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CERC on Re-designing Real time Electricity Markets in India

<p>CERC has issued a discussion paper on re-designing real time electricity markets in India. A need is felt for further actions in terms of improvements in market operations closer to real time, to better harness not only the intermittent RE, but also for optimal utilization of resources in the intra-day time horizon. In the paper it is brought out the need for the changes in the market design in real time segment.</p> <p>The current framework manages real time energy imbalances as well as inadvertent system imbalances primarily through DSM / AS (Ancillary Services) mechanism, and partly through rescheduling and intra-day market in the power exchanges. This has thrown up challenges that call for changes in market design. The recommendation that has evolved is for drawing a line of demarcation between &lsquo;energy trade&rsquo; and &lsquo;system imbalance&rsquo; handling.</p> <p>There is definitely a case for co-optimization of the two segments, but this should not imply mixing up the two and managing them jointly through a mechanism (of DSM / AS) which is meant for handling only system imbalances. Further, because of the provision of rescheduling, it becomes difficult to maintain firmness of day-ahead schedule. Hence, the need for a clearly identified real time / intra-day energy market with improved processes in the form of auction and gate closure.</p> <p>In India we have followed the European model of exchange-based market model. As a corollary, for the intra-day segment of the market as well, the exchanges have followed continuous trade-based pay as bid model as against the auction based uniform pricing model. Given the constraints in existing market operation and system operation and the challenges facing energy imbalance in real time, it is high time the country brought about changes in the market design in the real time segment.</p>