India’s power exchange market is set to undergo an experimental phase as the Central Electricity Regulatory Commission (CERC) has directed a shadow pilot study on market coupling, aiming to enhance market efficiency and optimize transmission infrastructure.
The proposed shadow pilot study aims to couple the Real-Time Market (RTM), RTM with Security Constrained Economic Dispatch (SCED), and Day-Ahead Market (DAM) of power exchanges. The shadow pilot will assess the operational, market, and regulatory impacts before full-scale implementation.
The move comes against the backdrop of the commission’s notification of the CERC (Power Market) Regulations, 2021, which aimed to create a more comprehensive market structure in the power sector.
To evaluate the potential benefits of market coupling, the Commission conducted simulations using bid data from power exchanges. The simulations indicated marginal increases in economic surplus and cleared volumes with market coupling, particularly in the RTM and DAM segments.
Additionally, the Commission has directed Grid-India to develop the necessary software for sharing operational experiences through monthly reports, and exploration of coupling DAM with SCUC (Security Constrained Unit Commitment) for further optimization.
The study will run for a period of four months, during which the impact on price discovery, volume movement, and system reliability will be closely monitored. Grid-India will also provide monthly reports on the operational experience gained during the study period.
Satyanarayan Goel, Chairman & Managing Director of Indian Energy Exchange (IEX), said, “IEX welcomes directions by the Commission regarding the shadow pilot study on market coupling.” Goel further explained, “After examining the stakeholders’ suggestion on CERC staff paper on Market Coupling dated 21st Aug 23, the staff of the Commission carried out simulations for coupling in DAM and RTM and no significant benefit was observed. One of the suggestions received was for coupling RTM with SCED and simulation studies of this indicated marginal benefit under this alternative.”
IEX shares witnessed a slight downturn, closing at Rs 145.25, down by Rs 7.60 (4.97%) today as of 7 Feb, 3:30 pm, a day after the announcement of the pilot study.
Satyajit Ganguly, MD & CEO of Power Exchange India Limited (PXIL), expressed that the implementation of ‘Market Coupling’ would foster an integrated and efficient electricity market, enabling the growth of multiple power exchanges and expanding their roles as ‘Market Infrastructure Institutions.’ He emphasized its role in leveling the playing field for power exchanges, promoting healthy competition, and integrating bids for a single common price.
Stakeholders presented mixed views on market coupling, citing benefits such as improved competition and lower transaction costs, alongside concerns about disruptions and increased transaction costs. The final decision on market coupling will be based on the outcome of the shadow pilot study and consultation with stakeholders.
Source: The Economic Times
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