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MOSL: UTILITIES-Shift to complete market-driven electricity scheduling; CERC discussion paper proposes a transformational shift

Utilities: Shift to complete market-driven electricity scheduling; CERC discussion paper proposes a transformational shift

 

In a recently published discussion , CERC has proposed a transformational shift to a complete market-driven marginal cost-based scheduling and dispatch of electricity, on principals similar to how electricity is scheduled on the power exchanges. All DISCOMs/buyers and generators/sellers will bid on exchanges for the next day. A market clearing price will be determined based on demand/supply.

The idea is to schedule electricity based on a national merit order, shifting from the existing regional (state) merit order. The paper shows by way of example how regional merit orders create artificial barriers against most economical scheduling of electricity. Some of the low cost plants remain under-utilized due to barriers created by regional sourcing. Although regional merit orders also operate on marginal cost principals, they lack enough market dynamism.

Under the proposed structure, generators with bilateral contracts (long/medium-term PPAs) are likely to bid at their variable cost (regulated/contracted). The bilateral contracts will be separately settled such that there is no loss of the DISCOM – effectively splitting bilateral contracts into physical and financial contracts. Any gains on a bilateral contract to a generator will be shared (@50%) with the DISCOM.

A national merit order, driven by exchanges, will bring in depth on exchanges, enabling wider participation and representative price discovery for stakeholders in the power sector.