Power trading in India through exchanges
Power trading in India has been a crucial element in the development of the power sector. In recent years, power exchanges have emerged as an essential platform for buying and selling electricity in the country. Power exchanges provide a transparent and competitive environment for market participants to trade electricity. The electricity market in India is rapidly evolving, with the introduction of the real-time market, ancillary markets, and distributed energy resource (DER) participation. Power trading through exchanges can help address several technical, business, and managerial issues related to the power sector in India.
One of the significant technical issues that power trading through exchanges addresses is grid stability. Power trading through exchanges helps to balance the electricity demand and supply in real-time, ensuring that the grid remains stable. The integration of renewable energy (RE) sources, such as wind and solar, can lead to grid instability due to the intermittency of these sources. However, power trading through exchanges provides an opportunity to manage RE integration effectively.
The high average power purchase cost (APPC) and RE purchase obligation (RPO) are major business issues faced by discoms in India. Power trading through exchanges can help discoms to reduce their APPC by procuring electricity at lower prices. It can also help discoms to meet their RPO targets by providing access to RE sources available in different parts of the country.
Power trading through exchanges can also help address managerial issues related to the power sector. The real-time market, ancillary markets, and DER participation provide an opportunity to optimise generation and supply-side dispatch of available resources that are currently underutilised, such as behind-the-meter (BTM) solar, storage, electric vehicles (EVs), etc. This will help to increase the flexibility of supply and demand management through fast responding distributed energy resource management.
To make power trading through exchanges work effectively, the Central Electricity Regulatory Commission (CERC) needs to develop and implement wholesale products for ancillary services that are inclusive of DERs and aggregated resources. Discoms, generators, and the Government of India (GoI) need to implement a plan to transition from long-term bilateral power purchase agreements (PPAs) to increased use of power markets and the creation of a liquid market. Consensus needs to be built across the central and state governments, regulators, discoms, generators, and other stakeholders for the successful implementation of power trading through exchanges.
In conclusion, power trading through exchanges has the potential to transform the power sector in India. Power exchanges provide a transparent and competitive environment for market participants to trade electricity. Power trading through exchanges can help address several technical, business, and managerial issues related to the power sector in India. The real-time market, ancillary markets, and DER participation provide an opportunity to optimise generation and supply-side dispatch of available resources. To make power trading through exchanges work effectively, all stakeholders need to work together to implement a plan that supports a transition to a liquid power market.