Pricing system used in India for unscheduled electric power transactions
Availability Based Tariff (ABT) is a frequency based pricing mechanism applicable in India for unscheduled electric power transactions. The ABT falls under electricity market mechanisms to charge and regulate power to achieve short term and long term network stability as well as incentives and dis-incentives to grid participants against deviations in committed supplies as the case may be.
Introduction.
ABT Mechanism in Electricity sector in India is adopted since the year 2000 and in a few other countries for pricing bulk power across various stakeholders. ABT concerns itself with the tariff structure for bulk power and is aimed at bringing about more responsibility and accountability in power generation and consumption through a scheme of incentives and disincentives. As per the notification, ABT was initially made applicable to only central generating stations having more than one SEB/State/Union Territory as its beneficiary. Through this scheme, the Central Electricity Regulatory Commission (CERC) looks forward to improve the quality of power and curtail the following disruptive trends in power sector:
The ABT scheme has now been expanded to cover the Intrastate systems as well. The power generation or grid capacity has increased substantially in last fifteen years particularly after the Electricity Act 2003 by introduction of competition and unbundling of vertically integrated utilities (SEBs) into separate entities in charge of electricity generation, electricity transmission, and electricity distribution. Deregulation and competition has facilitated participation of private sector on large scale in electricity generation, transmission and distribution. Of late, Indian electricity sector is transforming from perennial deficit to surplus electricity availability. The volume of purchased electricity that could not be transmitted to the buyers due to transmission lines congestion is only 0.3% of the total electricity consumed in the financial year 2013–14. It means that the actual power deficit in India is less than 1% excluding under priced electricity demand. ABT/DSM mechanism needs improvements to address the requirements of all stake holders (including final electricity consumers) for encouraging least cost electricity generation / tariff based on demand verses availability in the grid. There is a need of well represented Electric Reliability Organization to involve all the grid participants for framing guidelines for power system operation and accreditation which is presently looked after by the CEA
Bulk power purchasers can buy electricity on daily basis for short, medium and long term duration from reverse e-auction facility. In reverse e-auction, availability based tariff /Deviation Settlement Mechanism (DSM) is applied to settle the failed commitments by the electricity sellers or buyers The electricity prices transacted under reverse e-auction facility are far less than the prices agreed under bilateral agreements.
For those power generators who have made power purchase agreements (PPA) with Discoms and need not participate in day ahead market (DAM) trading on daily basis, the pecking order among the power generators in a state is called merit order power generation where the lesser variable generation cost electricity producer is selected out of the available generators to maintain the normal grid frequency. IEX is also implementing real-time round the clock trading or one hour ahead trading which will take care of intra day market dynamics. GoI also permitted electricity trading on exchanges with forward and derivatives contracts.
A reverse auction is not a perfect price discovery mechanism or balanced market coupling where single price is applicable to all traders when there is no transmission constraints. However, when the demand is slightly more than the supply, the market discovered price (Rs/KWh) would go steeply high and vice versa. When there is a transmission constraint to export power to a region, the difference between the market-discovered prices of different regions are unreasonably high. In reverse auction trading, the buyers pay a very high price/KWh (many times more than the cost of power from the diesel generator sets) for the incremental purchases.
In 2021, CERC proposed a grid management system where ancillary service providers are fully responsible for maintaining grid frequency within the safe range similar to prevalent practice in developed countries. Generators and Discoms are not required to keep the grid frequency in the permitted range under this proposal and the applicable power tariff is delinked from the grid frequency. Observing its detrimental effects on grid safety, it was discontinued after implementing for a few weeks.
ABT details.
Availability, for the purpose of the ABT order means the readiness of the generating station to deliver ex-bus output expressed as a percentage of its ex-bus rated capacity (MCR). Electricity is a commodity whose cost of storing is more than its production cost. The most economical method for electricity generation, transmission and distribution is just in time production where the availability and reliability of the entire system shall be very high to meet the unpredictable electricity demand on minute to minute basis.
Availability of thermal generating station for any period shall be the percentage ratio of average Sent Out Capability (SOC) for all the time blocks during that period and the rated MCR / SOC of generating station. The SAIDI (System Average Interruption Duration Index) is commonly used as a reliability indicator by electric power utilities.
During the fiscal year 2014–15, 1,043 billion KWh of electricity (three times that of National Grid) was supplied and met 138,215 MW maximum peak load. The total installed generation capacity is 267,637 MW at the end of fiscal year 2014–15. Its size is of global scale comparable only with EU grid, NERC grid, China electricity grid and Russian electricity grid. However, Indian grid lacks the basic features of smart grid for optimum use of its deployed resources.
Generally the top 10% of the unrestricted daily peak load (MW) persists only for 1% (15 minutes) of the total duration and its energy share (MWHr) is of the order of 0.2% of the daily energy supplied. Instead of generating this substantial extra power for a short duration, automatic selective load shedding can be implemented on bulk consumers possessing with standby power facility to eliminate the load spikes without inconvenience to most of the consumers. Alternatively, working captive power plants start feeding to the grid by giving break to the captive power supply up to a maximum of 30 minutes duration. The standby generator / captive power owner would be paid for providing grid reserve ancillary services.
With an installed capacity of proper mix of base load and variable load generation capability (excluding low capacity utilisation or secondary power or negative load type on daily basis such as solar, wind, etc. without storage) equivalent to the unrestricted annual maximum peak load, the most effective and economical smart grid shall be able to cater more than 99 percentile duration unrestricted load/demand on daily basis with 100% stable operation of the grid. The purpose of smart grid is to supply required electricity at optimum cost with reliability to the final consumers.
Natural gas transmission.
The Petroleum and Natural Gas Regulatory Board (PNGRB) was created in the year 2005 to regulate downstream activities in the petroleum and natural gas sector. There is requirement of natural gas TSO also for imparting optimum use of the gas on hourly basis for meeting peak load in the electricity grid and minimize gas transport distances. The available gas should be stored up to rated pressure in the pipe grid for generating power during peak demand hours on a daily (or more) basis. The natural gas carrying capacity utilization of GAIL pipelines is not exceeding 33%. Thus available limited gas quantity is used to meet the peak electricity loads by all gas based power stations. Gas turbine power plants are operated at 32.6% capacity factor as peaking power plants only in the US though being a surplus natural gas producer with lower price and the natural gas contributes largest portion (35.06%) of the total electricity produced. Also gas should not be transported from a power deficit region to a power surplus region by the gas grid and generated power from gas there shall not be transmitted back to the power deficit region to avoid misuse of the gas and power grid infrastructure. Natural gas TSO would also serve other sectors such as petro-chemical plants, CNG, fertilizer plants, PNG, LNG, etc. as per their hourly requirement in addition to receive gas from various types of natural gas producers and importers.
Indian Gas Exchange (IGX) started online gas trading platform for physical delivery of natural gas. Initially, the company has identified Dahej, Hazira and Kakinada as delivery points and will subsequently include Dhabol, Kochi, Ennore and Mundra terminals.
See also.
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References.
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