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Govt working towards uniform electricity pricing across India

To help facilitate annual savings of around Rs12,000 crore, the government has come out with a discussion paper that calls for One Nation, One Grid, One Frequency, One Price. (Photo: Reuters)Premium
To help facilitate annual savings of around Rs12,000 crore, the government has come out with a discussion paper that calls for One Nation, One Grid, One Frequency, One Price. (Photo: Reuters)

  • India has a significant inter-regional power transmission capacity through its complex interconnected power grid that requires close coordination between grid operators and power project generators across coal, gas, hydro, nuclear and green energy sources run by the Centre, states, and private firms

NEW DELHI: To help reduce electricity cost for consumers, the union government is working on Market Based Economic Despatch (MBED) of power from 1 April next year.

As part of the strategy to help facilitate annual savings of around Rs12,000 crore, the union power ministry has come out with a discussion paper that calls for “One Nation, One Grid, One Frequency, One Price."

“The full benefit of physical integration would be realisable when India transits to an optimisation at the national level and a country-wide balancing area instead of the siloed self-scheduling and balancing mechanisms currently followed within state or regional boundaries. Thus, the next step in reforming electricity market operations is to implement Market Based Economic Despatch (MBED)," the union power ministry said in a recent statement.

This comes in the backdrop of India’s peak electricity demand falling during the first wave of the coronavirus pandemic, with commercial and industrial demand taking a hit after many factories closed. However, domestic consumption, which generates comparatively lower tariffs, went up. The demand which had since revived fell again amid the ongoing second wave. India registered a record high electricity demand of 189.6 gigawatt (GW) in January.

“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 INR 12,000 crores for the electricity consumers," the union power ministry said in a recent statement.

India has a significant inter-regional power transmission capacity through its complex interconnected power grid that requires close coordination between grid operators and power project generators across coal, gas, hydro, nuclear and green energy sources run by the Centre, states, and the private sector.

“With significant investments over the last decade, the Indian power system has achieved larger inter-regional transfers of electricity and eliminated most constraints to realise its status as “One Nation, One Grid, One Frequency"," the statement said.

It is the state-owned Power System Operation Corp. Ltd (Posoco), which manages these complex functions through the National Load Despatch Centre (NLDC), Regional Load Dispatch Centres (RLDCs) and State Load Despatch Centres (SLDCs)—drawing comparisons with an air traffic controller. The country has 33 SLDCs, five RLDCs (for the five regional grids that form the national grid) and one NLDC.

“Despite this enablement, 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. It has been observed that the states very often end up committing and utilising costlier generation plants, while cheaper generation plants are not fully scheduled / utilised across the country," the statement added.

State-run Power Grid Corporation of India’s transmission network has 169,829 circuit km of transmission lines, 257 substations and 105 GW of inter-regional electricity transmission capacity.

“MBED shall 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," the statement said.

India is running the world’s largest clean energy programme to achieve 175 GW of renewable capacity by 2022, including 100GW of solar power and 60 GW of wind power—which are infirm sources of electricity.

“It has been suggested to implement MBED in phases. Phase 1 would involve only the thermal fleet of Central Generating Stations to test the efficacy of the MBED mechanism, identify deficiencies or potential issues that need to be addressed prior to a nation-wide rollout, familiarize all key stakeholders with the framework and allow for necessary infrastructure and systems to be built out and tested before scale up," the statement said.

Of India’s installed power generation capacity of 379.13 GW, the central and state sector projects account for 96.18GW and 103.62GW, respectively. Of the country's total electricity demand load pattern, industrial and agricultural consumption account for 41.16% and 17.69%, respectively. Commercial electricity consumption accounts for 8.24%.

“Security constrained economic despatch (SCED) was such an attempt towards optimisation of the system cost. This has already yielded substantial saving in system cost. This was followed by the Real Time Market - a half-hourly market, which provided for an opportunity for the buyers and the sellers to buy and sell through an organised market closer to real time," the statement said.

With the second wave of the coronavirus pandemic keeping a large part of India’s population indoors, the country’ electricity demand dipped in May, and this low power demand scenario is expected to continue till July.

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