Launch of real-time electricity trading in India, a huge step toward robust grid and efficient power market.
On June 1, 2020, India introduced the real-time market (RTM) for power trading, paving the way for a more efficient electricity market and smooth integration of renewable energy. With the launch of RTM, electricity distribution companies (DISCOMs) will now be able to purchase millions of units of power in spot markets just an hour before delivery, a process as simple as booking a cab online just an hour before travelling. Establishment of RTM is a landmark initiative by the Central Electricity Regulatory Commission (CERC), India’s central regulator, to drive the country’s shift from primarily long-term generation contracts to shorter-term contracts and electricity spot markets. As per estimates by power exchanges in the country, around 20 billion units of power would be traded through RTM each year. Within a few hours of RTM’s launch on June 1, a staggering 1.64 million units of power was traded on the platform.
CERC amended three regulations (the Indian Electricity Grid Code Regulations, Power Market Regulations, and Open Access in Inter-State Transmission Regulations) to introduce the RTM framework. USAID’s RISE Initiative, under the “Greening the Grid” bilateral program with the Ministry of Power, assisted CERC in this endeavor. The GTG-RISE assisted in carrying out detailed modelling exercises to establish outcomes; worked on validating various scenarios and options to refine designs; and supported CERC in compiling and responding to comments from stakeholders by preparing and drafting the Statement of Reasons.
The RTM platform is widely used across the world to promote market efficiencies and integrate renewable energy, which is variable by nature and requires access to flexible, shorter-term market options to balance supply and demand. CERC regards RTM’s introduction as a critical step toward establishing a more reliant electricity network in the country and the South Asian region. With RTM’s introduction, DISCOMs will not need to rely solely on day-ahead scheduling for meeting their demand. The RTM platform will enable DISCOMs to make up for errors in demand estimates and unpredictable generation patterns with increasing renewable penetration, saving them from the huge penalties incurred earlier for overdrawing from the grid in case of shortage. Similarly, the sellers across the region get wider access to more efficient and real-time power market. This will translate to savings and better resource utilization by both DISCOMs and generation plants.