be integrated in the smart grid system. It would enable quick
fault detection and analysis of the system, thus increasing reliability. The real time-monitoring and
control will enable a market dependent pricing mechanism and thus a deregulated market. Also,
consumers would be able to feed power back into the grid and earn according to the feed-in tariff. All
these will help in reducing the peak power demand and the country's dependence on fossil fuel
energy. The next stage envisaged is incorporation of advanced technologies like superconducting
material in the transmission network to increase the efficiency of the system.

2.0 INITIATIVES OF SMART GRID SYSTEM

The efforts for the development and deployment of Smart Grids in India are presently being carried
out through India Smart Grid Task Force (ISGTF) and India Smart Grid Forum (ISGF) under the aegis
of Ministry of Power (MoP). These two bodies were set up in 2010 to advice the Power Ministry on
appropriate policy and programs for the accelerated development of a Smart Grid in India
A Smart Grid Vision and Roadmap for India was approved by the Ministry of Power in August 2013
which also envisaged the launch of a National Smart Grid Mission (NSGM) having its own resources,
authority, functional & financial autonomy to plan and monitor implementation of the policies and
programmes prescribed in the roadmap. The road map has set up the targets to be achieved by the
NSGM includes 100% electrification of all household and the development of micro grid.

2.1.1. Smart Grid Road Map:

National Smart Grid Mission (NSGM) is housed under MoP considering the fact that most of the
prominent stakeholders (DISCOMs, Regulators, Electrical Manufactures, CEA etc.) for Smart Grid are
associated with MoP. Other concerned Ministries like Ministry of New& Renewable Energy (MNRE)
and Ministry of Heavy Industries (MOHI) would be associated with the mission. It is important to note
that Smart Grid is a dynamic and evolving concept due to constant technological innovations.
Therefore, the objectives, structure and functioning of NSGM must be such as to allow sufficient
freedom and flexibility of operations.
Mission will have a three tier structure as follows.
i) National Smart Grid Mission Governing Council will carry out the following functions:
  To approve the administrative and financial procedures from time to time for the effective
functioning of NSGM
 To approve the annual budget of NSGM
 To cause the audit to be done and to adopt the audited accounts.
 To permit mobilization of resources from bilateral and multilateral agencies, financial
institutions etc., over and above the budgetary allocation
 To review the implementation of NSGM‟s policies and programmes.
ii) The Empowered Committee will carry out the following functions:
 To provide policy input to Governing Council
 To approve specific Smart Grid projects and subsequent revisions/ modifications.
 To approve procedures / guidelines for Smart Grid projects
 To approve procedures / guidelines for recruitment, hiring of consultants / advisers / experts,
funds allocation etc.
 To monitor implementation of Smart Grid projects.
 To approve the detailed structure, procedures and guidelines from time to time for the smooth
functioning and operation of NSGM Project Management Unit..
 To take other steps as directed by the Governing Council to meet objectives of NSGM and
the Committee will meet on a quarterly basis.
iii) The Technical Committee will support the Empowered Committee on technical side and will carry
out the following functions:
 To develop standards, technology selection guidelines,
 To carry out technical review of projects / activities / documents,
 To prepare guidelines and procedures for training & capacity building etc.
 To take other steps as directed by the Governing Council / Empowered Committee to meet
objectives of NSGM.

3.0 OPPORTUNITIES
A smart grid is an electrical grid with automation, communication and IT systems that can monitor
power flows from points of generation to points of consumption (even down to the appliances level)
and control the power flow or curtail the load to match generation in real time or near real time. The
increased visibility, predictability, and even control of generation and demand bring flexibility to both
generation and consumption and enable the utility to better integrate intermittent renewable
generation and also reduce costs of peak power. If the traditional grid was made secure only through
over engineering, a smart grid is cost-effective, nimble, responsive, and better engineered for
reliability and self-healing operations. The traditional electric grid will need to build additional layers of
automation, communication and IT systems to transform it to a smarter grid.
Some of the applications or building blocks of a smart grid (some of which are already being deployed
in India), are:
1. Supervisory Control and Data Acquisition Systems (SCADA) with Energy Management
Systems (EMS) and Distribution Management Systems (DMS)
 2. IT network covering all substations and field offices with reliable communication systems
3. Enterprise Resource Planning (ERP)/Asset Management Systems
4. Geographic Information Systems (GIS) – mapping of electrical network assets and
consumers on geospatial maps
5. Modernization of the substations with modern switchgear and numerical relays
6. Advanced Metering Infrastructure (AMI) with two way communication and Meter Data
Management Systems (MDMS)
7. Electronic Billing Systems and Customer Care Systems
8. Distribution Automation (DA) and Substation Automation Systems
9. Outage Management Systems (OMS)
10. Mobile Crew Management Systems
11. Wide Area Measurement and Control Systems
12. Forecasting, Dispatch and Settlement Tools
13. Enterprise Application Integration
14. Analytics (converting data into business intelligence)
15. Variable or dynamic tariffs, renewable integration, electric vehicle (EV) integration, etc

3.1. India Smart Grid Task Force

India Smart Grid Task Force is an Inter-Ministerial Group and will serve as Government‟s focal point
for activities related to smart grid and to evolve the road map for implementation of smart grids in our
country. The main functions of the Smart Grid Task Force is to ensure awareness, co-ordination and
integration of the diverse activities related to Smart Grid technologies, practices and services for
Smart Grid Research and Development; Co-ordinate and integrate other relevant inter-governmental
activities, Collaborate on interoperability frame work, Review and validate the recommendations from
Smart Grid Forum etc.

3.2 Smart Grid Forum

India Smart Grid Forum (ISGF) is a Public Private Partnership initiative of Ministry of Power (MoP),
Government of India for accelerated development of smart grid technologies in the Indian Power
Sector.

The main objectives of ISGF are:

 To help the Indian power sector deploy smart grid technologies in an efficient, cost effective,
innovative and scalable manner by bringing together all key stakeholders and enabling
technologies.
 To create a platform for public and private stakeholder members, research institutions and
power utilities to exchange ideas and information on smart grids.
 To bring together experts from regulation, policy and the corporate sector to build support for
smart grid policies.
  To conduct research on the capabilities of smart grids in the Indian context through case
studies, cost benefit analysis, study of technical advancements in renewable energy sources
and other ancillary activities.
 To make recommendations to the Government, Regulators, Utilities and Consumers through
reports, white papers, technical seminars, etc.

ISGF has 10 working groups focussed on different aspects of smart grid which are described below:

WG1: Advanced Transmission and Distribution

The smart grid focus from centralized power generation to de-centralized evolving into one "Integrated
Grid". Electricity consumers are becoming "prosumers" with bi-directional flow of power.

Opportunities:
1. Improved Transmission Monitoring-Wide Area Measurement System (WAMS) using Phase
Measuring Unit (PMU)/Power Distribution Centres (PDC)
2. Better coordination between transmission and distribution(Grid Discipline)
3. Improved Transformer monitoring
4. Use of Robotics/ helicopters for commissioning and maintenance of transmission line which
include live/hot line insulator cleaning and replacement, thermo-scanning, etc.
5. Advanced network planning commensurate with generation & distribution for IPPs, CPPs and
renewable and inclusion of FACTS and HVDC controllers
6. Techno-economic feasibility studies for conversion and modernization of EHV sub-stations in
urban areas with GIS, unlocking the value of the real-estate.
7. R-APDRP/IPDS/DDUGJY/UDAY/BLY etc

WG 2: Smart Cities
31% of India‟s population lives in cities; these cities also generate 63% of the nation‟s economy
activity. Smart cities focus on the most pressing needs and on the greatest opportunities to improve
quality of life for residents today and in future.
List of digital assets and smart infrastructure created under various schemes of Ministry of Power are
as follows:
1. Geographical Information System (GIS) Map of the Towns
2. Billing and Customer Relationship Management (CRM) Systems
3. SCADA/DMS System
4. Common Command and Control Centre
5. Outage Management Systems (OMS) and Mobile Workforce Management (MWFM)
6. Application Integration
WG3: Metering and Communication
Information and Communication Technologies facilitate utilities to remotely locate, isolate, and restore
power outages more quickly, thus increasing the stability of grid. Metering is the backbone of a smart
grid. Digital meters can not only store more data with greater resolution, they become the interface
between consumer and utility, with advanced features such as bi-directional communications,
remotely controllable connect/disconnect switch and load control signalling.

Opportunities:
The AMI has facilities of ToD, Bi-directional data communication, Interoperability standards and
options, Tamper proof, Load limiters etc.

WG5: Load Control and Consumption

Power is an essential ingredient for achieving the economic and social development of a country.
There is a clear correlation between energy consumption growth and increase in GDP. As per the
statistics, there is an overall energy shortage of approximately 10% and a peak demand deficit of 13
%. This group recommends the technologies and solutions which can be adopted in India for load
control and reduce consumption to enable peak load and overall energy management.

Opportunities:
1. Energy controlling & measurement systems and devices with an objective of understanding
real time energy consumption information leading to smarter energy consumption with a
focus on sectors such as Industries, Commercial buildings (including data centres),
Infrastructure and residential sector.
2. Focus on demand side management, demand response management and TOU/variable
pricing as key processes for peak load saving and energy efficiency (appliances, storage,
electric vehicles etc)

WG 6: Policy and Regulations

It recommends appropriate regulatory policy initiatives to the Government, both central and state and
to suggest regulations to facilitate implementation of smart grid through inter-state regulations of
CERC and facilitate implementation of smart grid through forum of regulators (FoR) and the intra-
state system through SERCs.

Opportunities:
 Parameters of smart grid implementation such as economy, design, technology options,
reliability, quality and pay-back period
 Feed-in-tariff for renewable by generators including from individuals,
 Technical requirements for connectivity, network planning, making regulations for integration
of renewable into the grid from the point of view of system operation
  Differential tariff for reliable supply (retail and bulk)
 Policies for Advanced Metering Infrastructure (AMI) and Demand Response (DR) including
Virtual Power Plants (VPPs)

WG 7: Digital Architecture
It records the architecture and design standards (or guidelines) to support smart grid applications
keeping in view the required design principles such as interoperability, scalability, security and more
importantly the Indian energy sector centric requirements. The power system and Communications
layers are shown in figure 3.

Opportunities:
 Due consideration is to be given for selecting technology that is interoperable, evolvable and
scalable in future.
 Optimization of asset utilization and operating efficiency of the electric power system.
 Software applications should facilitate interface to other systems through web services.

WG 8: Pilots and Business Models

It proposes Distribution Franchise (DF), Public-Private-Partnership (PPP) and other such models with
the ultimate aim of achieving zero power cuts, reducing aggregate technical and distribution losses
and making distribution tariffs affordable to the consumers.
Opportunities:
 Study various smart grid pilot initiatives across the globe (developed as well as emerging
economies) and list out the ones that are most relevant to Indian context.
 Review the draft RFP circulated by ISGTF and come up with additional points / ideas on
smart grid pilot initiatives
 Prioritize the smart grid initiatives that give best returns / benefits for all stakeholders (utilities,
consumers and solution providers)
 Study various business models for different smart grid pilot initiatives, which shall include:
funding and benefits sharing options
 Work for assessing and developing training and capacity building initiatives for smart grids.

WG 9: Renewable and Microgrids

Microgrids are self-sufficient distribution networks with one or more local renewable sources, which
can operate by interconnecting to the grid, or can also be operated isolated from the main grid. For
the end consumer, microgrids provide electricity needs, and in addition enhance local reliability,
reduce emissions, improve power quality by supporting voltage and reducing voltage dips, and
potentially lower costs of energy supply. From the utility point of view, the application of distributed
energy sources can potentially reduce the demand for distribution and transmission facilities.

Opportunities:
 Study and recommend appropriate solutions for improving the CUF (Capacity Utilization
Factor) of Renewable
 Study tools available for forecasting and scheduling of Wind and Solar Power and
recommend appropriate tools.
 Develop set of standards, guidelines and technology recommendations for integration of
renewable sources into the grid.
 Develop a methodology for carrying out cost-benefit analysis of a microgrid project in the
Indian context.
 Develop recommendations for tariff policy for renewable in India.

WG 10: Cyber Security

There is a rapid growth of power system infrastructure in domains such as generation, transmission,
distribution, markets and end consumer demand all over India. This growth has also resulted in
enormous expansion of communication and information technology (IT) infrastructure. Manual
controls are being replaced by remote, electronic controls triggered by software commands. This
scenario exposes new vulnerabilities of the smart grid in the form of cyber-attacks and hence need to
be addressed. Apart from physical security and power system operational security, cyber security has
also become a major concern.

Opportunities:
 Develop smart grid cyber security requirements in Indian context.
 Propose a risk assessment framework to evaluate the risk of each smart grid component
throughout its lifecycle.
 Develop a cyber security approach and checklist useful for utilities
 Propose risk mitigation measures, regulatory and policy measures for security, legal and
information privacy issues.

4.0 CHALLENGES
The electrical grid has been cited as the greatest engineering achievement of the 20th century, but it
now faces new challenges of sustainability, energy security, reliability, etc. Developed countries have
a well developed grid, and seek to improve it, while developing regions are still expanding their grids.
Over the past decades, the electricity generation, transmission and distribution landscape around the
globe has changed drastically in the traditional grid of the 20th century there were relatively few points
of power generation or injection and millions of points of power consumption. Smart Grid development
is happening at a very fast pace because of the broad interest of policy makers and utilities in
decreasing the adverse effect that energy usage has on the environment. Smart Grids uses
technology to drive efficiencies in transmission, distribution and consumption. As a result, fewer
generating plants, fewer transmission and distribution assets are required in order to cater the
growing demand of electricity.
Presently, the Indian electricity system faces a number of challenges:
 Shortage of power
 Power Theft
 Poor access to electricity in rural areas
 Huge losses in the grid and Inefficient power consumption
 Poor reliability and Power quality

The challenges faced in Implementation of Smart Grid in India are:

High capital and operating costs: Capital and operating costs include large fixed costs linked to the
chronic communications network and software and hardware.

Technology maturity and delivery risk: Technology is one of the essential constituents of Smart
Grid which include a broad range of hardware, software and communication technologies. The policy
makers, regulators, and utilities look upon well established hardware providers for Smart Grid
implementation. On the software and data management side, the major challenges to overcome the
integration of the entire hardware system and to manage high volume of data. Multiple software
providers come for multiple data formats and the need for complex data models. In addition, the
proliferation of data puts stresses on the data management architecture that are much similar to the
telecommunications industry than the utilities industry.

Lack of awareness: Before going forward and implementing Smart Grid concepts, the consumers
should be made aware about Smart Grids, how it can contribute to low carbon economy and the
benefits they can drive from Smart Grids. Utilities need to focus on the overall capabilities of Smart
Grids rather than mere implementation of smart meters.

Access to affordable capital: Funds are one of the major roadblocks in implementation of Smart
Grid. Policy makers and regulators have to make more conducive rules and regulations in order to
attract more and more private players.

Skills and knowledge: As the utilities will move towards Smart Grid, there will be a demand for a
new skill sets to bridge the gap and to have to develop new skills in analytics, data management and
decision support. To address this issue, a cadre of engineers and managers will need to be trained to
manage the transition. This transition will require investment of both time and money from both
government and private players to support education programs that will help in building managers and
engineers for tomorrow.

Cyber security and data privacy: The transition from analogue to digital electricity infrastructure, it
comes challenges in communication security and data management; as digital networks are more
prone to malicious attacks from software hackers, security becomes the key issue to be addressed.
In addition to this; concerns on invasion of privacy and security of personal consumption data arises.
The data collected from the consumption information could provide a significant insight of consumer‟s
behaviour and preferences. This valuable information could be abused if correct protocols and
security measures are not adhered.

5.0 CONCLUSION
The present grid system needs a major revamp to address all the challenges mentioned above. It
needs investment in several areas: increasing generation capacity, improving grid efficiencies and
rural electrification. A smart grid is supposed to be the solution to all these challenges and in fact
essential for India's energy security in the future. With rapid increase of distributed and renewable
generation, the 21st century grid will have numerous points of power injection as well as millions of
points of consumption. Electric Vehicle (EV) roll out has further increased the complexity of the
traditional electricity grid. To manage a grid with such increasing number of intermittent energy
sources and EVs, smarter automation and IT systems are imperative. Peak load management
through control of loads has assumed high priority for electric utilities as there is a growing peak
demand, leading to a supply gap during peak hours of consumption in many parts of the country.
Beyond such drivers, increased deregulation, consumer choice for green power, which is inherently
variable and many more factors are giving thrust for the transition to smarter grids that can address all
these issues.
In this paper an attempt has been made to analyze the initiatives, opportunities and challenges in
implementing the Smart Grid concept in India. In most of the advanced countries utilities have made
major achievements in terms of productivity, reliability, and efficiency through the use of Smart Grid
technology. Indian utilities are still lagging far behind when compared to other countries. Today their
main focus is on providing energy at reasonable price but soon the day will come when the utilities will
be focusing on encompassing sustainable use and environmental improvement into their agendas.
Smart Grids will play a vital role to help utilities in accomplishing this mission.

REFERENCE:
1. www.powermin.nic.in
2. www.indiasmartgrid.org
3. www.isgw.in
4. www.globalsmartgridfederation.org
5. www.desismartgrid.com
6. www.mnre.gov.in
 OPTIMISATION OF NET HEAT RATE IN PARTIAL LOAD
OPERATION
K.RAVIKUMAR, Chief Manager/ Boiler Operation services/ TPS-II/ NLC India limited, Neyveli.
Email: ravikumar.k@nlcindia.com Mobile: 9488996359
V.SRINIVASARAGHAVAN, Executive Engineer/ BTG operation/ TPSII/ NLC India Limited, Neyveli,
Email: srikanthversatile@gmail.com Mobile:94889996283

ABSTRACT
The need for running units in partial load operation has become inevitable due to ABT &
surplus power in the grid. Now the real challenge for generating stations is to maintain Heat rate &
Auxiliary power consumption during partial load operation. For maintaining the heat rate & Auxiliary
power consumption in partial load operation, strategies like sliding pressure mode operation,
Reduction of ΔP across FCV, using of VFDs & stopping of auxiliaries based on load condition are
being followed.
In most of the stations, more than one units are connected to the grid and maintain the ABT
schedule as Combined commitment. This paper analyses the boiler efficiency, turbine heat rate &
auxiliary power consumption at various loads. Using the data the best combination of sharing of loads
by the units in partial load are identified with optimal total net heat rate & maintaining ABT schedule.
By optimisation the total net heat rate, Cost of production of per unit power will also
significantly trim down.

1. INTRODUCTION
All thermal power plants are designed to give maximum efficiency in their full load operation.
Nowadays because surplus power in the grid & uneven TOD (Time of Day) pattern in Power demand,
it is necessitated to run the unit at partial load based on ABT schedule. In this paper Stage-1 units of
Thermal power station-2 taken as reference for conducting the study. Stage-1 consists of 3x210MW
units. Initially during surplus power in the grid, load reduction was up to 75% of its capacity now it has
been reduced to 70%.
By varying the load from 150 MW to 210 MW at the interval of 10 MW Boiler Efficiency,
Turbine heat rate & unit auxiliary power Consumption and Unit net heat rate were calculated &
analysed.
By assuming same trend of unit net heat rate in all three units, the optimum combination of
load sharing by all the three units in partial load were computed. Based on the results the optimum
net heat rate in partial load operation was arrived.

2. BOILER EFFICIENCY:
NLC‟s Thermal power station-2, stage-1 boilers are of capacity 210 MW lignite fired boilers.
Lignite is having 50% moisture and 7% Ash. Boilers are designed for the efficiency of 77%.
Boiler Efficiency decreases marginally from 74.8% to 74.01 % for the load variation from 210
MW to 150 MW. As load decreases, O2 % increases and flue gas temperature decreases at ID
exhaust. Hence a marginal decrease in boiler Efficiency is observed.
2.1 LOAD VS BOILER EFFICIENCY
Figure-1
76

75.5
Boiler efficiency (%)

75 74.61 74.8
74.43
74.31 74.29
74.5 74.21
74.02
74

73.5

73
130 140 150 160 170 180 190 200 210
Load (MW)

3. TURBINE HEATRATE:
Turbine heat rate increases marginally from 2082 Kcal/Kg to 2131 Kcal/kg for the load
variation from 210MW to 150 MW. As the load decreases, HP turbine efficiency decreases but due to
increase in condenser vacuum, LP & IP turbine efficiencies increase.

3.1 LOAD VS TURBINE HEATRATE

Figure-2
Turbine heaterate (Kcal/Kg)

Load (MW)

4.
AUXILIA
RY POWER CONSUMPTION
 Auxiliary power consumption is the amount of power consumed by auxiliary equipments in the
unit & Station. Most of the unit auxiliary equipments are in continuous service while the unit is in
service. Station auxiliaries are having uneven TOD (time of Day) running pattern. To identify &
analyse the performance of the unit, it is better to take Unit Auxiliary consumption. In this study unit
auxiliary consumption alone was taken into account as “Unit Auxiliary Consumption”.

4.1 UNIT AUXILIARY CONSUMPTION OF STAGE –I LIGNITE FIRED POWER PLANT

Table-1
210MW
Equipments
% Gen % UAC
BFPs 2.55 31.80

CEPs 0.20 2.50

CWPs 1.20 15.00
ID fans 1.62 20.25

FD fans 0.58 7.25

Mills 1.25 15.63
Excitation 0.33 4.13
others 0.29 3.63
Total 8.02 100

*APC of stage-1, Thermal Power station-2 is 9.6% (including both unit & station loads)

The beater wheel mill draws hot flue gas from the furnace through a resuction duct. Five out
of six mills will be in service for normal operation. Before the lignite enters the mill, some moisture is
removed from lignite by hot flue gas. Mill acts as pulveriser & fuel pump equipment. Air required for
combustion is supplied by FD Fans .This is the reason for higher auxiliary consumption in Mills & FD
Fans.

4.2 LOAD VS % OF UNIT AUXILIARY POWER CONSUMPTION

Figure-3
9.2
9 9.06
% of unit auxiliary power

8.855 8.872
8.8
8.6 8.585
8.4 8.457
consumption

8.2 8.23
8.024
8
7.8
130 140 150 160 170 180 190 200 210

Load (MW)
 For the load variation from 210 MW to 150 MW, Unit Auxiliary Consumption varies from 8.02%
to 9.06%. At the load of 170 MW there is a sudden drop of 0.5% in auxiliary power consumption.
th
0.25 % of auxiliary power consumption drop is due to stopping of 5 mill and another 0.25% is due to
reduction in loading of FD & ID fans.

5. UNIT NET HEAT RATE:

Unit Net heat rate is the amount of heat required in Kcal to generate & supply KWh of power
at the exit of Generator transformer. Unit net heat rate is used to measure the performance of the unit.
It includes the performance of Boiler, Turbine & Unit auxiliaries.
Table-2

Load(MW) 210 200 190 180 170 160 150 170 (5mills)

Boiler Efficiency
74.8 74.61 74.43 74.29 74.31 74.21 74.02 74.27
(%)

Turbine Heat rate

2082.58 2088.91 2094.64 2104.52 2111.6 2120.81 2131.45 2111.24
(kcal/kwhr)

UAC (%) 8.024 8.23 8.457 8.872 8.585 8.855 9.06 9.09

Unit net heat rate

3027.09 3050.85 3074.23 3108.64 3108.47 3135.5 3166.44 3126.89
(Kcal/kwhr)

5.1 LOAD VS UNIT NET HEAT RATE

Figure-4
3180
3160 3166.43
Unit Net heat rate (Kcal/kwhr)

3140 3135.49
3120 3108.47
3108.63
3100
Series1
3080
3074.22
3060
3050.85
3040
3027.09
3020
130 140 150 160 170 180 190 200 210

Load (MW)
Unit net heat rate increases with decrease in load. At the load of 170MW slight increase in
th
trend was observed due to stopping of 5 mill.
6. ANALYSIS OF UNIT NET HEAT RATE VS LOAD VARIATION:

Table-3

Load
210-200 200-190 190-180 180-170 170-160 160-150
variation
Heat rate
23.76 23.38 34.41 -0.17 27.03 30.94
variation

 As the load decreases, unit net heat rate increases. Unit net heat rate variation with load is
uneven.
 For the load range from 180 MW to 170 MW a small decrease in heat rate is due to stopping
th
of 5 mill.
 No appreciable change in Heat rate variation from 210 MW to 190 MW, but from 190 MW to
180 MW the rise in heat rate is due to increase in variation of %UAC.
 Heat rate variation raises from 170 MW to 160 MW & from 160 MW to 150 MW. This is due to
rise in turbine heat rate & %UAC variation. In 160-150MW Boiler efficiency also decreases.

7. COMBINATION OF SHARING OF LOADS

In stage-I all three units combined as a single entity & ABT schedule is being maintained
among these units. Total area under this plot is the total heat required to generate total energy.

Figure-5
Unit Net heat rate (Kcal/kwhr)

H1
Unit-1
Unit-2 Unit-3 H2 H3

Load in MW (L)
L1= Load in Unit-1 H1=Unit net heat rate in Unit-1
L1 L2 L3
L2=Load in Unit-2 H2=Unit net heat rate in Unit-2
L3=Load in Unit -3 H3 =Unit net heat rate in Unit-3
Total load = L1+L2+L3 (Equation-1)
Total heat = L1 x H1+L2 x H2+L3 x H3 (Equation-2)
Average net heat rate = Total heat / Total load

7.1 CASE-1
Considering three units as a single entity, it needs to generate 570 MW as per ABT schedule
and distributing the load evenly to all three units.

Figure-6
t rate (Kcal/kwhr)
 Unit-1 Unit-2 Unit-3 H1=H2=H3

L1 L2 L3
Load in MW (L)
L1= L2=L3 = 190 MW
H1=H2=H3 = 3074.23 MW
Total heat = 3xL1xH1
= 3x3074.23x190
= 1752311.1x10^3 Kcal
Average Net heat rate = Total heat/Total load
Average net heat rate =1752311.1x10^3/570x10^3
=3074.23Kcal/kwhr

7.2 CASE-2
Considering to spilt the load as: Unit-1=170 MW, Unit-2 =190 MW & Unit-3 =210 MW
Figure-7
Unit Net heat rate (Kcal/kwhr)

H1
H2
Unit-1 Unit-2 Unit-3
H3

L2 L3
L1
Load in MW (L)
L1= 170 MW H1= 3108.47
L2=190 MW H2= 3074.23
L3=210 MW H3= 3027.09
Total heat = L1xH1 + L2xH2 + L3xH3
= 170 x 3108.47+190 X 074.23 + 210x3027.9
= 1748232.5x10^3 Kcal
Average Net heat rate = Total heat/Total load
Average net heat rate = 1748232.5x10^3/570x10^3
= 3067.07 kcal/kwhr

By this way of distributing the load a saving of 7 kcal per kwhr power generation can be
achieved. In case of load distribution like 200/190/180MW, the optimum heat rate could not be
achieved due to uneven heat rate variation in 180MW. If the generation is 400 MW in two units, it is
better to chose 210 MW &190 MW, rather than 2x200MW each. This is due to uniform variation from
190MW to 210MW. If the units are operating from 185 MW to175 MW with 5 mills, the heat rate
variation will be higher. During that condition we can rise load the in one unit & reduce load in other
th
unit and stop 5 mill in one unit thereby saving in Unit net heat rate & Unit Auxiliary power
consumption. Similarly running of units in the range of 160MW-150MW will result in higher heat rate
variation even in 4 mill condition. This may be further improved by studying variation in all the three
units. Hence optimisation at better combination of load can be achieved.

8.CONCLUSION:
Based on this analysis it is better to have pattern for sharing of loads between units during
partial load operation. This pattern for load sharing of station may be computerised, so it is easy to
follow. When there is uniform variation of heat rate with load, it is better to share loads unevenly for
decreasing total net heat rate. Where there is higher variation in heat rate it is better to avoid that
th
range of load operation. In TS-II units because of stopping of 5 mill at 170 MW create an advantage
in partial load. Similarly when operating units at 180 MW with 5 mills create increase in total Net Heat
rate.

REFERENCES
1. ASME PTC-6 Performance test codes on steam turbine 1976 & 1996.
2. IS-8753 Indian standard for Boiler Efficiency testing.
3. Francotosi Performance tests vol-1 & 2 for steam turbine 1988.
4. Transelectro performance test manual for stage-1 units of Thermal power station-2 NLC.
5. Recommendation of operation Norms for Thermal power stations for tariff period 2014-2019
by Central Electricity Authority, January 2014.
 ELECTRICAL GRID CONTROL THROUGH UNIFIED REAL TIME
DYNAMIC STATE MEASUREMENT (URTDSM)

R.CHANDRASEKARAN, B.E., F.I.E. DGM/ELEC/TS-II

S VIVEKANANDAN, B.E., M.B.A., M.I.E CM/ELEC/SWYD/TS-II
JANS GEORGE, B.E. M.I.E CM/ELEC/SWYD/TS-II
AFFILIATION AND ADDRESS : THERMAL POWER STATION-II, NLC INDIA LTD, NEYVELI-607807

Background:
Spread of Indian Power System is increasing to new dimensions especially with the synchronous
interconnection of NEW grid with Southern Regional Grid. Nowadays single grid of more than 250
GW capacity is being operated. With the growth of meshed network, complexities due to change in
power flow direction, wide variation in supply & demand etc. have grown manifold. Open Electricity
Market has given a new paradigm shift the way power is generated, transmitted and distributed.
Further, in order to maintain sustainability, emphasis has been given to develop renewable energy
and its integration with the grid. All these poses challenges in terms of grid security, safety and
stability under different operating conditions and has also increased the complexity towards the
monitoring and control of such large grid. The stable, effective and economic operation of the Grid is
very much warranted in such challenging conditions. Hence the control of Grid through URTDSM
gives the effective solution to these challenging conditions.

Grid:
A Grid is an interconnected network of various Generating Stations and Substations through
transmission lines at various voltage levels. At present there are 5 numbers of regional Grids existing
and they are Northern Grid, Eastern Grid, Western Grid, North Eastern Grid and Southern Grid. The
main three Grid parameters are Voltage, frequency and line flow. These three grid parameters are to
be monitored continuously and maintained to have a stable Grid. At present only the scalar quantity of
the parameters are only being monitored through SCADA system. These SCADA systems are being
installed in various National, Regional and State load despatch centers and the grid parameters are
being monitored and maintained continuously on real time basis. We are operating on a single
National Grid from December 2013 onwards with installed capacity of 284 GW.

Existing SCADA/EMS System:

It has the capability to provide only steady state view of the power system with high data flow latency.
The Supervisory Control and Data Acquisition (SCADA)/Energy Management Systems (EMS) are
based on distributed architecture incorporating open system features. The communication system
consisting of Fiber Optic and Microwave provide faster and reliable data transfer and voice
communication between Control Centers.SCADA/EMS system is hierarchical in nature having four
levels of hierarchies. At national level, SCADA/EMS systems of all five (5) RLDCs report to NLDC.
Data from each RLDC is transmitted to NLDC in real time on dedicated communication lines. All
RLDC coordinates all the inter-state activities of SCADA/EMS systems of SLDCs of a region. SCADA
systems of all the Sub-LDCs of a state report to the SLDC of that state. The hierarchy of grid
management is shown below.

Limitation in existing SCADA/EMS:

The measurements from supervisory control and Data Acquisition (SCADA) System from RTUs in the
Sub Station is obtained in sequential polling. The time taken from first scan to estimation of state may
be up to a minute in hierarchical system. Thus Control Center decision making is based on slightly old
Power System State. This assumption of the system not changing its state from scan to State
Estimation gives a Static view of System which is of not much use when system is undergoing
oscillation e.g., after clearing of a fault, or system is undergoing large change due to sudden load
throw off, ramping up of load morning & evening.

Need to have URTDSM:

Unified Real Time Dynamic State Measurement (URTDSM) employs PMUS (Phasor Measurement
Units) across the Grid at various Generating Stations, and substations. URTDSM Project is based on
Wide Area Measurement System (WAMS) Technology, which involves measurement of phase angle
between various nodes of the power system accurately using Phasor Measurement Units (PMUs).
These PMUs shall be installed in the substations/power plants, and they measure the parameters
such as voltage, current, phase angle and rate of change of frequency etc., and report these values to
the Phasor Data Concentrators (PDCs) located at various Control Centers. Phase angle
measurement helps in better Visualization & increase the situational awareness of Power System
Operators.

WAMS for URTDSM:

A WAMS (Wide Area Monitoring Systems), using Phasor measurement unit (PMUs), is advanced
measurement system that provides synchronized measurements. The WAMS technology provides
phasor measurements in terms of amplitude and phase angle of voltage and current over a widely
spread grid. The components of WAMS consists of Phasor Measurement Units (PMUs), Phasor Data
Concentrators (PDCs), Visualization aids, Application and Analysis modules, Data archiving and
storage etc. The basic infrastructure of WAMS technology is PMU, wide-band communication and
PDC units.

PMUS & Synchrophasor technology:

A phasor measurement unit (PMU) or synchrophasor is a device which measures the
electrical waves on an electricity grid, using a common time source for synchronization. Time
synchronization allows synchronized real-time measurements of multiple remote measurement points
on the grid. In power engineering, these are also commonly referred to as synchrophasors and are
considered one of the most important measuring devices in the future of power systems. A phasor is
a complex number that represents both the magnitude and phase angle of the sine waves found in
AC system. Phasor measurements that occur at the same time are called "synchrophasors" and can
be measured precisely by the Phasor measurement units (PMUs).PMU measurements are taken at
high speed typically 25 or 50 samples per second, compared to one every 4 to 10 seconds using
conventional technology. Each measurement is time-stamped according to a common time reference.
Time stamping allows phasors at different locations to be time-aligned (or synchronized) thus
providing a comprehensive view of the entire grid at central location.

Significance of PMUS:
PMUS (Synchrophasors) measure voltages and currents at principle intersecting locations (critical
substations) on a power grid and can output accurately time-stamped voltage and current phasors.
Because these phasors are truly synchronized, synchronized comparison of two quantities is
possible, in real time. These comparisons can be used to assess system conditions-such as;
frequency changes, MW, MVARs, kVolts, etc. The monitored points are preselected through various
studies to make extremely accurate phase angle measurements to indicate shifts in system (grid)
stability. The phasor data is collected either on-site or at centralized locations using Phasor Data
Concentrator (PDC). The data is then transmitted to a regional monitoring system.

Utilization of PMU Data:

The data from synchrophasor is a huge leap from the data from SCADA system. An accurate
measurement of voltage and current phasors in the grid is now available with a resolution of 40 ms
i.e, 25 samples per second. The precise relative phase angle separation can also be seen. Apart from
these angular separation other important system monitoring parameters such as frequency, rate of
change of frequency, positive sequence phase voltages and power flow are also available. Even the
limited exposure with synchrophasor data has been a revelation in terms of its potential for future
applications. The data can be examined closely for the following benefits.
1. It has been found that even within the synchronous system there could be difference in
frequency (few hundred microseconds) at various locations. This difference is pronounced
during system transients such as tripping of generating units. Such difference in frequency
 was not visualized through SCADA system due to 10 second data.
2. The sags and swells in voltage which were not observable in SCADA are now observable
through Synchrophasor data. Likewise the imbalance in voltage and current between
different phases can be clearly seen.
3. During grid events the operators are able to see the fault current, voltage, protection system
response time, fault clearance time etc. Such information are very useful for disturbance
analysis and better situational awareness in the real time system operation.
4. The phase angle across nodes helpes in determining the stress in the grid and its proximity to
instability. The proximity to instability is measured w.r.t predetermined stability threshold
limit. With this the transfer capability of the corridor can be re-assessed in the real time
5. Information obtained through PMUs has been found to be very helpful in monitoring the
performance of protection system in the grid. Some of the discrepancies in overvoltage
settings and unnecessary overvoltage tripping could be detected through the PMU. Those
can be later rectified.
6. PMU measurement has also been found to be very useful in validating the real time online
SCADA network model and offline network models.

Measurement Process in WAMS:

Bus voltage and current phasors in transmission line is measured directly through PMU in terms of
amplitude as well as phase angle. Input to the PMU is taken from bus PT and line CT at the
substation including time signal through GPS. Phase angle is measured relative with GPS frame.
Output from PMUs in a particular station (sending station) is transmitted through a LAN switch and
router to PDC. A Phasor Data Concentrator (PDC) is used to collect data from multiple PMUs and
other PDCs. A PDC also aligns data by time tag to create a time synchronized dataset, and transmit
this dataset to other information system. All data concentrators are connected locally to the respective
host computer, printers and operators console via Ethernet. PDCs can also filter the data so that it
can be fed to applications which use slow sample data such as SCADA system. In order to maintain
ease of data flow as well as computational process, it is proposed that PMU measured data from a
number of substations in a State is to be pooled and send it to a Nodal PDC located at strategic
location in the State. It is proposed to use one PDC (called Nodal PDC) for approximately 50 to 60
PMUs in any state. No Nodal PDC will communicate with the PMUs installed in any other state. Data
from number of Nodal PDCs are to be sent to a Master PDC located at respective SLDC and in turn
to Super PDC (SPDC) located at respective RLDC. Data from ISTS points are to be sent directly to
Super PDC (SPDC) at respective RLDC via Nodal PDC. Data from each SPDC are to be sent to
National PDC located at NLDC. (Flow diagram attached).

Communication in URTDSM:
The Communication infrastructure is critical backbone in the architecture of a WAMS system. PMU
devices are distributed over a wide area, covering various locations within the boundary of a power
system. The PMU devices are then connected to one or many control centers over the
communication network. Fibre Optic Communication network due to its high bandwidth offer low
latency for communication between PMU to PDC and PDC to PDC. The existing/planned wide band
Fiber Optic connectivity at substations can be used to transfer PMU data to control centres with the
addition of suitable interface cards. The bandwidth requirement would increase significantly if more
no. of feeders are added in the PMU. Further when control functions are developed and deployed,
effective implementation will require the latency of communication network between the points
involved in transfer of control signals should be less than 100 ms. A PLCC network does not have
such high bandwidth and low latency. Looking further at physical redundancy and enhanced reliability
needs for Power System operation, Optical Ground Wire (OPGW) based Fiber Optic Communication
ideally meets the requirement of Communication media for WAMS technology. The Fibre Optic
network is required to be extended to all those substations and power plants where PMUs are to be
installed.

Applications of URTDSM Project employing PMUS:

Synchronized measurements are the next generation of paradigm shift technology, enabling
improvements in planning, operating and maintaining the Electrical Grid. The measurements have lot
of potential applications and would help the system operator and planner in general. For some
applications (e.g. angular separation alarming on a situational awareness dashboard), benefits to an
individual entity are achieved only by having system wide information. As a result, a well planned
system wide PMU deployment, implementing optimal system architecture, is necessary to take a full
advantage of the technology. Some of the applications are:
1) Vulnerability test on relay characteristics
2) Instrument transformer measurement validation
3) Dynamic State Measurements - Wide Area measurement and control in regional
transmission Networks-Linear State Estimation
4) Supervised Zone-3 protection scheme to prevent unwanted tripping of distance
relays
5) Schemes for controlling angular instability (i.e., out of step protection and smart
islanding)
6) Emergency control schemes for controlling frequency and voltage instabilities
7) Increase the reliability of the power grid by detecting faults early, preventing local
events allowing for isolation of operative system, and the prevention of power
outages
8) Improved transmission corridor capability
9) Adaptive islanding.
10) Network transient stability model validation Load shedding and other load control
techniques such as demand response mechanisms to manage a power system.

Stages of WAMS in URTDSM:

WAMS technology world over have three (3) stages of implementation. The first stage is to install
PMU, PDC and collect/archive phasor data from important locations throughout the grid to determine
the topology and operating limits. In second stage, the data gathered along with real-time phasor and
frequency measurements to calculate grid conditions using analytical functions to make suggestions
to grid operator to keep grid stable and reliable. The final stage is to carry out all of the above
functions automatically.In Indian Power System context, it is proposed to follow the similar philosophy
i.e. installation of PMUs on substations at 400kV level and above in the State & Central grids, all
generating stations at 220kV level and above, HVDC terminals, important inter-regional/national
connection points etc., provision of PDC at strategic sub-stations to collect the data of nearby PMUs,
all SLDCs, RLDCs and NLDC along with visualization aids as a first phase. This shall facilitate a
Unified Real-time Dynamic State Measurements (URTDSM) tool towards improved system
operation. In the subsequent phases, development of software based analytic functions and
automatic corrective actions will be undertaken.

Conclusion:
India has diversified electricity market, in which power is contracted on different type of contracts such
as long term, medium term and short term power purchase agreements. These is a day ahead Power
Exchange for collective trading. Transmission systems are now squeezed between two great forces;
on one side, increasing demand, energy trading and economic pressures are pushing transmission
owners and grid operators to maximize the use of transmission assets and on the other side is the
reliability concern. For day-to-day congestion management, actual flow on a line is compared to Total
Transfer Capability (TTC), which is based on thermal limitations, voltage limitations, or stability
limitations of the line. The assumptions used in offline TTC calculations may lead to unused transfer
capability and lost opportunity costs in the dispatch process. The extent to which the excessive
margin contributed to the total congestion costs is unknown. Congestion relief occurs through the
ability to use actual transfer limits instead of conservative limits imposed due to angle and voltage
constraints. PMU technology has been identified as either necessary (e.g. stability limitations) or
beneficial (e.g. thermal and voltage limitations) in addressing this issue.

PMU based WAMS Technology will allow available transmission capacity to be based on these
precise real-time measurements rather than existing coarser measurements or simulation methods.
This will increase the effective capacity of congested corridors, if any, increase transmission asset
utilization and lower the energy costs to consumers.
 CHALLENGES IN OPERATION OF THE THERMAL UNITS
COMPLYING WITH INDIAN ELECTRICITY GRID CODE
N.RAMALAKSHMI, Chief Manager / Planning / TPS II, NLC India Limited
S.RAVI, Chief Manager / Planning / TPS II, NLC India Limited

This paper deals with the framework of effective & secure grid operation and the Evolution of
the ABT system in line with the changing grid requirements from the compliance angle of the
generators.
ABT is a performance-based tariff for the supply of electricity by generators owned and
controlled by the Central Government. It is also a system of scheduling and dispatch, which requires
both Generators and Beneficiaries to commit to day-ahead schedules. It is a system of rewards and
penalties seeking to enforce day ahead pre-committed schedules, though variations are permitted if
notified in advance as per the extant regulation. ABT (Availability Based Tariff) along with the
Electricity Act of 2003 is perhaps the most significant and definitive step taken in the Indian power
sector so far to bring more efficiency and focus to the vital infrastructure –the grid.
ABT was first introduced in Western Region from 01.07.2002 and subsequently in Northern
Region from 01.12.2002. In Southern Region ABT is followed from 01.01.2003 and later in Eastern
Region & North Eastern Region from 01.04.2003 & 01.11.2003 respectively.

The ABT mechanism was introduced with the main objectives of:

• Encouraging grid discipline

• Promoting trade in energy and capacity

• Economic load dispatch

• Encouraging higher generation availability

Some of the adverse grid conditions which necessitated the reforms in the form of ABT are:
1) Wide frequency fluctuations causing serious damages at Generation & load ends.
2) Low frequency during peak load hours, with frequency going down to 48.0 - 48.5Hz. for
many hours every day.
3) High frequency during off peak hours, with frequency going up to 50.5 to 51Hz. Formany
hours every day.
4) Rapid and wide changes in frequency - 1 Hz. change in 5 to 10 minutes, for manyhours
every day.
5) Very frequent grid disturbances, causing tripping of generating stations, interruption of
supply to large blocks of consumers, and disintegration of the regional grids.
The most significant aspect of ABT is the splitting of the monolithic energy chargestructure into
three components viz. capacity charges (fixed), energy charges(variable) andUI (unscheduled
interchange) charges. In addition to these three components, Generators are eligible for Incentive as
declared by the CERC beyond the Normative performance. It is the UI (unscheduled interchange) that
initially brought about the desired grid discipline.
Benefits realisedfrom ABT
 The mechanism has streamlined the operation of regional grids in India
 Enhanced grid discipline haspaved the way for higher quality power with more reliability
and availability. The grid parameters, i.e., frequency and voltage, have improved, and
equipment damage correspondingly reduced.
 Mechanism is established for harnessing captive and co-generation and for bilateral
trading between the constituents.
 Promote competition, efficiency and economy leading to power trading which has
ultimately paved the way (step-by-step) for a self-regulating power market.
 Introduced and encouraged MOD (Merit Order Dispatch) in the Indian powerscene
because of clear separation between fixed and variable charges. The generators cannot
produce as much as theycan irrespective of the demand side of the power equation.
Under ABT,generators have to ramp up and ramp down generation based on
theGeneration Schedule given by the RLDC (Regional Load DispatchCenter). Any
constituent which helps others by under-drawal from the regional grid in a deficit situation,
gets compensated at a good price for the quantum of energy under-drawn.
Before we give details of the constituents of ABT scheme, it is necessary to explain the
topography of Power System in Indiaand how grid is monitored and controlled. The structure of
ownership of generation and transmission facilities in India is based on the federal structure of the
country. In each of the states in the region, most of the generation is owned by the State Electricity
Boards (SEBs), which are vertically integrated utilities with generation, transmission and distribution
under their control. Many of the SEBs are now unbundled into separate generation, transmission and
distribution corporations. The Union Government own generation utilities that supply bulk power to the
SEBs based on allocations to the states made by the MOP. These utilities are known as Central
Generating Stations (CGSs – supplying power to Home State only) and Inter State Generating
Stations (ISGSs – supplying power to more than one State).
The transmission grid is divided into five regional grids Northern, Western, Southern, Eastern
and North-Eastern. Initially, all grids except Southern were inter-connected via synchronous links. The
Southern Grid was physically connected with NEW Grid with asynchronous links (400KV
Ramagundam – ChandrapurD/C Line with HVDC Back to Back Station at Chandrapur, 400KV
Jeypore – Gazuwaka D/C Line with HVDC Back to Back Station at Gazuwaka& 2000MW capacity,
500KV Talchar – Kolar DC Pole). On 31st December 2013, Southern grid was connected to Central
grid through the newly commissioned 765 KV Raichur-Sholapur transmission line thereby forming
„One Nation-One Grid-One frequency‟ system.
A Regional Load Dispatch Center (RLDC) in each of the region coordinates the daily
scheduling process for dispatch of centrally generated power. Inter-regional exchanges are
coordinated through National Load Dispatch Centre. After collecting the availability of power from
ISGS for the next day (in 96 slots of 15 min each), RLDC allocates this power to respective SEBs as
per their percentage share in CGS pool. SEBs then carry out an exercise to see how best they can
meet the load of their consumers over the day, from their own generation stations along with their
entitlement in CGS. They submit their requisitions to the RLDC, which then decides the dispatch
schedule for CGS andwithdrawal schedule for the SEBs.

INDIAN ELECTRICITY GRID CODE (IEGC)

The Indian Electricity Grid Code(IEGC) lays down the rules, guidelines and standards to be followed
by the various agencies and participants in the system to plan, develop, maintain and operate the
power system, in the most efficient, reliable and economic manner, while facilitating healthy
competition in the generation and supply of electricity.
The first two publications IEGC-1999 & IEGC-2002 were prepared by Power Grid Corporation of India
Ltd as The Central Transmission Utility and finalised by CERC. Subsequent editions, IEGC-2006 &
IEGC-2010 are prepared and issued by CERC. The IEGC brings together a single set of technical
rules, encompassing all the Utilities connected to/or using the inter-State transmission system (ISTS).
It defines the role of RLDC & RPC and Scheduling procedure to be followed by Generators &
Beneficiaries.

THE CHANGE IN THE UI RATES AND THE FREQUENCY RANGE OVER THE YEARS
From 01.07.2002 to 31.03.2004, UI rates varied from Rs.0.00/Kwhr for 50.5 Hz to Rs.4.20/KWHr for
49.0 Hz in linear steps of 5.6 Ps/0.02 Hz.
Initially, UI could be earned by the generators only when there was surrender since the generators
where not compensated for any injection above declaration. However, for actual generation below
declaration, generators had to pay UI penalty. The matter was taken up with CERC and while
disposing the petition, the commission allowed UI incentive from 01/04/2004 for maintaining Actual
Injection above Declaration. Generator was allowed to earn UI for Generation up to 105% & 101% of
DC in a Time block and for the day respectively and beyond that limit RLDC was empowered to
analyse for gaming.
The term “gaming‟ in relation to UI regulations, shall mean an intentional mis-declaration of declared
capacity by any generating Station or seller in order to make an undue commercial gain through
Unscheduled Interchange charges. Gaming can be under declaration for earning UI or over
declaration for earning fixed cost. If gaming is found by the Regional Load Despatch Centre, the
corresponding Unscheduled Interchange charges payable to the generating station on account of
such extra generation shall be reduced to zero and the amount shall be adjusted in UI pool account of
the beneficiaries in the ratio of their capacity share in the generating station. For over declaration and
not meeting the given schedule, there is provision in the Regulation that the real time operator can
ask the generator to prove his capability. Every time the generator is unable to prove the capability, a
n
penalty of 2 times the fixed cost will be slapped where n is the number of times the capability is not
proved.
From 01.04.2004 to 30.09.2004, UI rates varied from Rs.0.00/Kwhr for 50.5 Hz to Rs.6.00/KWHr for
49.0 Hz in linear steps of 8 Ps/0.02 Hz
From 01.10.2004 to 29.04.2007, UI rates varied from Rs.0.00/Kwhr for 50.5 Hz to Rs.2.10/KWHr for
49.8 Hz in linear steps of 6 Ps/0.02 Hz and from Rs.2.10/Kwhr for 49.8 Hz to 5Rs..70/KWHr for 49.0
Hz in linear steps of 9 Ps/0.02 Hz
From 30.04.2007 to 06.01.2008, UI rates varied from Rs.0.00/Kwhr for 50.5 Hz to Rs.2.10/KWHr for
49.8 Hz in linear steps of 6 Ps/0.02 Hz, from Rs.2.10/Kwhr for 49.8 Hz to Rs.3.45/KWHr for 49.5 Hz in
linear steps of 9 Ps/0.02 Hz and from Rs.3.45/Kwhr for 49.5 Hz to Rs.7.45/KWHr for 49.0 Hz in linear
steps of 16 Ps/0.02 Hz
From 07.01.2008 to 31.03.2009, UI rates varied from Rs.0.00/Kwhr for 50.5 Hz to Rs.2.80/KWHr for
49.8 Hz in linear steps of 8 Ps/0.02 Hz and from Rs.2.80/Kwhr for 49.8 Hz to Rs.10.00/KWHr for 49.0
Hz in linear steps of 18 Ps/0.02 Hz
The tightening of the frequency band and the introduction of capped rate for generators started from
01/04/2009. From 01.04.2009 to 02.05.2010, UI rates varied from Rs.0.00/Kwhr for 50.3 Hz to
Rs.4.80/KWHr for 49.5 Hz in linear steps of 12 Ps/0.02 Hz and from Rs.4.80/Kwhr for 49.5 Hz to
Rs.7.35/KWHr for 49.2 Hz in linear steps of 17 Ps/0.02 Hz. However, for generators the UI rate
beyond 49.62 to 49.2 was capped at Rs.4.08/Kwhr. For frequency less than 49.2 Hz, additional UI of
40% was charged and generators had to pay Rs.5.71/Kwhr for under injection and beneficiaries had
to pay Rs. 10.29/Kwhr for over drawal at frequency less than 49.2 Hz.
The UI amount earned by NLC stations for the Actual Injection beyond 105% & 101% of DC in a Time
Block and for the Day respectively was reduced to zero treating as gaming for the period from
01/04/2009 to 15/11/2009. NLC filed a petition to amend /clarify the UI regulations in vogue with effect
from 1.4.2009concerning treatment of actual generation in excess of 105% of the declaredcapacity
(DC) in a time block and 101% of DC in a day and to give directions to refund the UI charges
deducted from UI accounts of TPS-I(Expansion) and TPS-II on the grounds of alleged gaming
retrospectively witheffect from 1.4.2009 and the petition was disposed by the commission in favour of
NLC.
The next step was introduction of volume limits for deviation from schedule for the Beneficiaries. The
frequency band was narrowed down to 49.5 Hz to 50.2 Hz. From 05.05.2010 to 01.04.2012, UI rates
varied from Rs.0.00/Kwhr for 50.2 Hz to Rs.4.03/KWHr for 49.68 Hz in linear steps of 15.5 Ps/0.02 Hz
and from Rs.4.03/Kwhr for 49.68 Hz to Rs.8.73/KWHr for 49.5 Hz in linear steps of 47 Ps/0.02 Hz.
However, for generators the UI rate beyond 49.68 to 49.5 was capped at Rs.4.03/Kwhr. For frequency
less than 49.5 but greater than 49.2 HzHz, additional UI of 20% for generators and 40% for
beneficiaries was charged and generators had to pay Rs.4.836/Kwhr for under injection and
beneficiaries had to pay Rs. 12.22/Kwhr for over drawal at frequency less than 49.5 Hz but greater
than 49.2 Hz. For frequency less than 49.2 Hz, additional UI of 40% for generators and 100% for
beneficiaries was charged and generators had to pay Rs.5.642/Kwhr for under injection and
beneficiaries had to pay Rs. 17.46/Kwhr for over drawal at frequency less than 49.2 Hz. In the case
ofGenerators for maintaining Actual Injection above 105% & 101% of DC in a Time Block & for the
Day, UI rate was capped matching with the UI rate corresponding to 50 Hz.
The differential UI pricing for generators and beneficiaries has led to accumulation of significant
amount of fund, left after final UI claim settlement. The surplus money in the RLDC UI pool account is
transferred to the Power System Development Fund and used for creation of additional transmission
capacity needed for Grid Security, Capacitor Installation by States for improvement of Voltage,
maintaining spinning reserves, etc.

ISGSs PARTICIPATING IN ABT IN SOUTHERN REGION

In Southern Region, Generating Stations owned by NLC India Ltd, NTPC are scheduled by SRLDC.
Though ABT is not applicable for Nuclear Power Stations (MAPS, KGS & KKNPP), for the purpose of
load generation balance they arealso communicating their availability and schedule to the
Beneficiaries and UI/DSM is not applicable for them.

It may be noted that though Talchar Power Station, Stage-2 (4 x 500MW) of NTPC is located in
Eastern Region (Orissa), it is totally dedicated to Southern Region and scheduled by SRLDC to SR
Beneficiaries. The Station is physically connected to SR through 500KV DC Biploe from Talchar to
Kolar (Karnataka) and power received at Kolar is distributed to SR Beneficiaries through CTU
network. In the event of tripping of either DC Bipole or Generating Units at Talchar, Special Protection
Scheme (SPS) is installed for providing load relief by all the states.
DEFENCE MECHANISM IN SR FOR GRID SECURITY
Well defined and healthy defence mechanism is a pre- requisite for secure operation of the
interconnected system. Despite the utmost caution exercised during operational planning
andimplementation to improve network security and reliability, the possibility of a contingent situation
in the region cannot be totally eliminated. This situation calls for suitable defence mechanisms to be
available in the system, which would take care of such contingencies.
1. Automatic under frequency relay and df/dt load shedding scheme
The Automatic Under Frequency Relay with set points and df/dt at different conditions are
Defence mechanisms for the system formulated considering the largest single credible
contingency occurring in the system and based on both flat frequency as well as rate of change of
frequency. Generally, such scheme is meant to take care of unforeseen contingencies.

Frequency setting for UFR Stages (in Hz) df/dt stages

Constituent 49.5 & 49.3 &
49.2 49 48.8 48.6
0.2Hz/sec 0.3Hz/sec
Andhra Pradesh 392 393 398 399 345 855
Telangana 417 419 424 426 912 367
Karnataka 576 578 586 588 474 737
Kerala 204 205 208 209 172 175
Tamil Nadu 740 744 753 756 624 559
Puducherry 21 21 21 22 18 0
Total 2350 2360 2390 2400 2545 2693

2. Automatic under voltage relay load shedding scheme

3. Islanding scheme
4. System Protection Scheme
5. Transmission Network congestion management
6. Contingency Action
7. Physical Regulatory Measures for Over Drawal / Positive Deviation
8. Physical Regulatory Measures for Voltage
9. Contingency demand disconnection scheme for mitigating impact of sudden loss of wind
generation

SHIFT FROM UI TO DSM

After introduction of ABT mechanism and provision of UI mechanism, initially there was marked
improvement in frequency profile. Further, not even a single case of grid failure was reported after
implementation of ABT mechanism. But the relative success of UI mechanism in bringing in grid
discipline reportedly declined over the years, despite revisions in the UI ceiling rate and UI pricing
vector.
There was a major grid disturbance in Northern Region at 02.33 hrs on 30-07-2012. Northern
Regional Grid load was about 36,000 MW at the time of disturbance. Subsequently, there was
another grid disturbance at 13.00 hrs on 31- 07-2012 resulting in collapse of Northern, Eastern and
North-Eastern regional grids.One of thecauseswas Excessive reliance on unscheduled interchange
rather than organized markets.
The load generation scenario in the synchronous Northeast-East-West-North (NEW) grid was highly
skewed in the month of July. There was spurt in agricultural/weather beating demand in Northern
Region (NR) on account of failure of South West monsoon, large gap between requirement and
availability on account of high demand growth and aspiration to meet more customer load. On the
other hand there was surplus condition in the Western Region (WR) due to high generation availability
and heavy under drawal by the constituents of WR. This unscheduled interchange resulted in heavy
power flow towards the Northern region from Western and Eastern Region.
Many of the utilities prefer to draw power from the grid in the form of Unscheduled Interchange rather
than availing power from organized market through long term, medium term and short term contracts
without much consideration to the grid security. The UI mechanism should ideally have been used for
inadvertent interchange of power only. However, it was observed that gradually with the passage of
time, a number of utilities had started using this mechanism as an easy way to draw power to meet
load / sell power, without any prior financial commitment leading to constraints in the system and
endangering the security of the grid. There arose a necessity for a Suitable deterrent mechanism to
discourage such exploitation of the UI mechanism and bring about financial discipline.
Under the UI regulations there was no cap on the volume of Unscheduled Interchange as long as the
frequency was within the stipulated operating range. In the antecedent conditions of both the grid
disturbances, the efforts to curtail deviations from schedule failed to bring about the desired results
probably because the frequency was within the stipulated operating range. Thus the prevailing
mechanism of Unscheduled Interchange was reviewed to address the security concerns emerging
from the growth in the size of the synchronous interconnection and the behaviour of the market
participants in the existing market design in India and the Deviation Settlement Mechanism
Regulationscame into place.
The main objective of these regulations is to maintain grid security and grid discipline as envisaged
under the Grid Code through the commercial mechanism of Deviation Settlement by controlling the
users of the grid in scheduling, despatch, drawal and injection of electricity. The following table gives
a comparison of the shift from the UI to CD rates.

UI Charges from 02/04/2012 Charge of Deviation from 17/02/2014

Frequency Balancing Mechanism Frequency & Volume Control Mechanism
Frequency Variation in Steps of 0.02Hz Frequency Variation in Steps of 0.01Hz
Maximum Rate Capped at 421.5 Maximum Rate Capped at 303.04 Paise/KWHr
Paise/KWHr(49.82Hz) (49.95Hz)
UI Rate Zero at 50.20Hz Charge of Deviation Zero at 50.05Hz

Export to Grid upto 105% of DC in a Export to Grid upto 12% of Schedule in a Time Block
 Time Block and 101% of DC for the permitted
day permitted
Export to Grid above 105% of DC in a
Export to Grid above 12% of Schedule in a Time Block,
Time Block and 101% of DC is Priced
Charge of Deviation is Zero
at 165 Paise/KWHr
For Injection During High Frequency no For Injection During High Frequency 50.1Hz, Penalty of
Penalty 178Paise/KWHr is to be paid
Additional Charges during Under
Additional Charges during Under Injection
Injection
If Freq is Between 49.7 & 49.5Hz, 10%
If Freq is > 49.7Hz
UI Charges
Deviation Upto 12% of Schedule – Nil
If Freq is Between 49.5 & 49.2Hz, 20%
Deviation Upto 48 MW when Schedule is less than or
UI Charges
equal to 400 MW - Nil
Deviation Between 12% & 15% of Schedule - 20% of
If Freq is < 49.2Hz, 40% UI Charges
CD
Deviation Between 15% & 20% of Schedule - 40% of
CD
Deviation above 20% of Schedule - 100% of CD
If Freq is < 49.7Hz
For any Deviation Below Schedule is 100% of CD
DC Revision during Unit Tripping
All DC Revisions including Unit Tripping are effective
effective from 4th Block and Other
from 4th Time Block
Revisions from 6th Time Block
Frequency Range 49.7Hz to 50.2Hz Frequency Range 49.9Hz to 50.05Hz

No change in sign of UI Energy Change in sign of Deviation Energy in every 12 blocks

In order to encourage Renewable energy generation, the charge of deviation for Renewable rich state
is relaxed as below. Renewable Rich Statemeans a State whose minimum combined installed
capacity of wind and solar power is 1000 MW or more.

(i) For over-drawal/under-injection of electricity above Equivalent to 20% of the

200 MW and up to 250 MW in a time block for Charge for Deviation
installed capacity of renewable energy 1000 to 3000 corresponding to average grid
MW and above 250 MW and up to 300 MW in a time frequency of the time block.
block for above 3000 MW installed capacity of
renewable energy
(ii) For over-drawal/under-injection of electricity above Equivalent to 40% of the
250 MW and up to 300 MW in a time block for Charge for Deviation
 installed capacity of renewable energy 1000 to 3000 corresponding to average grid
MW and above 300 MW and up to 350 MW in a time frequency of the time block.
block for above 3000 MW installed capacity of
renewable energy
(iii) For over-drawal/under-injection of electricity above Equivalent to 100% of the
300 MW in a time block for installed capacity of Charge for Deviation
renewable energy 1000 to 3000 MW and above 350 corresponding to average grid
MW in a time block for above 3000 MW installed frequency of the time block
capacity of renewable energy

THE CONGESTION CHARGE REGULATIONS

The First formal definition of congestion in power system in our statute came with the congestion
charges regulations. Congestion‟ means a situation where the demand for transmission capacity
exceeds the Available Transfer Capability. Available Transfer Capability is Total Transfer Capability
less Reliability Margin. By simulation, analysis and brain storming of the Anticipated Network topology
, Capacity additions, Anticipated Substation Load, Anticipated Ex bus Thermal Generation,
Anticipated Ex bus Hydro generation, Gas / Nuclear despatch as per CEA Reports, LGBR, Last Year
Reports, Weather Forecast, Transmission Plan + approved S/D, Last Year pattern, Operator
experience, Planning criteria, Operating limits and Credible contingencies, the transfer capability is
assessed and TTC is arrived by the nodal agency, NLDC in association with SLDCs and RLDCs.
By definition, “Total Transfer Capability (TTC)” means the amount of electric power that can be
transferred reliably over the inter-control area transmission system under a given set of operating
conditions considering the effect of occurrence of the worst credible contingency. i.e. Outage of single
transmission element (N-1) in the transmission corridor or connected system and / or Outage of a
largest unit in the importing control area Station. TTC is directional in nature and hence different for
import from and export to a control area.
Transmission Reliability Margin (TRM)” means the amount of margin kept in the total transfer
capability necessary to ensure that the interconnected transmission network is secure under a
reasonable range of uncertainties in system conditions (Two percent (2%) of the total anticipated
peak demand met in MW and Size of largest generating unit – In case of SR 1000 MW of KKNPP is
considered for TRM)
SLDCs/ RLDCs/ NLDC shall have a display available in their web-sites showing Total Transfer
Capability (TTC), Transmission Reliability Margin (TRM) and Available Transfer Capability (ATC)
declared in advance.
"Congestion charge may be imposed on any Regional entity or entities in any Region or Regions for
causing congestion and paid to any Regional entity or entities in any Region or Regions for relieving
congestion ".
A corridor shall be considered congested under the following circumstances:
1. Grid voltage in the important nodes downstream/ upstream of the corridor is beyond the operating
range specified in the IEGC and/or
2. The real time power flow along a corridor is such that n-1 criteria (Outage of single transmission
element) may not be satisfied.
3. One or more transmission lines in the corridor are loaded beyond the normal limit specified in CEA
Manual on Transmission Planning Criteria.
Whenever real time power flow on inter/ intra-regional link/ corridor exceeds ATC RLDC / NLDC may
issue a warning notice.
If violation of TTC limits persists for 2 time-blocks not counting the time-block in which warning notice
was issued by RLDC and no affirmative action is taken by the defaulting agency, NLDC/ RLDC(s)
shall issue a notice for application of congestion charge.
Congestion charge shall be withdrawn after the power flow on the affected transmission link/ corridor
has come down to the ATC and remains at this level for one time block.
Congestion charge would be levied for
a) overdrawal or under-injection in the importing control area and
b) underdrawal or over-injection in the exporting control area.
Congestion charges may also become applicable for an intra-regional corridor of one region, if the
congestion is attributable to other regional entities of other region.
The rate of congestion charge shall be as specified by the Commission from time to time, through an
order (Rs.5.45/kwhr)
Power Flow from NEW Grid to SR

NEW 3000 MW 3300 MW SR GRID

GRID

Response to congestion warning In NEW GRID, the exporting region (upstream)

Beneficiaries to increase load

Generators to backdown

Response to congestion warning In SR GRID, the importing region (downstream)

Generators to increase Generation

Beneficiaries to reduce load

RESERVES REGULATION ANCILLARY SERVICES

Presently, generation in some of the Inter-State Generating Stations is not getting dispatched as it is
not getting requisitioned by the beneficiaries based on merit order considerations. The despatch of
such un-requisitioned surplus can be done if one of the other beneficiaries requisitions the power.
Alternatively, the generator can sell the un-requisitioned power to others through Short Term open
Access. At present NLC is trading the URS Power in IEX through NVVNL after obtaining consent from
Surrendering Beneficiaries utilising the provision available in Tariff Policy issued by MOP.In addition
to the existing mechanism of dispatching the un-requisitioned surplus, Reserves Regulation Ancillary
Services (RRAS) has been introduced.
The regulation provides for Regulation Up and Regulation Down service by Reserves Regulation
Ancillary Services (RRAS) providers. The RRAS providers shall be paid from the Regional DSM
Pools. The quantum of generation dispatched shall be directly incorporated in the schedule of
respective RRAS Provider(s). For Up Regulation, fixed and variable cost along with a mark-up cost as
specified by the regulatory authority will be paid and fixed cost has to be reimbursed to the original
beneficiaries. For Down Regulation, 75% of variable charges have to be paid by RRAS provider to the
pool.
For Regulation Up Service, power shall be scheduled from the generating station to the Virtual
Ancillary Entity by the concerned Nodal Agency, until such time the Nodal Agency gives instruction for
withdrawal of service.
“Virtual Ancillary Entity” means a virtual entity participating in the Regional Deviation Pool which shall
act as the counterpart for the schedule prepared for despatch of Reserves Regulation Ancillary
Services Providers
For Regulation Down Service, power shall be scheduled from the Virtual Ancillary Entity to the
generating station, so that effective scheduled injection of the generating station comes down, until
such time the Nodal Agency gives instruction for withdrawal of service.
In case of downward DC revision due to unit tripping in the station of the RRAS provider, the RRAS
power will be curtailed first, followed by STOA, MTOA and LTA transactions. RRAS curtailment shall
be effective from the second time block considering the time block in which the intimation is received
as the first time block.
Once the URS power from a RRAS provider has been scheduled under RRAS, then, this can be
recalled only by the original beneficiary. Such request from other beneficiaries will not be considered
by RLDCs.Sustained failure, i.e., failure to provide the RRAS (barring unit tripping) by RRAS
Provider(s) more than three (3) times during a month shall be brought to the notice of the CERC.
The schedule of the RRAS providers will become effective earliest from the time block starting 15
minutes after issue of the withdrawal instruction by the Nodal Agency.
In case Un-despatched power is requisitioned back by the original beneficiary, the quantum
dispatched under RRAS shall be reduced by the quantum of recall by the original beneficiary. This
quantum would be scheduled to the original beneficiary from fourth time-block counting the time-block
in which requisition has been received as the first block.

TECHNICAL MINIMUM & RESERVE SHUT DOWN

The regulatory authority indicated that there was need for more flexibility in the operation of
conventional generation plants also and flexibility needs to be quantified, measured and duly
compensated for. The regulations with regard to Technical minimum and reserve Shut down are a
step ahead in this direction. As per the IEGC 4th Amendment, the technical minimum for operation in
respect of a unit or units of a Central Generating Station or inter-State Generating Station shall be
55% of MCR loading or installed capacity of the units of the generating station. Prior to this
amendment, the technical minimum was kept at 70% of ratedcapacity. Maintaining the units at 55%
load is possible in larger size new units (500MW, 600MW & 800MW). However, in smaller size old
units, maintaining 55% load poses problems in stability and reliability of the unit.
When a generating station, is directed by the concerned RLDC to operate below normative plant
availability factor but at or above technical minimum, the generating station is compensated for
degradation in respect of Station Heat Rate and Auxiliary consumption for loading from 55% to 85%.
Where the scheduled generation falls below the technical minimum schedule, the generating station
has the option to go for reserve shut down and in such cases, start-up fuel cost over and above seven
(7) start / stop in a year shall be considered as additional compensation
The compensation so computed shall be borne by the entity that has caused the plant to be operated
at lower schedule.
No compensation for Heat Rate degradation and Auxiliary Energy Consumption shall be admissible if
the actual Heat Rate and / or actual Auxiliary Energy Consumption are lower than the normative
station Heat Rate and / or normative Auxiliary Energy Consumption applicable to the unit

THE FUTURE OF THE POWER RESERVES

The regulations of the CERC discussed so far have started yielding the desired results in terms of
operation of the grid closer to 50 Hz. However,the power system operation in the country still needs to
mature further.The forward step to the future would be creation of spinning reserves and large scale
integration of renewable energy resources. The Indian power sector was beset with scarcity for a long
time; however, now the scenario is changing and margin for reserves is feasible.
CERC constituted a Committee under the chairmanship of Shri A.S. Bakshi, Member CERC, to
examine the technical and commercial issues in connection with Spinning Reserves and evolve
suggested regulatory interventions in this context. Extract of the Major findings of the Committee are
as under:
 Spinning Reserves are required to be maintained of requisite quantum depending upon the grid
conditions. Operation at constant frequency target of 50.0 Hz with constant area interchange should
be the philosophy adopted.

 Each region should maintain secondary reserves corresponding to the largest unit size in the region
and tertiary reserves should be maintained in a de-centralized fashion by each state control area for
at least 50% of the largest generating unit available in the state control area. This would mean
secondary reserves of 1000 MW in Southern region; 800 MW in Western regions; 800 MW in
Northern region; 660 MW in Eastern region and 363MW in North-Eastern region (total approx. 3600
MW on an All India basis). Primary reserves of 4000 MW should be maintained on an All India basis
considering 4000 MW generation outage as a credible contingency.

 Implementation of AGC is necessary along with reliable telemetry and communication.

 The reserves at the regional level should be assigned to specific identified generating station or
stations duly considering the various technical and commercial considerations including energy
charges of the generating stations. The nodal agency should be empowered to identify the ISGS
irrespective of type and size of the generating station for providing spinning reserve services.

 The nodal agency may carry such reserves on one or more plants and may withhold a part of
declared capacity from scheduling.

 A market based framework may be put in place for achieving greater economy and efficiency in the
system.

Three types of reserves are generally considered depending on the timeline of initiation and
functional need. Primary control refers to local automatic control available in all conventional
generators, which delivers reserve power negatively proportional to frequency change. Such
immediate automatic control is implemented through turbine speed governors, in which the generating
units respond quickly to the frequency deviation as per droop characteristic of the units. However, this
response to arrest frequency drop or rise lasts for short period of up to 30 seconds - 15 minutes,
within which secondary control should come into play should the contingency last longer than that.
Secondary control involves Automatic Generation Control (AGC) which delivers reserve power in
order to bring back the frequency and the area interchange programs to their target values. For AGC,
units as well as load dispatch centres have to be equipped with necessary communication
infrastructure, as it involves sending automated control signals from the LDC to the generator based
on grid conditions.
Tertiary control refers to manual change in the dispatching and unit commitment in order to restore
the secondary control reserve, as loss of generator may cause a system contingency that lasts for
several hours.

CONCLUSION
As quoted by the CERC, grid does not generate electricity and as such cannot be relied upon for
meeting energy needs. Reserves and reserves alone can address this and the earlier the
stakeholders realise this, the better it is for safe and secure system operation. Capacity addition plans
of NLC India limited and others will help in achieving this objective.
 Challenges and issues related to compliance to
Perform, Trade and Achievement (PAT) scheme
for thermal power plant
M. G. Morshad, CM / Electrical
Energy Manager / TPS II
(BEE Reg No EA 2696)
Abstract:
For translating Prime Ministers vision “Make In India” into reality, India needs substantial
growth in energy sector within a short span of time. It is to be achieved by burning more
fuel that not only increase the depletion rate of the national energy reserve, but also
accelerate the causes of climate change as a result of Global warming.
As Dr A.P.J Kalam rightly said “Energy Efficiency is the fifth fuel after coal, Lignite, petroleum
& gas” and therefore utilization of this fifth fuel i.e. energy efficiency has become
compulsory for narrowing down the gap between fuel supply and energy demand which can
only decelerate depletion rate of natural energy reserve and address to the present
environmental issues.
In view of the above, National Mission on Enhanced Energy Efficiency (NMEEE) consisting of
- PAT (Perform, Achieve & trade), MTEE (Market Transformation for Energy Efficiency), EEFP
(Energy Efficiency Financing Platform) FEEED (Framework For Energy Efficiency Economic
Development) which was launched by Government of India during the year 2008 which can
be viewed as stepping stone for Prime Ministers vision in 2016.
After successful completion of PAT cycle I(2012 -15) , Ministry of Power GOI in consultation
with BEE, has recently notified the PAT Cycle II( 2016-19) with assigned energy efficiency
target that has to be achieved within the stipulated period to avoid penalty.
Handling PAT scheme for thermal power plant is more complicated than other industries
since it involves mainly with heat exchanging process and energy efficiency target is fixed on
heat rate basis.
It is to be mentioned that Heat rate is one of the factors for tariff fixation. Under the PAT
scheme, if the heat rate is reduced, it will automatically reduce the tariff. The loss of tariff,
at any cost, will not be acceptable to any management as it hurts the core of power plant
business.
Also, the scope for improving energy efficiency (Heat rate) in thermal power plant always
remains limited due to huge pressure for generation and tight maintenance schedule.
Due to these constraints, achieving PAT target is a big challenge to operation and
maintenance engineers of thermal power plant.
However, considering the wider interest of nation, it has to be overcome by taking some
suitable measures as discussed further.

Overall concept of PAT

Perform, Achieve and Trade (PAT) is a unique market based mechanism designed by BEE
exclusively for Indian Industry & market to enhance energy efficiency in energy intensive
eight sectors – Aluminum, Cement, Chlor- Alkali, Fertilizer, Power, Iron & steel Pulp & paper
and Textile which are identified as Designated Consumers (DC).
Under this PAT scheme, Thermal power plant shall have to achieve the target Net Heat Rate
(NHR) within a cycle period of three year. Plants able to achieve the NHR above the target
shall be issued Energy Saving Certificate (E-cert) proportional to the difference between
achieved NHR and target NHR which can be traded in the Power market. Plants fails to
achieve target NHR shall have to procure Energy Saving Certificate (E-cert) from the Power
market in proportion to the difference between target NHR and achieved NHR. As an impact
of this mechanism, it is bound to improve the energy efficiency in thermal power plant since
financial gain & loss has been directly linked with energy efficiency improvement factor.

The E-cert issued to the DC can be traded online in Power Exchange Of India under the regulatory
authority CERC and after registration of DC with POSOCO. It can be used for converting energy
efficiency incentives to revenue or it can be banked for the next PAT Cycle.

Though the cost of one Ecert is declared as Rs 10900/- (Cost of One MT of Oil), it is expected
that supply of certificates in the market will be higher than demand and therefore less
efficient industries can procure the certificate at lower price on trading basis. However the
impact of this process will finally improve the efficiency of the industry since it involves
financial gain for the high efficient industry and loss for the less efficient industry.

PAT and Thermal power plant

Thermal Power Plant sector is one of the 8 notified energy intensive sectors under which a
total of 144 plants are participating in this program. The heat rate reduction target in PAT
Cycle I (2012-15) was notified by BEE as shown in Fig shown below.

Nos of thermal Power Plants

50
45
40 44
35
30
25
27
20
15
10
12 12
5 8 7 5 9 9 6 4
0

Reduction range
of Net heat rate

The total reported energy consumption of these Designated Consumers (DCs) is about 104
million toe (Ton Of Oil Equivalent). It is reported that at the end of the PAT cycle I (2012-15),
the energy saving in the tune of 3.211 million toe /year has been achieved, which is around
48% of total notional energy saving targets assessed under PAT.
Significant of the target heat rate in Thermal Power Plant
Energy Efficiency in thermal power plant is measured in Heat rate. The amount of heat
energy (Kcal) required to produce one unit (Kwhr) of electrical energy is the heat rate of the
plant. Since thermal power plant consumes both thermal (Coal/Lignite/Oil/Gas) and
electrical energy, Net Heat rate is considered as target for optimizing the uses of both
thermal & electrical energy. The relation among the three parameters – boiler efficiency,
Turbine heat rate and % APC which determines the target heat rate is as shown in the
following figure.

Methodology adopted for setting target in PAT scheme for thermal power plant
Target heat rate is calculated based on % deviation of the design heat rate from the
operating heat rate. The target heat rate can be calculate as per the following method

% Deviation = [(O –D)/D] x100

(D) (O)

Deviation within 0- 5% Reduction of Heat rate

(O – D) x 0.1
Design Net Heat rate
Design Present
Net Heat operating
Reduction of Heat rate
rate Deviation within 5%- 10% (O – D) x 0.17 Net Heat
rate

Reduction of Heat rate

Deviation within 10%- 20% (O – D) x 0.21

Reasons for higher net heat rate

The probable reasons for higher heat rate are -
1. Variation in fuel quality ( GCV, Moisture, Hydrogen & Ash Content)
2. Error in fuel quantity measurement
3. Lower Boiler efficiency due to poor maintenance / aging factor
4. Higher turbine heat rate due to aging / Part load operation
5. Lower PLF due to non availability of fuel / Backing down / Poor fuel quality /
unplanned shut down
 6. Higher % auxiliary power consumption due to part load operation / unplanned
auxiliary consumption
7. Numbers of startup & shut down of units

Measures to be taken up for overcoming the challenges

PAT cycle II (2016-19) has been notified recently by MoP in consultation with BEE. Due to
lack of knowledge, several flaws were noticed during PAT Cycle I and these have been
rectified in PAT cycle II. Therefore PAT Cycle II is expected to be more serious and stringent.
To work in tune with PAT Cycle II following steps need to be taken up for overcoming the
challenges.

1. Normalization of parameters
The operating heat rate may go at higher side due to some uncontrollable factors such as
coal quality, PLF, part load operation, startup/shut down & aging factor. As a result of that,
plant may fail to achieve the target heat rate and face penalty. To avoid such condition,
relaxation for reduction in operating heat rate on the basis of the following formula is to be
carried out. This method is referred as normalization.

NOHR = WNOHR – NCQ – NAPC (PLF) – NAPC (CQ) – NOF

(Final heat (Target (Ta be (Ta be (Ta be (Ta be
rate) Heat calculated calculated calculated calculated
Rate based on based on based on based on
notified field data) field data) field data) field data)
by BEE)

Where:
NOHR = Normalized net operating heat rate (Kcal/Kwhr)
WNOHR = Net operating heat rate without normalization (Kcal/Kwhr)
NCQ = Coal Quality normalization (Kcal/Kwhr)
NAPC(PLF) =APC Normalization due to low PLF ( Kcal/Kwhr)
NAPC(CQ) = APC Normalization due to coal quality deterioration ( Kcal/Kwhr)
NOF = other normalization – start up/shut down/ Environmental concern (Kcal/Kwhr)

In order to get the benefits of normalization following inputs are to be incorporated in the
PAT calculation data sheet.

a) Coal quality normalization

The coal quality is measured based on coal analysis data of GCV, % Hydrogen (H), %Ash
(A) and %Moisture (M). Since coal quality always have a major impact on boiler
efficiency, these factors are used for calculating Standard Boiler Efficiency using formula
[92.5 - {50*A +630*(M+9*H)}/GCV].
This standard boiler efficiency is then compared with Designed Boiler Efficiency (OEM/PG
Test) and Operating Boiler Efficiency for base year and assessment year. If the boiler
efficiency is found to be lower than standard, correction factor in proportion to deviation
is incorporate for establishing Boiler efficiency. If the boiler efficiency is found to be
higher than standard, no correction factor is incorporate for establishing Boiler efficiency.
 Due to this complicacy – input data for Boiler design efficiency (OEM/PG test), fuel data -
GCV, % Hydrogen (H), %Ash (A) and %Moisture (M) are to be selected carefully so that
maximum benefits can be extracted in course of normalization.

Correction
Factor

Standard Boiler Efficiency

Deviation

Design Boiler Efficiency

Operating Boiler Efficiency

b) Heat Balance Diagram (HBD) curve for normalization of turbine heat rate
Turbine heat rate increases with decrease of turbine loading. Since turbine are not always
operated at full load due to factors like scheduling / Backing down / Technical Minima etc,
Turbine heat rate needs to be corrected according to the loading condition. It can be done
by developing HBD curve (MW Vs Heat rate) for each turbine in the form of Y = A (MW) 2 –
B (MW) + C from the manufacturers data.
As per the following example, the established HBD curve equation = 0.0171(MW)2 -
6.6159(MW) + 2684.8 with slop R² = 0.9974 and constant A =0.0171, B = - 6.6159 & C = 2684.8
For obtaining the maximum normalization benefits for turbine heat rate, Constant A, B, C
& R2 are to be established carefully and same is to be furnished in the PAT data sheet.

Turbine Heat Rate Vs Load

Heat Rate as per Equation
% Load Gross Load (MW) Heat Rate
= 0.0171(MW)2 - 6.6159(MW)x + 2684.8
% MW (kcal/kWh) (kcal/kwh)
30 63.6 2327.75 2333.2697
36 75 2292.6 2284.92
48 100 2196 2194.36
60 125 2116.65 2125.05
71 150 2074.05 2076.99
83 175 2057.4 2050.18
86 181 2052 2046.9076
95 200 2042.6 2044.62
 100 210 2044.44 2048.346

Heat Rate BHEL 210 MW

2350
Heat Rate (kcal/kWh)
2300

2250
Heat Rate kcal/kwh

2200

2150

2100
y = 0.0171x2 - 6.6159x + 2684.8
2050 R² = 0.9974

2000
0 50 100 150 200 250
MW

c) Normalization of % Auxiliary Power Consumption (APC).

Like turbine heat rate, % APC increases with the decrease of plant generation. Hence for
establishing % APC at lower PLF, APC curve (% APC Vs Average load in MW) is to be
developed as shown in the following fig.

MW % APC %APC as per formula = -(9/100000000)(MW)2 -0.003(MW)+13.93

1064.42 10.66 10.63

1118.58 10.34 10.46

1222.54 10.06 10.13

1352.12 9.73 9.71

1473.12 9.23 9.32

 % APC
10.8
10.6
10.4
y = -9E-08x2 - 0.003x + 13.93
10.2
R² = 0.986
10
% APC
9.8
9.6 Poly. (% APC)
9.4
9.2
9
0 200 400 600 800 1000 1200 1400 1600

For obtaining the maximum normalization benefits for % APC, Constant A, B, C & R2 are
to be established carefully and same is to be furnished in the PAT data sheet

2. Implementation of Action Plans recommended by Empanelled Accredited Energy Auditor

during Mandatory Energy Audit (MEA) at the end of PAT Cycle I.
3. Conducting internal energy audit of each units once in a year for assessing performance
of the plant with respect to PAT target.
4. Addition auxiliary power consumption in ESP, Ash Handling system etc to comply with
environmental norms needs to be incorporated in the PAT data sheet for obtaining
relaxation in % APC
5. Efforts may be taken up for convincing MoP / BEE to incorporate solar & wind power
generation with thermal generation for obtaining relaxation in target heat rate.
6. Making availability of required documents in support to scheduling, backing down,
Technical minima, characteristic curves (Heat rate vs MW, % APC Vs MW) etc for
normalization at the end of PAT cycle II.
7. Formation of PAT committee at unit level for handling the PAT cycle II
8. Participation in online trading of E-certs for converting energy efficiency incentives into
revenue.
9. Submission of required documents to BEE & SDA within the time line.

Conclusions
Since the thermal power plants consume major natural energy source- , covering these
industries under PAT mechanism are bound to have direct impact on fossil fuel depletion
rate, annual capacity addition and environmental pollution as a result of improvement in
the operating efficiency of plant. Hence, it is necessary for all thermal power plants to
accept the challenge of PAT scheme considering the wider interest of the nation.
 Power Trading in India
S.Gnanaprabhakaran
DGM/Commercial /NLC India Limited

Abstract:
The main objective of Power Trading is to ensure Cost Effective Quality Power to the ultimate
Consumers. The philosophy of Power tariff shifted from erstwhile cost plus approach to Competitive
Market driven price approach, thus rewarding for efficiencies and economies of scale. Quality Power
manifests appropriate Voltage and frequency level. The entire concept of Power trading dwells upon
these objectives. In India, towards this objective, the Power Market has taken the appropriate shape.
In pursuance of the mandate enshrined by the Indian Electricity Act 2003 and the National Electricity
Policy, the Central Electricity Regulatory Commission (CERC) has issued appropriate Regulations to
facilitate trading and introduction of competition in the Electricity Sector in the country. Open Access
in inter-state transmission was introduced in May 2004 which facilitated the development of the
bilateral market in the country. In order to further streamline the bilateral transactions and to facilitate
the implementation of Power Exchange in India, CERC issued the Open Access Regulations 2008.
These regulations provided for two categories of Short Term Open Access Transactions namely
bilateral and collective (discovered on a power exchange). This paper has been aimed to present a
comprehensive bird‟s eye view on the Power Market domain right from concept to the present
scenario. An attempt has been made to intertwine the threads of statutory provisions, regulatory
requirements and implementation thereof. This paper enumerated the extracts of the relevant acts
and Policies governing the rules of the Power Market. The essential features of the regulatory
requirements that need to be taken care of the in the implementation of the Power Market. The salient
features of Power Exchange implementation viz. Modus operandi of Power exchange functioning like
Bids receipt, discovery of Market Price and Market Volume, the timelines for compliance etc. has also
been brought out for appreciation and understanding. The crux of the aspects sequel to the available
transmission capability (ATC), occurrence of congestion and the congestion management techniques
have also been deliberated. The reiteration technique of determining Area Clearing Price and Area
Clearing Volume has also been highlighted in this paper. The paper sheds light on the ramifications
due to the transmission congestion and also the unconstrained volume, constrained Market cleared
Volume address this issue with utmost importance. The existing market growth potential for the
market and the way ahead for the market has been brought out to appreciate the issues in proper
perspective and also to move forward.
If the experience of world‟s major power markets and also present power trade scenario in India are
taken as cue, we may perceive that in the long run, presence of power market would change the
entire electricity sector scenario and place the power sector utilities towards a new growth trajectory.

***
 Power Trading in India
S.Gnanaprabhakaran
DGM/Commercial /NLC India Limited
1.0 Introduction:
The Electricity Act 2003 (EA) heralded radical power reform process in the country towards the
accomplishment of harbinger growth and development of Power market in India. The Electricity Act
2003 and National Electricity Policy enshrines requisite framework for the fructification of the process
and implementation thereof. Central Electricity Regulatory Commission (CERC) was entrusted with
an onerous responsibility of promoting competition, efficiency and economy in bulk power market,
improving the quality of supply and promoting investments. Power market affords transition from a
vertically integrated private or public monopoly market structure to one of competitive wholesale and
retail mechanism with marketplaces like power exchanges CERC set this process in motion through
Trading Licensee and Open Access regulations in 2004. Now, the short- term power market has
become an imminent and integral part of the electricity sector in the country. It has helped the
electricity providers to balance their portfolios on day ahead basis and adjust to fluctuating power
requirements. It has also enabled power producers and procurers to sell their surpluses.

Key words: power market, open access, trading, power exchange ,market clearing price, market
clearing volume, congestion, market splitting, area clearing price.

2.0 Power Trading – Why

2.1 Objective: The main objective of Power Trading is to ensure Cost Effective Quality Power to
the ultimate Consumers.
2.2 Cost Effective: The philosophy of Power tariff shifted from cost plus approach to Competitive
Market driven price approach, thus rewarding for efficiencies and economies of scale
2.3 Quality Power: Quality Power manifests appropriate Voltage and frequency level
3.0 Power Trading
3.1 Regulatory facilitations:
Open Access (OA): Open Access as stated in Electricity Act-03 means “the non discriminatory
provision for the use of transmission lines or distribution system or associated facilities with such lines
or system by any licensee or consumer or a person engaged in generation in accordance with the
regulations specified by the Appropriate Commission”.
Short-term open access on Inter-State Transmission is regulated under CERC (Open Access in
Interstate Transmission System) Regulations, 2008. For short term open access the transmission
corridor may be made under any of the categories: advance, first-come-first-served, day-ahead and
same day.
3.2 Agencies involved:
Following agencies are involved for coordinating, dispatching & scheduling of electricity.
• NLDC (National Load Despatch Centre): Supervises over the Regional Load Despatch Centres for
achieving maximum economy and efficiency in the operation of National Grid. NLDC looks after
Scheduling and dispatch of electricity over the inter-regional links in accordance with grid standards
specified by the authority and grid code specified by Central Commission in coordination with
Regional Load Despatch Centres. The NLDC act as a nodal agency in case of reservation of
transmission capacity for collective transactions.
• RLDC (Regional Load Despatch Centre): The country is divided into five regions and each region
has a Regional Load Despatch Centre (RLDC), which is the apex body, as per the Electricity Act 2003
(EA 2003), to ensure integrated operation of the power system in the concerned region. RLDC looks
after daily scheduling and operational planning and also facilities bilateral and inter-regional
exchanges. The RLDC of buying entity act as a Nodal agency for bilateral transactions for short term
open access.
• SLDC (State Load Despatch Centre): In line with the federal structure of governance in the
country, every state has a State Load Despatch Centre (SLDC), which is the apex body to ensure
integrated operation of the power system in the state. SLDC is responsible for optimum scheduling
and despatch of electricity within a State, in accordance with the contracts entered into with the
licensees or the generating companies operating in that State. The clearance for trading of power by
embedded entity is given by concerned SLDC.
3.3 Need for Power Trading
 The mandate of the Central Electricity Regulatory Commission (CERC) is to promote
competition, efficiency and economy in the power markets and improve the quality of supply,
which necessitates the development of a healthy short-term power market.
 A short- term power market can help electricity providers to meet unplanned and fluctuating
power requirements, and on the sellers' side, enable power producers as well as procurers to
sell their surplus power.
 In India, the short-term power market, which covers contracts of less than a year through
bilateral agreements and power exchanges are well developed,
 Access to information is one of the key elements to ensure efficient markets and faith of the
stakeholders in the system.
3.4 Power Trading – License requirements as per Electricity act 2003
 Electricity Act, 2003 recognized trading in electricity as distinct activity defining it as “Purchase
of electricity for resale”
 License is required for undertaking trading in electricity (sect. 12)
 CERC notified the Regulations on procedure for application and for grant of License , besides
on allowable trade margin
 Holders of Inter-State Trading Licensee need not take separate License for trading within any
state.
Following entities need not obtain license
 Deemed Licensees as per Section 14 of the Act : Appropriate Government if it undertakes
trading in Electricity (3rd Proviso)
 Damodar Valley Corporation (DVC) (4th Proviso)
 Government Companies formed pursuant to re-organisation (u/s 131) (5th Proviso)
 DISCOMs (do not require Licence to undertake trading in Electricity) (9th Proviso)
3.5 Entities Prohibited from trading
 Central Transmission Utility (CTU) - (Section 38(1) First Proviso)
 State Transmission Utility (STU) - (Section 39(1) First Proviso)
 National Load dispatch centre (Sect.26)
 Regional Load dispatch centre (Sect.27)
 State Load dispatch centre (Sect.31)
 Conversely Traders are prohibited from undertaking Transmission of Electricity (CERC
Regulations)
3.6 Power Trading - Bulk supply model
Basically two Models are adopted in this country for Power Trading:
3.6.1 Single Buyer Model ( a unitary organization like Trading Corporation of State Govt.
purchasing power from Generators and supply to DISCOMs).
3.6.2 Mutli Buyer Model (DISCOMs directly purchasing from the Generator)
3.7 Power Supply scenario –
Prior to the Electricity Act, 2003
3.7.1 Generating companies were required to supply power to the State Electricity Boards
(SEBs) only.
3.7.2 Competent Government‟s permission is required for sale to other persons.
After the Electricity Act 2003
 Generators are free to supply power : (Section 10(2))
 To any Licensee in accordance with the provisions of the Act
 To any consumer subject to Open Access Regulations.
 No License is required for such supply by Generators and even by captive plants (amendment
of June 2007).
3.8 Electricity Act –Power Trading definitions/concepts
Trading:
Section 2 (71) - “Trading” means Purchase of electricity for resale thereof and the expression "trade"
shall be construed accordingly;
Duties of Traders:
Section 52
(1) Without prejudice to the provisions contained in clause (c) of section 12, the Appropriate
Commission may, specify the technical requirement, capital adequacy requirement and credit
worthiness for being an electricity trader.
(2) Every electricity trader shall discharge such duties, in relation to supply and trading in electricity,
as may be specified by the Appropriate Commission.
Functions of Commission in respect of traders:
Section 79(1)(j)/Section 86(1)( j )
The Commission shall (j) fix the trading margin in the Inter-State/ intra-State trading of electricity,
if considered, necessary;
3.9 Role of CERC w.r.t Power Market domain:
 Scrutiny of Rules/bye-laws of Px (Power Exchange)
 Assignment of Transmission Capacity to Px
 Apportionment of Transmission charges and Transmission losses.
 Procedure for handling Transmission congestion
 Overview to prevent speculation, collusion and unfair gaming
 Adjudication of disputes between the Px and the Members
3.9.1 Power Market Regulations: CERC notified the Power Market Regulation on 20.01.2010
(as amended on 03.04.2014)
 Applicable to bi-lateral trading between:
- generating company including captive generating plant, distribution Licensee and the
electricity trader on one hand, and
- the electricity trader and the distribution Licensee on the other hand.
 Subject to review based on developments pursuant to open access regulations by State
Commission or introduction of power exchange market.
3.9.2 Trading margin regulation (Notified on 23-01-2006
 Trading margin : 4.0 paise/kWh exclusive of charges for scheduled energy, Transmission
charges and Transmission losses.
 Amended in 2010: 4.0 paise/kWh if less thanRs.3.00/kwh and if more 7.0 paise/kwh
 Trading margin in case of multiple trader to trader transactions shall not exceed the ceiling
trading margin specified under these regulations; Open access charges shall include
transmission charges, operating charges, point of injection/ drawl charges and the
application fee
3.9.3 Power Trading – Benefits/Advantages
(a) Voluntary participation (o) Standardized contracts
(b) A neutral platform (p) Fully automated
(c) Anonymous participation (q) Home grown interface with System
(d) Competitive bidding Operator
(e) Double sided auction (r) Risk management
(f) Hourly bidding (s) Investment Signals
(g) Social Welfare Maximization (t) Competition amongst Power Exchanges
(h) Uniform Pricing (u) Regulatory oversight
(i) Price discovery (v) Transparency and information
(j) Freedom and Choice dissemination
(k) Consumer‟s discount (w) Harnessing of Latent and Captive
(l) Generator‟s surplus Generation
(m) Congestion Management- Market (x) Access opportunities for bulk and
Splitting industrial consumers
(n) Implicit auction (y) Empowerment of stakeholders

4.0 Market Mechanism (Sec 3 of CERC Power Market Regulations):

4.1 Over the Counter Market
Over the Counter Market is the inter-State market where buyers and sellers directly transact or
transact through an Electricity Trader. The price and terms of the contract are determined through
negotiations as agreed between the parties or through competitive bidding process or through an
Electricity Trader. The risk in contracts executed in such markets is managed between the parties
themselves or by the Electricity Trader, as the case may be
4.2 Power Exchange Market is a market where buyers, sellers, Electricity Traders, Members of
Power Exchange transact on standardised contracts and where the Power Exchange or
Clearing Corporation is counterparty to such contracts. Scheduling is done by Regional Load
Despatch Centre or National Load Despatch Centre unless actual delivery is dispensed with. A
power exchange created within the regulatory framework is an institution that is responsible for
conducting auctions in a non-discriminatory fashion. This is to ensure that electric supply is at
 current market prices for different participants (power companies) who can trade energy
according to their requirements.
4.3 Other Exchange is a market where derivative contracts, contracts for electricity or its related
products are transacted on standardized contract specifications and where the Exchange or
Clearing Corporation is counterparty to such contracts
4.4 Trading – types
4.4.1 Delivery Based Short term Contracts in OTC Market
a) OTC Contracts directly between buyers and sellers
b) OTC Contracts through Electricity traders
i. Back to Back deals
ii. Deals with open position: The interstate transaction in which a Electricity Trader takes a
position in a power purchase or sale contract based on price and other factors in view and
adopts a strategy which he deems fit
iii. Contract to aggregate suppliers / buyers and sell to a one or more buyers / sellers
4.4.2 Financially settled electricity derivatives contracts transacted in OTC market
A contract which derives it‟s value from an underlying asset, whose price is fixed at the time of
transaction and the final financial settlement is based on the spot price of the underlying asset. These
can be derivative contracts, swap and other structural contracts
4.4.3 Delivery Based Contracts transacted on Exchange
a) Intra Day Contract / Contingency contract
b) Day Ahead Contract
c) Term Ahead Contracts
4.4.4 Financially settled electricity derivatives contracts transacted on Exchange
4.4.5 Any new Contracts linked with electricity generated from renewable sources ie RECs
transacted on Px.
4.4.6 Any new Contracts in areas related to capacity, power price indices and other areas
related to electricity
4.4.7 Capacity Contracts -These are contracts where the capacity of a generating station is
booked in advance and consideration is paid by the buyer with the right to require the
generator to despatch electricity as and when required by such buyer at any time during
the tenure of the contract. These can be transacted both on OTC markets and /or on
Exchanges.
4.4.8 Ancillary Services Contracts – These contracts are for ancillary services. Ancillary
Services in power system (or grid) operation are support services necessary to support the
power system (or grid) operation for maintaining power quality, reliability and security of the
grid, e.g. active power support for load following, reactive power support, black start,
4.5 Power Exchanges in India:
CERC issued guidelines for setting up PXs (Order dated 6th February 2007)
The commission seeks to encourage the power exchange to emerge as a market based institution for
providing price-discovery and price risk management to the generators, distribution licensees, traders,
consumers and other stakeholders. In 2008 two power exchanges in India, Indian Energy Exchange or
IEX (that is promoted by Financial Technologies) and Power Exchange India or PXIL (promoted jointly
by the National Stock Exchange and the National Commodity and Derivative Exchange) came into
being. The trading volumes of the above are 93% and 7% respectively of the total traded volume.
Promoters have freedom to develop, manage and operate the Power exchange according to the
approved rules and procedures.
Essential Features of Power Exchange
 Transparency in operation and decision – making: automated audit trail of time sequenced
 Reliable, effective and impartial management; Computerized trading and clearing system
 Efficient financial settlement and guarantee system &trade information dissemination system
 Scrutiny of rules and bye-laws of the PX; Assignment of transmission capacity to PX
 Apportionment of transmission charges & losses Procedure for handling congestion
 Procedures for preventing speculation, collusion and unfair gaming
 Adjudication of disputes between exchange and its members
 Promoters shall be conversant with &Grid code, Open access, ABT&UI, scheduling, Dispatch
and energy accounting procedure
4.6 Trading – Contracts
A) Day ahead market (DAM) Contracts:
 The transaction occurs on the day (T) and delivery of Power would be on the next day (T+1)
  Day-ahead market (DAM) is used for trading 15-minute block contract, one day prior to the
delivery of electricity.
 Both buyers and sellers electronically submit their anonymous bid during the bid call session.
 The market clearing price is determined on the basis of intersection point of demand and
supply curve. This Uniform price (MCP) are offered to both selected buyers and sellers.
 Price discovery in DAM market is true function of demand and supply only
 Scheduling by NLDC/RLDC
B) Term ahead marketing
 Term-ahead market (TAM) contracts cover the entire range of products which can be offered
for the duration up to two weeks.Further sub-categorization is done for region wise, intra-
day(Round the clock), day-ahead contingency (Trading window 15:00 hours to 23:00
Hrs), daily (for rolling 7 days ; delivery starting from 4 th day) and weekly contracts to
help participants manage their electricity portfolio for different duration
C) Delivery based contracts transacted on Exchange
 (a) Intraday contract /Contingency contract
 (b) Day Ahead contract
 (c) Term Ahead contract
 Any new contracts linked with electricity generated from renewable sources,
D) REC Marketing
Renewable Energy Certificates (REC), etc. transacted on Power Exchange.
E) Any new contract in areas related to capacity , power price indices, and other areas
related to electricity ;
4.7 Power Trading – Time line iconography

4.8 Market Clearing Price and Market clearing Volume:

Generating companies submit sell bids to supply a certain amount of electrical energy at a certain
price for the period under consideration. These bids are ranked in order of increasing price. Similarly,
the demand curve of the market can be established by asking consumers to submit buy bids
specifying quantity and price and ranking these offers in decreasing order of price. The intersection of
these “constructed” supply and demand curves represents the market equilibrium and hence Market
Clearing Price. All the sell bids submitted at a price lower than or equal to the market clearing price
are accepted and generators are instructed to produce the amount of energy corresponding to their
accepted bids. Similarly, all the buy bids submitted at a price greater than or equal to the market
clearing price are accepted and the consumers are informed of the amount of energy that they are
allowed to draw from the system.

Fig 1: Market Clearing Price

The bidding mechanism shall be double sided closed bid auction on a day ahead basis. The price
discovered for the unconstrained market shall be Uniform market clearing price and in case of
congestion in transmission corridor, market splitting mechanism shall be adopted
Market splitting is an implicit auction mechanism wherein transmission capacity and energy are
auction and traded simultaneously through energy markets, ensuring that transmission capacity is
allocated according to buy/sale bids
• Country is divided into 12 bid areas for the purpose of trading through Exchange
Sr. No. Bid Area Region States covered under Bid Area

1. N1 North Region Jammu and Kashmir, Himachal Pradesh, Chandigarh, Haryana

2. N2 North Region Uttar Pradesh , Uttaranchal, Rajasthan, Delhi

3. N3 North Region Punjab

4. E1 East Region West Bengal, Sikkim, Bihar, Jharkhand

5. E2 East Region Orissa

6. W1 West Region Madhaya Pradesh

7. W2 West Region Maharashtra, Gujarat, Daman and Diu, Dadar and Nagar Haveli, North
Goa

8. W3 West Region Chhattisgarh

9. S1 South Region Andhra Pradesh, Telangana, Karnataka, Pondicherry (Yanam), South Goa

10. S2 South Region Tamil Nadu, Kerala, Pondicherry (Puducherry), Pondicherry (Karaikal),
Pondicherry (Mahe)

11. A1 N. East Region Tripura, Meghalaya, Manipur, Mizoram, Nagaland

12. A2 N. East Region Assam, Arunachal Pradesh

• The criterion for defining these areas is the location of the physical constraints in the structure
of the transmission network, including national and/or control area borders.
• In case of congestion when the required flow exceeds transfer capability, Exchange
determines Area Clearing Price (ACP) specific to the bid area
• The price is reduced in the surplus bid area (sale > purchase) and increased in the deficit area
(purchase > sale).The following fig depicts differential Area clearing Price
(
Average Price Rs/kWh ) SR WR MCP
3.79 2.46 2.73
7 6.17
Average Price (Rs./kWh)

6 5.05 4.88
5 3.87
3.59 3.68 3.68 3.55
4 3.30
2.99 2.74 2.82 3.03 2.99 2.86
2.68 2.62 2.67 2.51
3 2.56
3.42 2.56 2.52 2.61
2.30
2 2.47 2.39
2.89
2.54 2.45 2.40
2.25 2.18 2.20 2.24 2.11
1
0

Fig 2 : Area Clearing Price Vs Market clearing Price

4.9 Unconstrained Market and Congestion management:

The volume of electricity transacted/sold through power exchanges is sometimes constrained due
to transmission congestion. It can be observed that there is an increasing trend in the
unconstrained cleared volume and actual volume transacted (excluding the year 2014-15). There
is an increasing trend in the volume of electricity that could not be cleared (i.e. the difference of
unconstrained cleared volume and actual volume transacted) as % to unconstrained cleared
volume from 2010-11 to 2012-13 and a declining trend from 2012-13 to 2014-15 as tabulated
below (Table 1) (Table 1)
Year Unconstrained Actual Cleared Volume of Volume of
Cleared Volume and electricity that electricity that could
Volume* (MU) hence scheduled could not be not be cleared as % to
(MU) cleared due to Unconstrained
congestion (MU) Cleared Volume
1 2 3 4 (2-3) 5 (4/2)
2009-10 8098.74 7087.10 1011.65 12%
2010-11 14263.45 13540.75 722.70 5%
2011-12 17084.28 14827.68 2256.61 13%
2012-13 27672.30 23024.41 4647.89 17%
2013-14 35621.04 30029.62 5591.42 16%
2014-15 31607.48 28464.33 3143.15 10%
4.10 Timeline for operation of Market : Sale Bids and Purchase bids by the appropriate entities
need to be submitted to the Exchange by 12:00 PM. Exchange would do the matching of bids and
determine Market clearing Price (MCP) and Market clearing volume (MCV) determined by 3:00
PM. In case of Congestion, reiteration would be done to determine ACP and ACV with final
confirmation at 5:00 PM. Final Schedule is done at 6:00 PM
Power Trading
4.11 Data of Market Volume and Price: The following table (Table 2) provides a snapshot on the
quantum of power traded and the price trajectory for the respective periods, evidencing increased
volume coupled with reduction in Price.
(Table 2)
Year Electricity Price of Size of Electricity Price of Size of Total Size
Transacted Electricity bilateral Transacted Electricity Power of the bilateral
through Transacted trader through Transacted Exchange trader + Power
traders through Market in Power through Market in Exchange
(BU) Traders Rs Crore Exchanges Power Rs.Crore Market
(Rs/kWh) (BU) Exchanges (Rs.Cr)
(Rs/kWh)
2009-10 26.72 5.26 14055 7.19 4.96 3563 17617
2010-11 27.70 4.79 13268 15.52 3.47 5389 18657
2011-12 35.84 4.18 14979 15.54 3.57 5553 20532
2012-13 36.12 4.33 15624 23.54 3.67 8648 24272
2013-14 35.11 4.29 15061 30.67 2.90 8891 23952
2014-15 34.56 4.28 14801 29.40 3.50 10288 25089

4.12 Bids Volumes (Purchase and Sell Bids) and Average Market clearing Price: The trend of
Bids submitted, cleared volume, and MCP for 2009-10 to 2015-16 depicted below
 7000 Purchase Bid (MW) Sell Bid (MW) Cleared Volume (MW) 6.00
MCP (Rs/kWh)
5.19
Fig 3: Year wise Bids, MCV, and MCP
6000
5.00
Average Hourly Volume (MW)

5000
3.56 3.54 3.48 3.51 4.00
4000
2.80 2.73 3.00
3000
2.00
2000

1000 1.00
1,334
1,302

1,919
2,371

2,842
2,539

4,456
3,956

4,737
5,741

4,942
4,689

4,907
6,434
1347

1571

2554

3302

3212

3878
704

0 0.00
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16
4.13 Balancing supply and Demand:

Fig: 4 – Final Scenario of Real Time after matching balancing and

demand -

4.14 Delivery Procedure:

The delivery mechanism of power traded through Market seller from Northern region to buyer in
western Region is explained below. Delivery point is respective regional periphery.

5.0 Premises of Current developments fostering Power Market to spur it’s growth:
 5.1 Power Surrender by States & surplus during Peak period: Power of the order of 5000 MW is
surrendered by large number of States ; Power of the order of 2000-4000 MW is shown as
surplus even during the peak period
5.2 Electricity Policy 2016: enables selling of Un Requisitioned Surplus Power (URS) opening a
new vista for sale of power and NTPC and NLCIL has already commenced trading
5.3 IEGC 4th Amendment : proposed reduction of Technical Minimum capacity, ushering Power
Trade Market to the next level in furtherance to this amendment
5.4 Competitive Market Price: The prices at Exchange is of the order of Rs. 1.5 – 4.0 per unit
5.5 Market size: About 9% of the total energy generated (96 BUs during March, 2016) is transacted
under short term mode, whereas in developed countries it is more than 90%.
5.6 Untapped Potential of Market: Empirical analysis suggests considerable buying and selling
potential exists in the country to be harnessed for further development of Market in India.
5.7 Electricity Act Amendment: envisaged for separation of carriage and content.
5.8 Gap between envisaged surrender and actual surrender: In so far as the envisaged
surrender is furnished ex ante and where as the actual surrender happens after so many other
considerations, the gap between them deter the market potential leaving it untapped.

Way Forward for widening and deepening the Power Market for mulling and appreciation:

6.0 New Avenues for the Market:

6.1 Evening market: In view of the time gap between bids submission to exchange by 13: 00 hrs
and the ultimate rescheduling takes place during 22:00 – 23:00 hrs, the possibility of having an
evening market may be explored.
6.2 Capacity Market: The bids correspond to estimates of the level of resource commitment that
will be needed to meet future peak demand on the system. This particular approach to planning
and procurement in the power sector became generally referred to as a “forward capacity
market.”Capacity markets provide a mechanism for optimal development of power system by
allowing the markets to choose the least cost mix of generation, transmission and energy
efficiency resources
6.3 Forward Market: enables power trading specifying the quantity and quality of the power, that
need to be delivered on date of delivery stipulating date of payment following delivery
6.4 Futures Market: Only difference from Forward contracts is that future contracts are not backed
by physical delivery and are usually traded at Exchanges.
6.5 Contracts for Difference (CfD): A CfD is a forward contract that was introduced to hedge even
when the markets are split into one or more price areas(difference between the area price and
Pool spot system price)
6.6 Financial Transmission Rights (FTRs): FTRs offer instruments for converting historical
entitlements to firm transmission capacity into tradable contracts that keep the owners just as
well-off as economically while enabling them to cash out when others can make more efficient
use of the transmission capacity covered by these contracts.
6.7 Hedging Market: The PXs can be an effective platform for providing hedging options to the
players in the market. The existing products are all physical delivery linked products. Going
forward, as the market expands and gains more depth, players would also require hedging
instruments to square off their positions.
6.8 Timing of Gate Closure: Gate closure for Intra Day Markets at Exchange to be reduced to
allow more flexibility
6.9 Market Splitting Mechanism with Implicit Auction Vs Explicit Auction: The market splitting
mechanism avoids e-bidding and makes it possible to integrate auctioning of transmission
capacities within the bidding mechanism of the exchange hence acting as a powerful platform
for integrating energy and transmission markets. Implicit auction of transmission capacity
through market splitting reduces the procedural complexities related to managing price bids and
transmission capacities concurrently. As discussed above, implicit auction is definitely better
than explicit auction, however in the context of Indian Power Market design, small quantum is
transacted through implicit auction (about 3% of total generation and around 29% of short term
market) and rest 97% of generation, is either on long term, first cum- first serve or on explicit
auction basis. The large volume which is not participating in the implicit auction is in fact
affecting price discovery under the implicit auction methodology. Therefore there is a need to
take a holistic view of the situation and to bring equity between two sets of transactions.
6.10 International Power Market: Foraying into International Power Market due to the recent
developments of power scenario and agreements between Nepal, Bhutan and Bangladesh.
Acknowledgement: The author gratefully acknowledges the published documents of CEA, CERC, IEX
POSOCO, NLDC/RLDC, SRPC and other entities for the valuable inputs.
 Development Power Exchanges in the Country
S.Gnanaprabhakaran
DGM/Commercial /NLC India Limited
Abstract:
Electricity sector reforms have enabled a transition from a vertically integrated private or public
monopoly market structure to one of competitive wholesale and retail mechanism with Market places
like power exchanges. The fugacious and continual demand-supply mismatch at geographical level
and the instantaneous and perishable nature of electricity call for a marketplace where surpluses can
be disposed off efficiently on a real-time basis to optimise resource allocation on short-term basis. It is
expected that the role of Power Exchanges would transform with time. Initially the main purpose of
exchanges was to act as price signal for investments, but over time it played the twin role of providing
price signal and act as risk transfer platform. Power exchange provides an organised marketplace
which offers standardised products to the market.
This paper is aimed to present an insight to focus into the development of Power Exchanges in the
Country, chronologically right from pre Electricity Act 2003 era, mooting point for reforms to the
current scenario, to the point where Power exchange has become an indomitable player in the Power
sector. Pursuant to the mandate of the Indian Electricity Act 2003 and the National Electricity Policy,
the Central Electricity Regulatory Commission (CERC) has issued appropriate Regulations namely
Open Access and Indian Electricity Grid Code to facilitate trading and fostering competition in the
Electricity Sector in the country. In furtherance to the introduction of Open Access in inter-state
transmission in May 2004, the development of the bilateral market was mooted in the country.
Pursuant to the issuance of Open Access Regulations 2008 by CERC, the bilateral transaction was
further streamlined and also the implementation of Power Exchange in India was kick-started. CERC
regulations provided for two categories of Short Term Open Access Transactions namely bilateral and
collective (discovered on a power exchange). Electricity reforms brought about during the last few
years in various power markets around the world have revolutionized the way in which the markets
have typically viewed electricity. This paper manifests salient features of Power Exchange
implementation in India. The fact that the Indian power grid networks are well knitted and congestion
takes place due to load generation imbalance, the consequential effects thereof have been
deliberated. This paper touches upon the Congestion management issues with potential strategies for
mitigation techniques. Contrary to the single exchange concept in most of the countries, the adoption
of Multiple Exchange scenario in the country for the ultimate benefit of the consumers and also to
have a healthy competition among the power exchanges, have also been discussed in this paper.
The challenges posed to Power Market and the way ahead to put in place a robust exchange
mechanism and development thereto to accomplish cost effective reliable power have also been in
discussed this paper for proper appreciation.
***
 Development of Power Exchanges in the Country
S.Gnanaprabhakaran
DGM/Commercial /NLC India Limited
7.0 Preamble - Need for Power Exchange- raison d'etre:
The term Power Exchange, the moment it is seen instantaneously triggers a concern in our mind, on
the necessity and requirement of Power Exchange in India. While the country is said to be reeling
under power shortage, due to one context or other, by virtue of inadequacies in the power system, the
Power Exchange philosophy would definitely haunt our thought process. The Power sector encounters
various issues/factors viz. demand supply gap, transmission corridor requirement, stranded/stressed
power plants, fuel linkage issues etc and the country is moving forward towards surmounting all these
stumbling blocks. Power Exchange is an amazing concept with the objective of cheapest reliable
quality power to the ultimate consumers. This could be achieved only if a robust mechanism is put
in place so as to assure power for all on 24 X 7 basis. While the Cost plus Power tariff would
contribute for inefficacies, market driven power price would afford a competitive price to the ultimate
consumers. This concept is vindicated by the experience gained in the developed countries, fructifying
into meaningful benefits to all the stakeholders of Power sector. The development of Power
Exchanges in the country is aimed at this direction with a focussed approach to accomplish this
objective.
Keywords: power exchange, open access, trading, market clearing price, market clearing volume,
transmission corridor, congestion, market splitting, area clearing price.

8.0 Genesis:
8.1 Pre Electricity Act 2003 Era:
During the period prior to sixties, power sector concentrated to address the power needs of urban and
irrigation. In sixties rapid industrial growth took place urging a need for development of power sector in
terms of generating unit sizes ( from 200 MW to 500 MW) and transmission voltage (220 KV to
440KV).
The Indian Electricity Act 1910:The Pre-Independent, “Indian Electricity Act, 1910” created the basic
framework for electric supply industry in India which was then in its infancy. It provided for licensees
who could supply electricity in specified areas and created the legal framework for laying down of
wires and other works relating to supply of electricity. This act had to be revamped as this act was
intended only for generation and distribution activities at the state level
The Electricity Supply Act – 1948 – The post-independent Electricity (Supply) Act was enacted in
1948 to attain systematic and significant growth of power supply industry all over the country and
mandated creation of State Electricity Boards in various parts of the country. The Act also provided for
creation of Central Generation Companies for setting up and operating generating facilities in the
Central Sector. Gradually the performance of SEBs deteriorated and cross subsidies reached
unsustainable levels.
The Electricity Regulatory Commission Act -1998: During the year 1998, dawned the concept of
Regulatory mechanism. Interference of State Governments with the State Electricity Boards in tariff
fixation led to heavy cross subsidies. To address this issue and to provide for distancing the
government from tariff determination, the Electricity Regulatory Commissions Act was enacted in 1998
for setting up of Independent Regulatory bodies both at the Central level and at the State level namely
Central Electricity Regulatory Commission (CERC) and State Electricity Regulatory Commission
(SERC) respectively. However, the ERC Act-1998 was not able to take the reforms forward mainly
because of inadequate powers for the Regulators and also as it was optional and left to the discretion
of the state governments to set up the SERCs.
The Electricity Act - 2003 (EA-2003)- This Act came into effect from 10-06-2003,repealing the
erstwhile Indian Electricity Act 1910, the Electricity (Supply) Act 1948 and the Electricity Regulatory
Commission Act 1998. This is a powerful Act to consolidate the laws relating to generation,
transmission, distribution, trading and use of electricity, for taking measures for promoting competition,
protecting interest of consumers and supply of electricity to all areas, rationalization of electricity tariff,
establishment of Appellate Tribunal etc.,
 8.2 Crux of Electricity Act on Competitive Environment for Power:
The EA 2003 had enumerated the imminent proposition of competition and development of Power
Exchange, in as much as the regime of Cost plus regulation could in no way accomplish towards the
reduction of price of Electricity, what the Competition could, while ensuring good quality of power. The
Electricity Act, 2003 recognises trading as a separate licensed activity. The Act envisages that the
Commission shall notify the procedure for grant of licence and also specify the technical requirement,
capital adequacy requirement and credit worthiness for being an electricity trader.
8.3 Central Electricity Regulatory Commission (CERC) – Principal Regulator:
Section 66 of the Electricity Act 2003 envisages that the Appropriate Commission shall endeavour
to promote the development of market (including trading) in power in such a manner as may be
specified and shall be guided by the National Electricity policy.
National Electricity Policy (5.7.1) specified promotion of market development with a view that
significant portion of the installed capacity of new generating stations could participate in Competitive
market. In order to achieve this objective, the Policy enshrined the following functions on the
Commission.
a) To issue license for inter state trading including authorization for trading throughout the
country; ABT regime enabling credible settlement mechanism for intra day power transfers
from licensees with surplus power to licensees with deficits.
b) Captive generators to be permitted to sell electricity to licensees and consumers when they
are allowed open access; Development of power market
c) Central and state Commission to make regulations and notify to ensure implementation of
various provisions of the Act regarding the encouragement of the competition and also
consumer protection
d) Enabling regulations for inter and intra state trading and also regulations on power exchange
Open Access: Pursuant to the Mandate of Electricity Act, the Commission (CERC) had issued a
concept paper in August, 2003. Open Access in transmission is vital for creating competition in the
power supply industry. The consumers are able to seek open access as and when they are permitted
by the State Commissions. On December 9, 2003, the Commission issued the Draft Regulations for
electricity trading. The trading regulations notified on 30th January 2004. The CERC is required to
issue the licence for inter-state trading
ABT (Availability Based Tariff) & Grid code: The Central Electricity Regulatory Commission (CERC)
has issued Indian Electricity Grid Code (IEGC) on 28.04.2010 superseding earlier regulations with it‟s
recent fourth amendment issued on 06.04.16. The settlement system (Availability Based Tariff or ABT)
was introduced in phases through 2002-2003. The ABT mechanism allows deviation from the
schedule, which is called the Unscheduled Interchange or UI and now DSM. With the introduction of a
vibrant Electricity Market in the Country, need for focus on the Congestion Management was
addressed by the CERC through specific Regulations on the subject. CERC issued the Guidelines for
Establishment of Power Exchange in February 2007 and in principle approval was granted to the first
Power Exchange in August 2007. Subsequently Power Market Regulations was issued on 20.01.2010
with amendment on 03.04.2014
CERC Open Access Regulations, 2008 made the following provisions:
a) Transactions were categorized as Bilateral and Collective (through Power Exchange)
b) Nodal Agency for the two types of transactions was identified. National Load Despatch Center
(NLDC) was designated as the nodal agency for Collective Transactions. The Regional Load
Despatch Centers (RLDCs) were the designated agencies for the bilateral transactions.
c) Transmission losses were applied at both the points of injection and drawal. The sellers are
required to inject more and the buyers draw less than traded quantum to compensate for losses.
d) Regulations placed great emphasis on the empowerment of the SLDCs. NOC/Standing Clearance
was required to be obtained by State Utilities/Intra-State Entities from the SLDC. All Buyers within a
State are clubbed together into one group and all Sellers within a State are clubbed together into
another group by the Power Exchange(s). Each group of buyers and sellers is counted as a separate
entity for Scheduling and levy of Operating Charges.
The CERC Guidelines for Setting up of Power Exchange, however, clearly provided for a de-
mutualised form of Power Exchange implementation where ownership, management and participants
were clearly demarcated.
8.4 Indian Power System – it’s uniqueness:
Pan India Implementation: The Indian Power System has a hierarchical structure with State
Grids, Regional Grid and the National Grid. The State Grids are interconnected to form the
Regional Grid and the Regional Grids are interconnected to form the National Grid. In India, a
hierarchical model with National, Regional and State Load Despatch Centers (NLDC, RLDC and
SLDC respectively) is mandated for System. The Power Exchange implementation is pan India,
treating the entire country‟s network as a single system.
Bid Areas: The country is demarcated into five Regional Grids namely the Northern, western,
Southern, Eastern and North-Eastern Grids. Each regional grid comprises several states having
geopolitical demarcation as its constituent members acting as control areas.

Fig 1 : Bid Areas

Assessment of Transfer Capability by NLDC/RLDCs: In order to facilitate the Electricity

Market, the assessment of Total Transfer Capability(TTC) and Available Transfer
Capability(ATC) is carried by the NLDC/RLDC with due consideration to the network constraints
of each region. The TTC/ATC is made available transparently to the entire stakeholders.
Coupled by design, Split by Exception:
Structurally, the Indian Power System shares some similar characteristics, other than line
lengths, with the Power System in Continental Europe. Firstly, the Indian Power System has a
highly meshed network. Secondly, the transfer capability between areas is strongly
interdependent and transfer capabilities cannot be considered in isolation between any two
areas. In the Power Exchanges, the price discovered is a single price for the entire country. The
market is split only in the case of congestion, when different prices are discovered. Thus, the
Indian design is unique in the sense that the market is coupled by default and split only by
exception, thereby causing an overall economy and efficiency at the National level.
National, Regional and State Markets: The design and definition of bid areas is such that it
offers the flexibility of creating a single National market, Regional Market or State Markets. In
case of congestion, between one Region and the rest of the Country, the market is split and local
buy/sell is possible both upstream and downstream.
Flexible Design for International Participation in Power Exchanges: India has international
interconnections with Nepal and Bhutan. Further, interconnection with Bangladesh is under
implementation. With these interconnections, international participation from these countries can
be quickly implemented by creation of new bid areas in the Power Exchange. This is made
possible by the flexible design adopted in the Power Exchange.
8.5 Market Imperatives- Four Pillars of Market mechanism:
 Scheduling & Despatch: System Operator needs to be in charge for expedition
 Congestion Management: Possible overloading may haunt the grid
 Ancillary Services: Network interactions; Plants need to produce several outputs and stand
as Reserve
 Imbalances: Owing to the fact that Contract amounts will not match usage or output

9.0 Power Exchanges in the Country

9.1 Power Exchanges - Why:
 Neutral, Transparent, Electronic Trading platform providing competitive power purchase
options
 Under CERC‟s Regulatory oversight
 Counterparty in the trade and absolves the participants of any risk of payment defaults.
 Standard Contracts
 Benefits for Discoms
a. Competitive option for purchase of power
 b. Lower prices
c. Fine true-up of demand – 15-minute wise
d. High liquidity on exchange ensuring assured supply
 Worldwide, Power Exchanges are established platform to trade power
9.2 Power Exchanges- Benefits/advantages:
The salient features of Power Exchange in India and the advantages offered are as below.
Voluntary Participation: In India, the participation in any of the markets – bilateral or the Power
Exchanges is purely voluntary, unlike many countries in the world that have mandated compulsory
participation through Power Exchanges. It is the decision of the market participant to choose the
market place for buying or selling electricity.
A Neutral Platform: Power Exchange is a neutral platform, a market place, which provides the
necessary electronic trading platform and associated infrastructure to facilitate buying and selling of
electricity by the participants. Power Exchange in no way influences the price determination process,
which is dependent on the offers and bids placed by the market participants i.e., the sellers and
buyers.
Anonymity: Trading through the Power Exchanges is a non-cooperative game. Both the sellers and
the buyers place bids on the electronic platform independent of each other. No negotiation is involved
in the process and the identity of the player (buyer or seller) is not known to the other participants.
Competitive Bidding: Power Exchange is a competitive bidding platform. The buyers compete with
each other to get the commodity at the best possible price and the one who values electricity the most
gets it. Likewise, the sellers compete with each other to offer the commodity at the lowest possible
price.
Freedom and Choice: The participants in the electricity get all possible avenues for exercising their
freedom and choice in terms of the products, the market place and time frame. Multiple products are
available both in the Over the Counter (OTC) Bilateral market segment and the Power Exchange
segment. In term of the time frame, bilateral offers products ranging from monthly advance to day-
ahead and contingency. Though Power Exchange is primarily a day-ahead market, it also offers term-
ahead products.
Double Sided Auction: Power Exchange as a market place facilitates, without exercising any
influence, an auction mechanism where both the buyers and the sellers place bids and offers
simultaneously during the bidding session. This gives rise to the aggregated supply – demand curves
for price matching giving rise to price discovery.
Price Discovery: The bids and offers are aggregated and the intersection of the aggregated supply–
demand curves gives the Market Clearing Volume (MCV) and the Market Clearing Price (MCP).
Social Welfare Maximization: The price discovery mechanism in the Power Exchange is based on
the principle of Social Welfare Maximization. According to this principle, the algorithm of price
discovery ensures that the welfare of all the market participants is maximized simultaneously. In other
words, neither the buyer nor the seller receives any preferential treatment over the other, even
Inadvertently.
Consumer’s Discount: The price discovered on the Power Exchange ensures that the accepted buy
bids are those that are more than or equal to the MCP. In other words, the consumer buys electricity
at a price which is guaranteed to be lower than or at most equal to the price bid the consumer (buyer)
had placed on the Power Exchange. This ensures a saving or a discount for the consumer over and
above what he was willing to pay.
Generator Surplus: From the seller‟s perspective, the price a seller gets is guaranteed to be more
than or at best equal to the offer the generator (seller) has placed on the Power Exchange. This
ensures a surplus for the seller over and above the expected return.
Uniform Pricing: The Power Exchange declares a single price i.e., the Market Clearing Price (MCP)
or Area Clearing Price (ACP) in a market. The principle of uniform pricing adopted in the Power
Exchange ensures that the offers are placed on the marginal cost principle.
Declaration of Transfer Capability: Delivery of the trades discovered on the Power Exchanges is
facilitated by the System Operator utilizing the spare margins available on the transmission system.
These margins, also known as the Total Transfer Capability and Available Transfer Capability, are
declared and made public upfront transparently on the websites of the System Operator well ahead in
time for the market participants.
Transmission Congestion – Market Splitting:
In case of congestion in transmission corridor, the market is split in the Power Exchange into different
price areas split across the congested corridor. The prices in the deficit area (which is a net buyer
area) are increased to reduce demand and increase supply. On the other side of the congested
corridor, the prices in the surplus area (which is a net seller area) are reduced to decrease supply and
increase demand. This is continued till the flow on the constrained corridor is restricted to the
quantum permitted. In this process a price differential is created between the two areas and the
inclusion/exclusion of bids and offers is done purely on a merit basis without any bias. It is important
to mention here that market splitting may not necessarily result in a reduction in the total volumes
traded.
Implicit Auction: Electricity is a bundled product. During congestion, while bidding for „energy‟ on the
Power Exchange, separate bidding for the transmission corridor is not required to be done by the
participants. It is thus an implicit auction mechanism factoring both the carriage and content in a
single auction.
Diversion of Traffic: In case of market splitting, because of the price movements, new bids and
offers get accepted in the other bid areas. The selection of new bids and offers is deliberately effected
due to the price movements and this causes a diversion of the power flows to other uncongested
areas.
Standardized Contracts: The contracts traded on the Power Exchange are standardized contracts,
terms and conditions of which are well known upfront to all the market players, thus reducing the
transaction costs.
Completely Automated: The Power Exchange trading platform is a fully automated electronic
platform. Each Member/Client is allotted a secure access to the trading platform where he can place
the bids, know the trading results, settle payments and gain insight into other trade related
information.
Home Grown System Operator Interface: The System Operator facilitates the delivery of the trades
finalized on the Power Exchange. The Power Exchanges are required to act in close coordination with
the System Operator and exchange data frequently. The interface between the System Operators and
the Power Exchanges is fully automated and has been designed using in-house expertise.
Instant Payments: Payment is an important area of concern for all market participants. The Power
Exchanges follow a strict regime for payments wherein, payments by or to the participants are
ensured on a pre-determined time frame. The buy bids would be accepted only after verifying the
availability of funds and sellers receive their payments on „T+2‟, where „T‟ is the day of trade.
Risk Management: An important function discharged by the Power Exchanges is that of Risk
Management. All Members of the Power Exchanges are required to maintain adequate collateral
margins, in proportion of the trades being carried out, with the Power Exchanges to cover any
payment defaults. Settlement Guarantee fund (SGF) is also in place to meet exigencies.
Competition amongst Power Exchanges: India is a unique country in the World which has opted for
multiple Power Exchanges in a singly physical delivery market. Worldwide, there is only one Power
Exchange in a single physical delivery market. The implementation of multiple Power Exchanges in
India has ensured competition amongst the Power Exchanges, ensuring better quality of service to
the market participants and the end users.
Regulatory Oversight: In India, Power Exchange is a private sector initiative under the Regulatory
oversight of CERC. The Regulator has adopted an approach of light handed regulation while
providing an enabling framework for the development of Power Exchange. The objective was to
provide operational freedom to the Power Exchange within a given framework and Regulation would
be minimal and restricted to requirements essential for preventing derailment of the process. Private
entrepreneurship was allowed to play its role so as to facilitate provision of value added and quality
service to the customers.
Transparency & Information Dissemination:
The Power Exchanges make available all market related information such as prices and volumes
(current and past) on their websites, transparently for all users.
Harnessing Captives & Small Players: The Power Exchange platform has brought about a
transformation in the Electricity Market in India. It has turned the vision of harnessing the captive
generation and bringing in small participants into a reality.
Empowering Stakeholders: Power Exchanges have provided a competitive, fair, neutral and
transparent market. It has facilitated non discriminatory access to a pan-India electricity market
thereby empowering the stakeholders besides bringing in the much needed economy and efficiency.
9.3 Power Exchange – International models
Various market models have been adopted by different electricity markets. Australia (NEMMCO)
has a mandatory power market whereas countries like New Zealand (NZEM), Nordpool, BETTA
(UK), PJM (USA), and IEX (India) are examples of voluntary marketplaces. Power exchange models
differ mainly in the following aspects:
Timing sequence: It is defined in terms of scheduling and time units.
Scheduling: Nordpool offers day-ahead scheduling and ex-ante price settlement with a separate
market for real-time balancing whereas NEMMCO (Australia) offers real-time trade and ex-post
settlement.
Timing: Marketplaces like Nordpool, PJM (USA), PowerNext (France), OMEL (Spain), EEX
(Germany) operate on hourly contracts. NEMMCO (Australia) offers half-hourly contracts whose
prices are determined by a time-weighted average of six 5 minute intervals for clearing the market.
Pricing rules: Marketplaces like PJM, NZEM (New Zealand) use nodal pricing approach in
which the price at each individual node is calculated separately whereas NEMMCO,
Nordpool use zonal pricing approach where a set price is used for every zone without inner
congestion.
9.4 Indian Power Exchanges
9.4.1 Indian Energy Exchange (IEX), the country‟s first Power Exchange, obtained an in-principle
approval on 31st August 2007 by CERC. IEX commenced operations from the 27th June 2008
after the Rules and Bye Laws were approved by CERC and permission was granted to
commence operations.
9.4.2 The second Power Exchange, Power Exchange of India (PXIL), was granted in-principle
approval on 27th May 2008. PXIL went through a process of Regulatory approval similar to
that of it‟s predecessor and it commenced operations on 22nd October 2008.
9.4.3 The Regulators have provided for multiple Power Exchanges to exist simultaneously in one
physical market. The charges collected by the Power Exchanges for the services rendered are
automatically regulated by the market forces
9.4.4 Power Exchange in India is a private enterprise under the jurisdiction of the Central
Regulator. Being a private enterprise, entrepreneurship was allowed to play its role so as to
facilitate provision of value added and quality service to the customers. The Business Rules,
Rules and Bye Laws are formulated by the Power Exchanges and duly approved by the
CERC.
9.4.5 The year 2010-11 witnessed collective open access transactions, a significant development
in procurement of power by the industrial consumers through power exchanges. It can be
observed that 3269 Open Access (OA) Consumers who were mostly located in Tamil Nadu,
Andhra Pradesh, Gujarat, Punjab, Haryana and Rajasthan. During the year, these OA
consumers procured a total of 12084MU of electricity through IEX. In 2014-15, the weighted
average price of electricity bought by OA consumers at IEX was lower (Rs 3.05/kWh) when
compared to the weighted average price of total electricity transacted through IEX (
Rs.3.49/kWh). About 517 OA consumers procured who were mostly located in Tamil Nadu,
Gujarat and Punjab. During the year, these OA consumers procured a total of about 103MU of
electricity through PXIL. In 2014-15, the weighted average price of electricity bought by open
access consumers at PXIL was lower (Rs.2.88/kWh) when compared to the weighted average
price of total electricity transacted through PXIL (Rs.3.09/kWh).

10.0 Modus Operandi:

10.1 Power Market Transactions:
The volume of short term transactions Vs the total generation are tabulated in Table -1
Table 1
Total Volume of Total Electricity Total volume of Short-term
Year Short-term Generation (BU) Transactions of Electricity as
Transactions of % of Total Electricity
Electricity (BU) Generation
2009-10 65.90 764.03 9%
2010-11 81.56 809.45 10%
2011-12 94.51 874.17
11%
2012-13 98.94 907.49
11%
2013-14 104.64 962.90
11%
2014-15 98.99 1045.09
9%
10.2 Bilateral Transactions
Bilateral Trading- Involves only two parties: a buyer and a seller. Price of each transaction is set
independently by the parties involved. There is thus no “official” price. The Open Access Regulations
provide for a variety of products in the bilateral transactions category which have a pre-defined time
line. These are advance, first-come-first-serve, day-ahead and contingency
10.3 Collective Transactions:
Collective transactions on a Power Exchange through anonymous bids on a neutral platform would
result in a transparent price discovery and are processed before the processing of day-ahead and
contingency category bilateral transactions. The total available margins for short term open access
are assessed by the RLDCs in advance through simulation studies and made available transparently
to the stakeholders through their respective websites.
10.4 Exchange of Information between stakeholders:
The exchange of information is fully automated between NLDC and Power Exchanges, NLDC and the
Regional Load Despatch Centres (RLDCs). The bidding window for submission of the bids in the
Power Exchange(s) is from 1000 Hrs to 1200 Hrs. Information is exchanged between NLDC, Power
Exchange(s) and the RLDCs as per a protocol defined in the Procedure for Scheduling of Collective
Transactions. A provisional solution is given by the Power Exchanges to the NLDC at 1300 Hrs for
checking for congestion if any. In case of congestion, NLDC advises the Power Exchanges about the
limits of scheduling. The Power Exchange(s) submit the Application for Scheduling of Collective
Transactions by 1500 Hrs and the approval for scheduling is communicated by NLDC by 1730 Hrs. as
explained in Fig 2
Figure 2

10.5 Market Clearing Price

The initial period of exchange was marked by infrequent trading activity with high degree of price
volatility. However, over a period of time with increased number of players and higher volumes being
traded, the price volatility has reduced It can be observed that prices respond to various events. over
a period of time there has been a smoothening of price on the exchange. This can be attributed to
factors such as, greater participation, and relative increase in the supply compared to the past. The
Market Clearing Price is the intersection point of Bid curve and supply curve as depicted in Fig 2
Fig 3 – Discovery of Market Clearing Price

10.6 TRANSMISSION CONGESTION MANAGEMENT METHODS:

When there is transmission congestion due to available transfer capability, the same needs to be
managed with Congestion Management tools. Some of the commonly used methods for congestion
management are:
 Explicit Auction:
 Implicit Auction:
 Market Splitting:
 Counter Trade:
 Re-dispatching:
In the Indian scenario, both the Power Exchanges use market splitting for congestion management.
CONGESTION MANAGEMENT IN MULTI-EXCHANGE SCENARIO:
Multiple Exchanges are operating in the same physical delivery market in India. Different Power
Exchanges arrive at solutions based on their own philosophy and algorithms. Scheduling of the trades
is possible in case there is no congestion. In the event of congestion, allocation of variable transfer
margins between multiple Exchanges
10.7 Competition amongst Exchanges:
The Regulators have provided for multiple Power Exchanges to exist simultaneously in one physical
market. Light handed regulation has been adopted and the Power Exchange(s) have been given full
functional autonomy. This allows for competition amongst the existing Power Exchanges and an
automatic system of checks and balances. The market participants stand to benefit from the Process
of Exchanges vying with each other for providing superior quality of service. Moreover, the charges
collected by the Power Exchanges for the services rendered are automatically regulated by the
market forces. Trade volume indicated in Table 2
Table - 2
Year Electricity Electricity Electricity Electricity Total
Transacted Transacted Transacted Transacted (BUs)
through through IEX through PXIL through
traders (BUs) (BUs) IEX and
(BUs) Day Term Day Term PXIL
Ahead Ahead Ahead Ahead (BUs)
Market Market Market Market
2009-10 26.72 6.17 0.095 0.92 0.003 7.19 33.91
2010-11 27.70 11.80 0.91 1.74 1.07 15.52 43.22
2011-12 35.84 13.79 0.62 1.03 0.11 15.54 51.38
2012-13 36.12 22.35 0.48 0.68 0.04 23.54 59.66
2013-14 35.11 28.92 0.34 1.11 0.30 30.67 65.78
2014-15 34.56 28.12 0.22 0.34 0.72 29.40 63.96

10.8 Price of Electricity traded through traders and Exchanges: The price per unit through the
traders was Rs.4.79 in 2011-12 and Rs.4.28 in 2014-15, while it was Rs.3.47 in 2011-12 and
Rs.3.50 in 2014-15, when it was traded through the Power exchange. This has evidenced an
edge for the Power exchange clients.

11.0 Challenges before Power Exchange:

11.1 Growing Volumes in Indian Electricity Market:
The overall size of the short term Indian Electricity Market, as a percentage of the All India
Energy Generated has increased over the years and the maximum in a month so far is nearly
13% as per the reports of the Market Monitoring Cell of CERC.
11.2 Factual position during 12 Plan
th
– 12 Plan Forecast v/s Actual – Load : Peak Load to grow 68 GW (from 130 GW to
198 GW).
– Actual growth 33 GW (165 GW by 3/2017).Variation (-)49%
 th
• 12 Plan Forecast v/s Actual – Generation :
– Gen addition target 88 GW, Actual likely 105 GW; Slipped 19 GW and New 35 GW.
So, net variation 54 GW (60%)
th
• 12 Plan Forecast v/s Actual – Transmission :
– Transmission addition target 107 Tckm(Lines) & 270 GVA (SubStation Capacity).
– Expected is 97 Tckm & 264 GVA Variation -9%, and -2%, respectively
11.3 Transmission Infrastructure:
The transmission system is marked by high congestion corridors and hence the power flows are
constrained. Congestion is defined as a situation where the demand for transmission capacity
exceeds the Available Transfer Capability. The present scenario is tabulated in Table 3
INTER-REGIONAL TRANS. LINKS & CAPACITY (MW) as on 31.03.2016

Present (as Expected by Additional Expected

Inter-Regional corridors
on 29-10-15) 2017 planned by 2021-22
East - North 15830 17930 1600 19530
West - North 12920 16920 3000 19920
North East - North 1500 6000 - 6000
East - West 12790 12790 - 12790
East - North East 2860 2860 - 2860
East - South 3630 7830 - 7830
West - South 7920 7920 14400 22320
Total 57,450 72,250 19,000 91,250

12.0 Road Map for further development of Power Exchanges:

12.1 Priority for Transmission Infrastructure development: Top priority needs to be assigned to
enhance the Available Transfer Capability (ATC) with a view to nullify the quantum difference
between the Unconstrained Market volume and constrained Market Volume.
12.2 Regulations for URS sale: Despite Tariff Policy 2016 provides for URS sale, in the absence of
appropriate regulations, issues w.r.t consent from the beneficiaries, NOC, and gap between ex
ante surrender and real time surrender happens crop up, which needs to be addressed
12.3 Open access in Reality: Whereas, the Commission has issued regulations for hassle free
Open access availment, in reality it does not happen due to various other blocks viz. Non
existence of transmission corridor etc., This needs to be mulled over to allay the apprehensions of
consumer.
12.4 The market splitting mechanism – Implicit auction Vs Explicit auction: In the context of
Indian Power Market design, small quantum is transacted through implicit auction (about 3% of
total generation and around 29% of short term market) and rest 97% of generation, is either on
long term, first cum- first serve or on explicit auction basis. The large volume which is not
participating in the implicit auction is in fact affecting price discovery under the implicit auction
methodology. Therefore there is a need to take a holistic view of the situation and to bring equity
between two sets of transactions.
12.5 Other Markets: Creation of Markets for capacity, Transmission, Hedging market for Difference
between MCP and ACP may be attempted to widen the domain of the Power exchange.
12.6 Financial Markets: The possibility of financial markets viz. Derivatives, Futures, Forwards,
hedging need to be explored.

Acknowledgement: The author gratefully acknowledges the published documents of CEA, CERC, IEX
POSOCO, NLDC/RLDC, SRPC and other entities for the valuable inputs.
11.