The Ministry of Power has circulated a discussion paper proposing market-based economic despatch (MBED) of electricity to power distribution companies.
The paper covers the proposed mechanism for the implementation of MBED, estimation of the indicative benefits of the mechanism, key issues and suggested mitigation mechanisms.
MBED will ensure that the cheapest generating resources across the country are despatched to meet the overall system demand and will thus be a win-win for both the distribution companies and the generators and ultimately result in an estimated annual savings in excess of ₹12,000 crore for the electricity consumers, the Ministry said in a statement on Thursday.
MBED will also facilitate larger integration of variable renewable energy by enlarging the balancing area to the national level and is also expected to optimize the need for reserves and ancillary services, it added.
The existing electricity scheduling and despatch mechanisms in the country are siloed and the day-ahead procedures result in sub-optimal utilization of the country’s generating resources, the Ministry said. States very often end up committing and utilising costlier generation plants, while cheaper generation plants are not fully utilised across the country, it added.
The first phase of MBED would involve only the thermal fleet of central generating stations to test the efficacy of the mechanism and allow for necessary infrastructure and systems to be built out and tested before scale-up.
Comments are invited on the paper till June 30. The Centre intends to arrive at a consensual way forward on implementing the first phase of MBED from April 2022, the statement added.