Loading...

Real-time power trading a win-win for power producers and consumers


06 June 2020 | BRIDGE TO INDIA

Real-time power trading a win-win for power producers and consumers

Power exchanges in India started offering a new ‘Real Time Market’ (RTM) trading window at the beginning of this week. The market features 48 trading slots, half an hour each, during the day for delivery of power within one hour of trading.

  • The new window allows DISCOMs, power producers and open access consumers to tide over short-term variations in their power schedules through an efficient market process;
  • Majority of trading activity is expected to be concentrated among a few DISCOMs with high share of renewable power consumption;
  • RTM would serve as a valuable learning experience for all stakeholders for launch of more sophisticated market instruments and ancillary services;

Until now, the exchanges offered only two power trading windows: i) Day Ahead Market (DAM) where trading takes place for two hours daily for delivery of power next day; and ii) Term Ahead Market which consists of intra-day, day ahead contingency and weekly contracts. Most of the trading has been accounted for by the DAM window – in 2018-19, 94% of all transactions on exchanges were under this route. The DAM window does not allow any intra-day revisions to schedules and hence, there was need for an additional short-term window to provide flexibility to power producers and purchasers.

The need for RTM window has arisen mainly on account of rapid increase in renewable power capacity to 90 GW, now well over half of power requirement. Increasing renewable capacity and pressure to provide 24×7 power to consumers has introduced high levels of uncertainty on both supply and demand sides. RTM allows flexibility to DISCOMs, power producers and open access consumers to meet deviation in their power schedules. In absence of such a window, the DISCOMs dealt with deviations through power plant ramp-up/ down (not always practicable or efficient), load-shedding or Deviation Settlement Mechanism (DSM) involving high risk of financial penalties.

Similarly, renewable IPPs, rather than being curtailed and/or made to pay DSM penalties, can now trade surplus power for additional income. RTM transaction horizon of 60-90 minutes is ideal for them as short-term generation can be predicted with considerably higher accuracy. The day-ahead window has larger scope for errors in power generation and hence, higher risk of DSM penalties. There may also be attractive arbitrage opportunities for smart operators using advanced load and weather forecasting capabilities. NTPC, with its substantial volume of uncontracted power, could also be a major beneficiary. Combined with Security Constrained Economic Dispatch (SCED) scheme – still under pilot phase – RTM offers an attractive opportunity to NTPC.  

First week of RTM trading points to reluctance among stakeholders, especially buyers. Sellers outbid buyers five to one in terms of volume during first five days of RTM trading. Looking ahead, trading volumes are expected to increase as industry gets more experience and power demand catches up with pre-COVID levels. Majority of trading activity is obviously expected to be concentrated among a few DISCOMs with high share of renewable power consumption.

As an additional and more efficient relief valve for short-term mismatches in power schedules, RTM should improve financial performance of DISCOMs and IPPs as well as lead to higher grid stability. It would also serve as a valuable learning experience for all stakeholders for launch of more sophisticated market instruments and ancillary services.


Recent reports

India Solar Map | December 2023

India Solar Map | December 2023

India Solar Map 2023 is an info-graphic report covering growth of utility scale solar sector – national and state-wise commissioned and pipeline capacity, leading market players and portfolio details of top 16 project developers. Capacity addition in 2023 fell 51% YOY to 5,924 MW taking total utility scale solar capacity to 59,840 MW. Total project pipeline stands at a record 74,161 MW.

India Corporate Renewable Brief | Q4 2023

India Corporate Renewable Brief | Q4 2023

This report provides an update on key trends and developments in the corporate renewable market including capacity addition, key players, policy & regulatory issuance, financing, PPA tariffs and other market trends.

India PV Module Intelligence Brief | Q4 2023

India PV Module Intelligence Brief | Q4 2023

This report captures quarterly trends in module demand and supply, import and domestic production volumes, supplier market shares, break-up by technology and rating, global market scenario, pricing trends across the value chain, key policy developments and market outlook.

India Solar Compass | Q4 2023

India Solar Compass | Q4 2023

This report provides a detailed update of all key sector developments and trends in the quarter – capacity addition, leading players, tenders and policy announcements, equipment prices, financial deals and other market developments. It also provides market outlook for the next two quarters.

Inter-state OA — opportunities and challenges

Inter-state OA — opportunities and challenges

Inter-state transmission system (ISTS) open access (OA) renewable market is growing strongly on the back of multiple drivers including a waiver from ISTS charges together with decarbonisation pressure on corporates and streamlined transmission connectivity approval process. However, the ISTS route savings are viable only for projects commissioned by June 2026 (at least 75% ISTS charge waiver).

India Corporate Renewable Brief | Q3 2023

India Corporate Renewable Brief | Q3 2023

This report provides an update on key trends and developments in the corporate renewable market including capacity addition, key players, policy & regulatory issuance, financing, PPA tariffs and other market trends.

To top