Comments
The Central Electricity Regulatory Commission (CERC) on Monday floated a paper on implementing market coupling in the power sector, which aids in discovery of uniform prices, optimal use of transmission infrastructure and maximising economic surplus.
The regulator through its CERC Power Market Regulations (PRC) 2021 has created enabling provisions for market coupling among the power exchanges in the country. However, they are yet to be notified.
The CERC has floated a staff paper on various aspects related with market coupling and its impact on India’s three power exchanges - Indian Energy Exchange (IEX), Power Exchange of India (PXIL) and Hindustan Power Exchange (HPX).
The paper discusses regulatory provisions for market coupling, international experience, objectives of market coupling in India, issues and challenges in implementation of market coupling and the key points for discussion.
Stakeholders have to submit their responses by September 30, 2023.
Market coupling
Market coupling is the process whereby collected bids from all the power exchanges are matched, after taking into account all bid types, to discover a uniform market clearing price for the Day Ahead Market (DAM) or Real-time Market (TAM) or any other market as notified by the CERC, subject to market splitting.
Its objective is the discovery of uniform market clearing price for DAM or RTM or any other market as notified by the CERC, optimal use of transmission infrastructure and maximising economic surplus, after taking into account all bid types and thereby creating simultaneous buyer-seller surplus, CERC said.
Key issues
Globally, market coupling has been introduced to integrate two or more electricity markets or different geographies. However, in India, the objectives are different.
Among the key issues pointed out by the regulator includes whether current Indian power market scenario presents a “compelling” case for coupling, its impact on tech innovation as well as competition and whether there is a need for a third party market coupling operator (MCO).
While the power exchanges have the expertise to run the algorithms and handle different market scenarios, having a third-party MCO shall ensure more objective operation and will not have any conflict of interest. The third party could be the system operator or an explicitly formed entity, it said.
Citing instances, CERC said it has appointed Grid-India as the Nodal Agency for Tertiary Reserve Ancillary Service (TRAS) procurement through the market. The segment was introduced on June 1, 2023.
“As the nodal agency, Grid-India receives sell bid information from the power exchanges, enters the buy bid itself, runs the price discovery engine, and publishes the result to the power exchanges and market participants. All these activities broadly cover the functions to be performed by the MCO. Learnings from this segment would also help in deciding whether to appoint the system operator as the MCO,” it added.
What should be the ideal institutional/structural design for market coupling and the extent of autonomy of various parties in such a design?, the regulator has asked the stakeholders.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.