Experts Panel Outlines Roadmap to Redesign Indian Electricity Market

The proposal includes long-term PPAs to be of 12-15 years only


A committee of experts constituted by the Ministry of Power to develop India’s electricity market has proposed comprehensive solutions to address key issues such as long-term contracts, resource adequacy planning, and increasing renewable energy’s share in the overall energy mix.

The solutions aim to create an efficient, optimal, and reliable market framework to enable renewable energy transition and integration into the grid.

The proposed changes include demand response and aggregation, strengthening market monitoring and surveillance activities, and implementing a regional-level balancing framework for deviation management.

The group, headed by the Power Secretary, has representation from various ministries, regulatory bodies, and state governments.

The group has submitted the report to Union Power Minister R.K.Singh.

The experts’ group has outlined a roadmap and specific recommendations for the redesign of the Indian electricity market of the future.

The roadmap includes interventions for the near, medium, and long term, such as setting up a mechanism to monitor supply adequacy, enhancing the efficacy of the Day-ahead Market, introducing a market-based mechanism for secondary reserves, and implementing 5-minutes based metering, scheduling, dispatch, and settlement.

Singh emphasized the need to ensure procurement of the most efficient power generation capacity while designing the capacity contracts and agreed with the recommendations of long-term power purchase agreements of 12-15 years.

He recommended that new renewable capacity additions should be based on the Contract for Difference methodology to ensure competition and transparency.

According to the latest data, the total traded volume in the Indian electricity market in 2023 was only a small portion of the energy generated from all sources.

The peak demand for electricity in 2022-23 was 215.8 GW, which is expected to increase to 335 GW by 2030.

The Ministry recently formulated guidelines to plan communication systems for new and existing inter-state transmission systems to help define their categories and the corresponding approval procedure.

A communication system is a collection of individual communication networks, communication media, relay stations, tributary stations, and terminal equipment capable of inter-connection, and inter-operation used to regulate the transmission of electricity.

Subscribe to Mercom’s real-time Regulatory Updates to ensure you don’t miss any critical updates from the renewable industry.