The Odisha Electricity Regulatory Commission (OERC) has issued the draft Ancillary Services Regulations, 2026, which sets out a state-level framework for the procurement, deployment, payment, accounting, and settlement of ancillary services.

The draft defines ancillary services as services necessary to support grid operation by maintaining power quality, reliability, and security.

Stakeholders have until June 20, 2026, to submit their suggestions.

The proposed rules introduce Secondary Reserve Ancillary Service (SRAS), Tertiary Reserve Ancillary Service (TRAS), and other services, such as voltage control and black start ancillary services, as specified in the Odisha Grid Code.

The draft designates the State Load Despatch Centre (SLDC) as the nodal agency for implementing ancillary services.

Activation and Procurement of SRAS

For SRAS, the draft provides that activation will occur when the state’s area control error goes beyond the threshold of +10 MW or another limit notified by the Commission, or when required for congestion relief or replenishment of primary reserves.

SRAS will be procured at the state level by the nodal agency.

The proposed SRAS procurement mechanism requires providers to give standing consent for at least seven days. Generating stations must declare parameters such as installed capacity, declared capacity, maximum possible generation, schedule, technical minimum, and ramp-up and ramp-down capability.

Despatch of SRAS

Under the proposed rules, Secondary Reserve Ancillary Service (SRAS) will be activated through automatic generation control or secondary control signals.

The SRAS provider will be selected by the nodal agency for providing SRAS-Up or SRAS-Down based on the customer participation factor.

SRAS will be dispatched at the state level through secondary control signals by the nodal agency. The nodal agency will send the secondary control signal for SRAS-Up and SRAS-Down to the SRAS provider’s control center every four seconds. The SRAS provider will allow its control center to follow the secondary control signal for SRAS-Up or SRAS-Down automatically without manual intervention.

The average of SRAS-Up and SRAS-Down data will be calculated by the nodal agency for each five-minute time block, using archived SCADA data at the nodal agency, reconciled with data received at the SRAS provider’s control center, and used for payment of the energy charge or compensation charge.

Payment of SRAS Incentive

SRAS may be provided by generating stations, energy storage systems, or demand response entities connected to the intrastate transmission system, provided they have bi-directional communication with SLDC, metering and SCADA telemetry, and the ability to respond within 30 seconds, deliver the full SRAS capacity obligation within 15 minutes, and sustain it for at least 30 minutes.

The draft contains two different provisions on SRAS incentive treatment. No incentive will be provided during the introductory stage of SRAS implementation, while Regulation 12 sets out an incentive structure based on performance, ranging from ₹0.10 (~$0.001)/kWh to ₹0.50 (~$0.0052)/kWh for performance levels from 20% to 95% and above.

Performance below 20% on two consecutive days may result in disqualification from SRAS participation for one week.

Tertiary Reserve Ancillary Service

The draft also introduces Tertiary Reserve Ancillary Service (TRAS), which may be provided by generating stations, energy storage resources, or demand response entities connected to the interstate or intrastate transmission system.

TRAS providers must be capable of varying active power output, drawal, or consumption on receipt of SLDC dispatch instructions, and must be able to provide service within 15 minutes and sustain it for at least 60 minutes.

Procurement of TRAS

The procurement of TRAS through the Day Ahead Ancillary Service (AS) Market and the Real Time AS Market will be undertaken in accordance with the bidding timelines specified in the Grid Code. Until specific provisions in this regard are set out in the Grid Code, the bidding timelines for the Day Ahead AS Market and the Real Time AS Market will be the same as those of the Day Ahead Market for energy and the Real Time Market for energy, respectively.

The capacity offered as a sell bid for energy and for TRAS from the same resource in the same time block shall be separate and non-overlapping.

The capacity offered as a sell bid in the power exchange to provide TRAS-Up or TRAS-Down from a resource in the same time block will be separate and non-overlapping.

A TRAS Provider cleared in the Day Ahead AS Market may place incremental bids in the Real Time AS market. A TRAS Provider not cleared in the Day Ahead AS Market or that has not participated in the Day Ahead AS Market may also place bids in the Real Time AS market.

Price Discovery for TRAS-Up

The price discovery for TRAS-Up will be based on the uniform market-clearing price principle, subject to market splitting in the event of congestion. The highest energy-up bid corresponding to the requirement for TRAS-Up will be the market-clearing price for Energy-Up in the Day Ahead Ancillary Service market or in the Real Time Ancillary Service market.

Price Discovery for TRAS-Down

The price discovery for TRAS-Down will be based on the pay-as-bid principle. The Energy-Down bids will be ranked in descending order from the highest Energy-Down bid to the lowest, and the nodal agency will select the TRAS-Down.

Shortfall in SRAS and TRAS Procurement

In the event of a shortfall in SRAS or TRAS procurement, all generating stations whose tariffs are determined by the Commission, including those with surplus power, will be deemed available to the SLDC for use. If unrequisitioned surplus is dispatched for TRAS-Up due to a shortfall in market procurement, the generator will be paid 110% of energy charges; if dispatched for TRAS-Down, it will be paid back at 90% of energy charges.

Deviations by ancillary service providers will be calculated for each 15-minute time block and settled in accordance with the deviation settlement mechanism regulations. No transmission charges, transmission losses, or transmission deviation charges will be payable for SRAS and TRAS.

Recently, OERC issued the draft ‘Terms and Conditions for Determination of Transmission Tariff Regulations, 2026,’ establishing the framework for determining transmission tariffs for intrastate transmission systems.

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