This presentation was made before CERC on 14.10.2019 as an individual on Proposed framework for Real Time Power Market

1. Focus: Grid Security
Vijay Menghani
Good judgment comes from experience;
experience comes from bad judgment.
-- Mark Twain
Proposed framework for Real-
Time Market for Electricity.
Public Hearing : 14.10.2019

2. Purpose of Regulations
• Regulations is boutique of incentive disincentive for desired behavior
• State-mandated regulation is government intervention in the private
market in an attempt to implement policy and produce outcomes
which might not otherwise occur, ranging from consumer protection
to faster growth or technological advancement.
• The regulations may prescribe or proscribe conduct ("command-and-
control" regulation), calibrate incentives ("incentive" regulation), or
change preferences ("preferences shaping" regulation).
• Efficient regulations can be defined as those where total benefits
exceed total costs.

3. Objective
Reducing dependence on DSM
Deepening the market
Concept of Gate closure
Absorbing More Renewable Power
But what is ultimate objective function at central system operation level: If all SLDCs
manage themselves , lesser quantity of Regulating Reserves would required to operate grid
in safe and secure mode.
• Individual stakeholders objective : ? Quite similar to National Electricity Policy and Tariff
Policy
• Secure Grid, No blackout , Uninterrupted power at economic cost
• Maximization of Renewable Generation ,Clean Environment , less Co2, less water
Consumption

4. RE : Growing at 24%

5. Consultants and practitioner
• Study at Central level with certain assumptions is not reflective of
ground conditions
• Local Energy Mix and flexibility is not sufficient to absorb all RE
energy in High RE low Demand period
• Operating protocols and decision Making procedure
• Power Portfolio costs .
• Access to new, near the operation time , market is necessary , so
RTM is good initiative.
• Even with additional Wind capacity of 2300 MW more as compared
to last year , Generation in August,2019 and Sep,2019 ( Prov) is 17.5%
and 16% less than last year .

6. Karnataka

7. Tamil Nadu

8. Andhra Pradesh
http://apps.aptransco.co.in/sldcreports/forms/Curtailment.aspx

9. Power Market Development
• Market Development not mentioned in Section 79
• Section 66. (Development of market): The Appropriate Commission shall endeavor to promote
the development of a market (including trading) in power in such manner as may be specified and
shall be guided by the National Electricity Policy referred to in section 3 in this regard.
5.7 COMPETITION AIMED AT CONSUMER BENEFITS ( NEP 2005)
• 5.7.1 To promote market development, a part of new generating capacities, say 15% may be sold
outside long-term PPAs . As the power markets develop, it would be feasible to finance projects
with competitive generation costs outside the long-term power purchase agreement framework.
In the coming years, a significant portion of the installed capacity of new generating stations
could participate in competitive power markets. This will increase the depth of the power
markets and provide alternatives for both generators and licensees/consumers and in long run
would lead to reduction in tariff.
• So as per present NEP: Power market constitutes either 15% capacity outside PPA or capacity
Outside PPA ( Merchant ) . So bringing existing PPA capacity into market not appear to be fit into
scheme of thing.

10. Are we All In
• Discussion paper in July,2018 and even after one year Stakeholders
not all on same page but on multiple pages,
• Most players want comfort of past to continue, risk averse, not fully
prepared , passing through Transition of RE disruption .
• IT systems , Load and generation forecasting evolving.
• Preparation time of Open Access registry
• “To accomplish great things, we must not only act, but also dream;
not only plan, but also believe.”
– Anatole France
Not fully on board All together through Nudge
Open Access, 175 GW ODF, Saubhagya, Single Use plastic ban

11. Mismatch or synchronized
Power Market Development :Central and State
Regulations/Systems/ Organization structure
What Participants want
1. NLDC through gate Closure wanted certainty on
quantum of URS for RRAS.
2. State want to reduce their deviation through a
last mile Real Time market to manage load and
variation in RE.
3. Few feasible bilateral contracts are not
happening due to lack of price discovery
mechanism . Umbrella agreements ( SR)not working
for larger control area to balance RE.
4. Few machines being operated at Minimum
technical load can be switch off through a trade
with neighboring state under scheduled generator
( Suratgarh-IV ( Rajasthan)– Haryana )
Need a dessert ( new market segment) not change in its Main
Course

12. August,2019
Total Electricity
Generation
( MU) 121110
Ancillary
(Regulation UP)
MU 118 0.097%
Regulation Down
( MU) -288 0.238%
Gate Closure : Thin layer of Last stage of optimization
Source : NLDC Monthly Reports and RRAS report. Are we are
burning coal more than what is required as frequency is more
than 50.05 Hz for more than 20% of time.

13. Suggestion: Objective function is to reduce Cost
and quantum of Regulating Reserve
• As objective is to increase /deepen
opportunity for closer to operation
correction , let first implement Gate Closure
on PPA generators so the quantity available
for Existing URS based RRAS is firm
• Discoms right to schedule and recall survive
as per proposed methodology and remain
suspended only for an hour or six block. If
system operator want , it can be enhanced.
• Let existing contract holders to utilize Long
Term contract in a optimum manner during
day and balance goes to RRAS rather than
RTM , except for consented quantum which is
going to DAM.
• A Subset RTM only for Merchant Capacity as
per proposed market time line and where
buyer and sellers contract sacrosanct .
• Participants : Discoms, Merchant Seller and
balance of consented /surrendered.
• No Revision of schedule . In case of outage ,
buyer had to face DSM
• Mixing both PPA and merchant generators in
RTM affecting risk return of both and
outcome of their earlier choices.
• Later fully surrendered quantity as per
provisions of PPA or lapsed PPA quantity can
enter into RTM.
• Excess RE can be sold by Discoms in RTM as
near the time visibility will be better. Three
hour ahead forecast give best results.
Staggered Implementation: Two parallel streams

14. Many Markets Mechanism will work together
DAMSECD
Long
Term DSM
RSRAURS
DAM
Bilateral
STOA
DSM RTM
URSRSRA

15. Suggestion: Objective function is to reduce Cost
and quantum of Regulating Reserve
• Market based Ancillary Service implementation is overdue as initially
it was implemented for one year , now running into third year.
• No of players and quantity of available RRAS need to be increased to
achieve optimum cost.
• As earlier also presented before Commission that unless cost
allocation principle is changed and payment through DSM continued
, there is no incentive for State utility to change behavior.
• Event based cost allocation as Public good and Non – event based
cost allocation can be based on private good principle.

16. Path forward : 2020 Reserve Regulation
Ancillary Service
• With implementation of Gate Closure and Revision of RRAS Regulation by
broadening , market price and Cost allocation.
• Desired quantum of RRAS available with NLDC target should be achieving
frequency at least 95% within ISGS band in 2020.
• Make National Level Grid Visibility better similar to CASIO & AEMO
• By separate cost allocation for event ( ISGS failure, Slit during Monsoon)
and non event ( Overdrawal, unbalance portfolio), nudge utility towards
balance portfolio by using DAM and RTM.
• If frequency is within secure band , RE curtailment incidents due to Grid
security will reduce.
• Both objectives Grid security and Maximization of RE can be achieved.

17. @175GW_IndiaRenw
Thank You
Vijay Menghani,
menghaniv@gmail.com,
+91-9999035484
in.linkedin.com/in/menghanivijay17
“The key to realizing a dream is to focus not on success but
significance – and then even the small steps and little
victories along your path will take on greater meaning.”
– Oprah Winfrey
We all need to work together
“Some of us are more capable of many of us, but none of us is
capable as all of us” -Fairy Dust