Government Issues Guidelines for Resource Adequacy Planning Framework

The guidelines ensure the availability of resources at each level to meet the growing power demand


The Ministry of Power, in consultation with the Central Electricity Authority (CEA), has released a set of guidelines to establish an institutional mechanism for resource adequacy, spanning from the national level down to the distribution companies (DISCOM).

The guidelines are put in place to ensure the availability of resources at each level to meet the demand. Additionally, the framework will help proactively assess the requirements for new generation capacities, energy storage, and other flexible resources well in advance.

The guidelines for the resource adequacy planning framework have been formulated by the Ministry of Power under Rule 16 of the Electricity (Amendment) Rules, 2022, which were officially announced on December 29, 2022.

Last October, CEA issued the draft resource adequacy plan to maintain adequate generation capacity to meet future energy demands.

Under the new framework, the DISCOMs will create a report detailing the expected demand, the rate of demand growth, the current contracted capacity, and the amount of power obtained from power exchanges.

The objective of the plan is to optimize the generation of electricity at the lowest possible cost while meeting the demand. This includes minimizing overall system costs, such as operational and maintenance expenses, costs for obtaining spinning reserves, fuel costs, and the costs associated with starting up and shutting down power-generating units.

The optimization process takes into account various constraints related to power plant operations, such as limits on ramping up or down generation, costs associated with starting up or shutting down units, generation limits, energy storage operations, interconnection limits for importing or exporting power, renewable purchase obligation (RPO) targets, capacities for solar rooftop or distributed generation, and planning reserve margin.

The resource adequacy exercise will be conducted with a ten-year planning horizon on a continuous basis.

Mechanism for Resource Adequacy and Compliance Monitoring

According to the new guidelines, the National Load Despatch Center (NLDC) is required to release an annual short-term national resource adequacy plan covering one year.

The plan should encompass various parameters such as demand forecasts, resource availability based on the progress of new projects under construction, scheduled maintenance plans for existing stations, historical forced outage rates for each station, and decommissioning plans.

The demand forecasts used by CEA and NLDC on an hourly basis should be synchronized with the projections provided by individual DISCOMs to CEA and NLDC.

To facilitate this alignment, the State Transmission Utility (STU) or the State Load Despatch Center (SLDC), acting on behalf of the DISCOMs in each state, should submit the details of demand forecasts (both peak and energy requirements) for the next ten years to CEA and NLDC by May every year.

The DISCOM is required to demonstrate to the State Electricity Regulatory Commission (SERC) or the Joint Electricity Regulatory Commission (JERC) a tie-up with the power generator for 100% of the energy for the first year and a minimum of 90% tie-up for the second year to fulfill their obligation in contributing towards meeting the national peak.

Each DISCOM should develop a resource adequacy plan spanning ten years to ensure they can meet their peak demand and electrical energy requirements.

The guidelines also specify the timeframe within which DISCOMs must complete the procurement process for each type of generation. This will ensure the procured capacity becomes available at the required time to meet the projected load.

The DISCOMs are required to present their plan for meeting peak demand and energy requirements to the SERC or JERC through the long-term distribution licensee resource adequacy plan. This plan should include a combination of long-term, medium-term, and short-term contracts.

According to the guidelines, DISCOMs should strive to have at least 75% of their total capacity requirements covered by long-term contracts as specified in the long-term national resource adequacy plan or by the respective SERC.

Medium-term contracts are recommended to constitute 10-20% of the capacity, while the remaining power demand can be fulfilled through short-term contracts.

In cases where there is a shortfall in capacity needed to meet the short-term distribution resource adequacy plans, the NLDC must conduct bidding processes by aggregating the individual plans of DISCOMs to acquire the required capacity.

The DISCOMs will be responsible for submitting the contracted capacity details for the upcoming year, which will fulfill the resource adequacy requirement for the national peak, to the respective STU or SLDC.

The submission should be made after obtaining approval from the respective SERC or JERC, and the deadline for submission will be January.

The STUs will then aggregate the total contracted capacities at the state level and forward the information to the corresponding Regional Load Despatch Center (RLDC). The RLDCs, in turn, will aggregate the capacities at the regional level and submit the information to the NLDC by February.

The NLDC would then consolidate the capacities at the national level and ensures compliance with the short-term national resource adequacy plan. If any shortfall is identified for the upcoming year, the NLDC should either inform the SERC or JERC for necessary compliance or facilitate a national-level auction to address the balance.

The STU or SLDC will be responsible for preparing a one-year ahead short-term distribution resource adequacy plan on an annual basis at the state level, which will aid in operational planning.

In line with the long-term national resource adequacy program, every DISCOM should develop individual plans for ten years to secure the necessary capacity and meet the planning reserve margin at the national level.

Similarly, in a manner akin to the NLDC, all SLDCs should also create comprehensive annual operational plans specific to their respective states. The plans will be based on the actual availability of generating stations.

Guidelines for Procurement of Required Resources

The DISCOM will be responsible for securing an optimal mix of resources through contracting to meet future demand and fulfill resource adequacy requirements. This should be done based on the findings obtained from the long-term national resource adequacy plan study.

The DISCOM should consider entering into long-term, medium-term, and short-term firm contracts with generation resources to contribute to the resource adequacy requirement. The future capacity mix may comprise existing capacities, planned capacities, and capacity addition required to meet the increasing demand of the utility, considering the appropriate gestation period of the generation resource.

When procuring power from renewable energy sources to meet RPO targets, the DISCOM should consider the renewable energy potential in their respective state and adhere to the fungibility provisions within renewable resources per the latest RPO order.

Furthermore, the procurement of power from wind, solar, wind-solar hybrid, and round-the-clock (RTC) projects should be conducted per tariff-based competitive bidding process guidelines.

The DISCOMs must ensure that the procurement process for the projected demand is initiated and completed well in advance. This ensures the procured capacity becomes available when required to serve the anticipated load.

Recently, CEA directed renewable energy developers who have applied for connectivity until April 30, 2023, to comply with CEA Connectivity Regulations by September 30 or face disconnection.

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