Central Electricity Regulatory Commission (CERC), the government body responsible for regulating the power sector in the country, has issued amendments in methodology of transmission corridor allocation for transactions recorded in the power exchanges.
The new provision requires the power exchanges to submit their daily transactions to the National Load Dispatch Centre (NLDC) for clearances. Accordingly, the allocation for power transmission would be provided against the available transfer capability (ATC).
In case, the cleared volume for power sale is within the ATC, the delivery order would be processed hassle-free to the transmission system.
However, when this volume exceeds the ATC, the allocation of transmission corridor margin would be in the ratio of the initial unconstrained market clearing volume in the respective power exchanges.
Why this change has been proposed?
The country, at present, has two power exchanges operational namely Indian Energy Exchange (IEX) and Power Exchange India Ltd (PXIL).
The new order was necessitated in order to eliminate the discrepancy in the previous system of transmission allocation, which offered limited access to Power Exchange India Ltd (PXIL).
This became more important at a time when a new power exchange under the name of Hindustan Power Exchange Ltd is set to be operationalised soon.
Role of power exchanges
The power exchange provides a trading platform for physical delivery of electricity, and it holds importance for buyers who require power in small volume to meet their short-term demand.
The significance of these exchanges has increased in view of the widening gap between power supply-demand. In the day-ahead-market (DAM), spot electricity price at IEX has registered an exponential growth of 172% y-o-y to INR 10.06/unit in April 2022 against INR 3.7/unit in April 2021.
In order to curtail price volatility, CERC had directed the power trading exchanges to cap spot prices at INR 12/unit in DAM and real time market (RTM). The same has now been extended in all market segments including day ahead contingency and term-ahead market (TAM) effective till 30 June 2022.
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