Rohit Bajaj, Head and Senior Vice President-Business Development, Indian Energy Exchange
The electricity sector being one of the key pillars of the economy must be robust and viable for the overall socio-economic growth of a country. Amidst the prevailing economic uncertainties due to Covid-19, electricity markets have played a critical role in supporting the sector. The markets have helped it to function optimally while ensuring overall efficiency and flexibility for the stakeholders including industrial customers, DISCOMs and power generators. Moreover, the launch of the Real-Time Market (RTM) starting June 1, 2020, following the approval from CERC (Central Electricity Regulatory Commission), on power exchanges has been a game-changer and helped in making electricity trading on Exchange more dynamic. The new market segment has enabled stakeholders in the energy sector to further capitalize the benefits of a market-based model.
RTM making power market more dynamic
The real-time market has 48 half-hourly auctions – a new auction window opening every 30 minutes during the day allowing more flexibility in terms of power procurement options. The new market segment has successfully managed to offer optimal and efficient utilization of resources to distribution utilities, generating companies and large energy intensive consumers. They are now able to manage power demand-supply variability in the most cost-effective way, integrate renewable energy effectively, reduce DSM penalties as well as enhance grid security. Undoubtedly, RTM, since its launch, has greatly enabled utilities to meet 24x7 power supply aspirations in the most efficient and dynamic way.
Addressing demand variability through RTM
The power requirements are dynamic in nature and especially during the day, week, month as well as specific periods in a year such as festive season, the demand surge is unpredictable. As a result to manage power demand-supply variation, the already financially stressed DISCOMs have to opt for deviation settlement mechanisms (DSMs) for balancing real-time requirements which result in huge financial penalties for them. Through RTM, they now have access to market auctions throughout the day and thus can avoid paying the high deviation settlement charges, ultimately lowering their overall cost of procurement, encouraging financial liquidity and registering savings.The real time market enhances overall grid safety and security by managing demand variation and additional deviation effectively close to real time.
Positive response from participants & growing volume
Since its launch, RTM has received a great response from all participants and recently in the month of October, trading volume at IEX for RTM stood at 814 MU. At present under RTM we have more than 400 registered participants - 302 buyers and 180 sellers. IEX has more than 99 per cent of the market share in RTM. Within a span of 5 months since its launch on June 1st2020, this market has traded a volume of 3680 MUs driving the growth of energy trading in the country. The sell bid volumes at 10,798 are more than twice the buy bid volumes at 4,816 during the period from June to October. The market clearing price during this period has been quite competitive at Rs 2.42 per unit on the bank of high sell-side liquidity in the market, encouraging utilities and open access consumers to access the Exchange market for increasingly meeting their electricity requirements at low and competitive costs. States like Telangana, Rajasthan, Andhra Pradesh, Haryana and Maharashtra have been actively buying power through real-time market and are amongst the top buyers on this platform. Moreover, many Open Access consumers from railways, steel, cement and chemical industries have also been leveraging RTM to procure cost-efficient electricity.
With RTM, the generation companies now have an opportunity to sell any excess or un-requisitioned capacity round the clock to a wide set of buyers thus enabling efficient use of the installed generation capacity. As India moves towards energy transition with increase in the share of renewable energy, RTM will also help in better RE integration. The real time market will help distribution utilities and system operators to forecast and schedule green energy in an effective and integrated manner thereby supporting the national green energy aspirations towards building India as a sustainable green energy economy.
Way forward
Over the last four months since commencement of trade, the real time electricity market at IEX has not only facilitated un-requisitioned surplus generation capacity find buyers but also facilitated generators to purchase power to fulfill their supply commitments and obligations during outages. Moreover, several distribution utilities and industries have managed to reduce dependence on the DSM mechanism especially the additional deviation penalties as well as integrate renewable energy in the much efficient and effective way. As more and more participants realize the benefits of the real-time market, the trade volume is expected to grow further, especially when all the commercial entities across sectors are looking to improve liquidity and maintain business viability. In the future, the real time market will be key in expansion of the power markets as more and more marketplayers leverage it to establish demand supply equilibrium as well as facilitate power for all on round the clock basis in the most optimum and efficient manner.
