4. Electricity- Charactersitics
• Electricity cannot be stored
– TIME LINE OF PARTICIPATION
– Spot & Forwards
• Quantity- Private good ; Quality- public good
– Any buyer or seller cannot control quality
– Quality is result of collective response of all buyers/sellers
– No one-to-one physical relationship between Buyer-seller
– Need System operator to ensure quality
Transactions needs to be done close to real-time
5. Electricity as Commodity–market structure
Long Term (MO)
Capacity Markets Energy Markets - Futures & Forwards
Short Energy Term (MO)
OTC Trading Exchange based
Near Real-time (MO)
Day-Ahead Intra-day
Real-time (TSO)
Balancing Market Reserves Market
6. Ancillary Service categories
Frequency Control Ancillary Services (FCAS)
• Maintain frequency
• Load following/imbalance management
Network Control Ancillary Services (NCAS)
• Voltage control
• System Protection
System Restart Ancillary Services (SRAS)
• To restart the system in case of whole or partial
system black out
8. Next step in the market development
trajectory
Financially
Indian market is here settled
Derivatives
Capacity OTC Exchange/
Market Derivatives Options
Maturity
Ancillary
Market
Market
Spot Markets on
Exchanges
OTC Markets
Multiple buyers
- sellers
Individual
Buyer /Seller
Time
9. Enablers for
market based Frequency Control Ancillary Services
Large pool of bottled up generation
(~2000MW capacity)
Liquid Day-Ahead Markets
Adequate number of right sized
generators available
MW available from each such
generator is also adequate
High ramp-rate generators(CCGTs)
available
Strong National/Regional Grids
12. Proposed Market process
DAM Final Solution by 3:30 PM
Qualified generators submit bid for
ancillary service
Results Bids arranged in Merit Order
stack and sent to NLDC /RLDCs
Sellers on the TSO’s list to remain
available for the day
NLDC/RLDCs to direct seller to
operate plant as required
Payments released on the basis
of Schedule
13. Salient features
Qualified generators only participate
Non-performance by Enabled generators to be
penalised
Selected generators (in stack) to receive small
availability fee
Schedules issued to Generators for some
minimum periods irrespective of system
normalisation
14. Eligibility for Qualified Generators(QGs)
Minimum quantity to be specified
(say 50MW or 0.1% of system size)
Minimum period of operation specified
(say 6 time blocks)
Minimum Ramp rate (say 10MW/min)
Ramp constraints to be indicated at the time
of registration
No. of start/stops and period between two
start/stops
16. Should there be qualifification criteria ?
Qualified Generators only
• Participation by generators with high
ramp/down, fast start capability
• Selected resources should perform to meet
TSO’s requirement
All Resources
• All unutilised generation can participate
• Performance may not match TSO’s requirement
17. Auction Type
DAM Auctions
• Leftover Sellers
• Confidentiality of DAM results may be hampered
Re-auction
• PXs can arrange bidding
• Allow qualified generator to post different bid
based on Average cost and not Marginal cost
• Balance capacity can bid
18. Merit Order Stack Basis
Synchronous interconnections
• Bids stacked on the basis of common frequency
area
• Area may/may not be interconnected due to
congestion
Congestion area specific
• Bids stacked on the basis of congestion area
• Allow to select generators on the basis of area
suffering most congestion to least congestion
19. Regulation Type
Upward Only
• Allow generators to bid for increasing gen or demand to
bring down demand (Demand Response)
• Only valleys are handled
Downward and Upward Regulation
• Generators to increase/decrease generation
• Loads to decrease
• Peaks and valleys are handled
20. Price Discovery
Pay-as-you-bid
• Resources to be paid price quoted by them
• Sellers to strategise bidding
Uniform Price
• All utilised resources to be paid price of
highest enabled generators
• Generator may quote near marginal cost to
be a part of the ‘stack’
21. Uniform Price Discovery Mechanism
Balancing power -sorted in merit order
Price
Highest up regulation
Price = Sales price
Upward
Regulation
Downward MW
Regulation
Lowest down regulation
Price = Purchase price,
22. Market design parameters
Auction /Re- Residual from
Re-auction
auction DAM auctions
Participation Qualified
All Resources
by Resources Generators
Synchronous
Merit Order interconnections Congestion area
Stack basis (common specific
frequency areas)
Regulation Downward &
Upward only
Type Upward
Price
Discovery Pay as you bid Uniform Price
23.
24. Features of the proposed market design
• NLDC (in consultation with CERC) to
Selection of ascertain rules for selection of Qualified
Generators Generators who then register with
NLDC/RLDC
Incentive for • Those who appear in TSO’s list for the day
should receive a nominal Availability Fee to
availability remain available for the day
Penalty • Non-adherence should be subjected to UI
• Re-bids may have ceiling price = UI (max)
Price Fixation rate
• Counter-party is a POOL and therefore
Commercial payment to be made by the TSO
Settlement • Those who create such situation to pay TSO
25. Demand Response
• Direct Load Control
– Load Shedding by utilities
– Involve the remote interruption of customers' energy
usage during peak hours
– Value of lost load high, resort to DG sets which is
costly
• Pricing Incentive
– Variable electricity rates to encourage customers'
voluntary curtailment during demand response events
– Utilities use a variety of pricing schemes including
peak time rebates, critical peak pricing, and time of
use rates to curtail usage
