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Comments and Suggestions on CERC Staff Paper on: Market Based Economic Dispatch of Electricity (MBED): Re-designing of Day-Ahead Market (DAM) in India’

Author(s): Prayas (Energy Group) Publication Date: March, 2019

CERC staff published a discussion paper ‘Market Based Economic Dispatch of Electricity (MBED): Re-designing of Day-Ahead Market (DAM) in India’ on the 31st of December for public comments.
While there is a need for optimal scheduling, Prayas (Energy Group)’s comments and suggestions on the paper highlight a number of areas where more clarity is needed and detail certain gaming possibilities as well as implementation issues.
The proposal outlined in the CERC staff paper for Market Based Economic Dispatch needs further analysis especially to ensure:

  1. Estimation of potential savings based on multiple studies
  2. Assessment of potential risks to DISCOMs, generators and grid users, especially with respect to fuel sector uncertainties, various potential bidding and gaming strategies by generators and changes due to applicable transmission charges. Before implementing this proposal, mechanisms to address potential risks should also be detailed.
  3. Analysis of legal and institutional changes needed to operationalise this mechanism and implications of the same, particularly in the context of power procurement, the role and powers of market monitoring institutions and load dispatch centers.

The changes proposed in the paper are fundamental and need to be implemented cautiously and slowly. However, in the intervening period, several steps, which require limited legal and institutional changes, could be implemented to avoid loss of many crucial years in moving towards market based operations and improving efficiency. Thus, urgent action on the issues listed below is imperative.

  1. Implementing  gate closure
  2. Instituting mechanisms to ensure automatic sale of unrequisitioned power in power exchanges
  3. Creating a nodal trading agency for the sale of unrequisitioned power
  4. Broadening and deepening the scope of transparent, bilateral, short-term and medium-term trades of DEEP
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