CERC Orders Changes in Power Exchanges’ Bidding Software to Cut Power Cost
The order comes in the wake of the increase in electricity demand
The Central Electricity Regulatory Commission (CERC) has directed all power exchanges to redesign their bidding software to allow members to quote prices within a specified range for different types of contracts.
The Commission said that redesigning the bidding software would reduce the cost of power for buyers while also providing an opportunity for high-cost generators and willing buyers to participate in the High Price Day Ahead Market (HP-DAM) market.
The Power Exchanges are directed to comply with these directions within two days from the order date.
The range for all contracts, including Day Ahead Market (DAM), Green Day Ahead Market (GDAM), Real-Time Market (RTM), Intra-day, Day Ahead Contingency, and Term-Ahead contracts including Green Term Ahead is up to ₹12 (~$0.15)/kWh.
It is up to ₹20 (~$0.24)/kWh for HP-DAM.
The Commission had passed an order, valid until June 30, 2022, directing the power exchanges to redesign their software so that members could quote a price of up to ₹12 (~$0.15)/kWh. An extension was given from July 1, 2022, to September 30, 2022, and later extended to December 31, 2022.
The Commission has been reviewing the situation in the power market and other factors impacting the demand and supply of electricity in the country.
Based on the analysis of data for the past three months, the Commission observed that the Market Clearing Price (MCP) for electricity in the Day-Ahead Market (DAM) ranged up to ₹12 (~$0.15)/kWh. The percentage of blocks in a day with MCP at 12 (~$0.15)/kWh was in the range of 0-33% in March 2023.
The peak demand for electricity touched 212 GW in January 2023 and 210 GW in February 2023, showing an increase of 8% compared to the same period last year.
The Peak Demand is expected to increase further with the onset of summer and increase in manufacturing activities from April onwards, as per a report published by Central Electricity Authority.
The Commission also noted that natural gas and coal prices have significantly reduced over the last few months.
The sellers bidding in the range of ₹8 (~$0.097)- ₹12 (~$0.15)/kWh are mostly state utilities and independent power producers based on imported coal and e-auction coal, and the average bid price of such sellers has generally been lower than ₹10 (~$0.12)/kWh.
However, during peak hours, MCP touches the price ceiling of ₹12 (~$0.15)/kWh largely because of buyers bidding at the ceiling price due to higher demand.
The Commission approved the introduction of HP-DAM in the Integrated Day Ahead Market (I-DAM) segment at IEX and approved the price ceiling of ₹50 (~$0.61)/kWh. However, there has not been any trade in this segment since its introduction.
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