The Indian Energy Exchange (IEX) will allow real-time trading of electricity from June 1, a move that will facilitate better use of renewable energy.
Under the ‘real-time market’ (RTM) product, auctions will be held 48 times a day. Every half an hour, auctions IEX “will run a market for 1 hour and 15 minutes” in which generators and purchasers of electricity will engage. Electricity producers who may see generation more than their committed demand, will offer to sell the surplus energy in the market. In the absence of this opportunity, they would have to back down generation. Likewise, buyers of electricity will offer to purchase. This is particularly useful to electricity distribution companies who may suddenly be faced with a shortage of supply because of, say, a turbine failure at a power plant.
IEX will take 15 minutes to clear the bids and will then hand over the results to the National Load Dispatch Centre—which (along with State Load Dispatch Centres) routes electricity from various supply sources to consumption points. NLDC would take another 15 minutes to effect delivery of electricity, Rajesh Mediratta, Director, IEX, told Business Line today.
The RTM therefore makes way for better utilization of renewable energy—particularly wind—which is more prone to fluctuations in generation. Ever since renewable energy entered the market the need for a market close to real time was being felt, Mediratta said.
The idea was mooted by the Central Electricity Regulatory Commission (CERC) some time back, he said.
“RTM will offer the distribution utilities immense flexibility to meet their dynamically varying schedule with delivery of power within an hour of closure of bid session,” says a press release of IEX issued today. “With better planning, the utilities would be able to save on excess penalties currently paid under deviations framework as well as effectively integrate renewable energy. The market will also enable the system operators to enhance overall grid security and discipline,” it says.
Giving an example of how the real-time market would come in handy, Mediratta said that suppose the electricity utility of Tamil Nadu, Tangedco, had contracted to supply 3,000 MW of electricity, but perhaps because of winds not blowing and the wind turbines not generating enough, it found it was short of 500 MW—it could purchase the power from the market.
To IEX, a listed company, the RTM is another product to make money.
Meanwhile, it is reliably learnt that the dispute between the stock market regulator, SEBI and the electricity regulator, CERC, over who should have the jurisdiction for oversight when derivative products are introduced in the electricity markets, now debated in the Supreme Court, is nearing resolution. The final hearing would have happened now but the Covid-19 pandemic has delayed it.
In anticipation of a resolution, IEX is gearing itself up for introducing derivatives in the market – there will be trading in futures and options in electricity, just as in stocks and commodities.