Case Study: Powering India
Figure 1: Electricity Transactions in Total Generation, 2009
Regulatory Initiatives Over the Last Year 1. Improving Access to Markets For Generators & Discoms Investment in generation is also propelled by ensuring adequate
Figure 2: Short-Term Transactions in Total Generation, 2009
transmission capacity addition with minimal congestion in the grid. It provides assurance to the generator of physical offtake of power. Similarly, clear and simple rules for connectivity to transmission grid, clear rules for scheduling and despatch, and accurate transmission pricing signals reduce the generators operational risks. The central regulator (Central Electricity Regulatory Commission, CERC) has formulated “Long-term and medium-term open access regulations” to improve market access for grid connected entities. It provides for a framework for open access in to inter-state transmission grid in the medium- term (3 month to 3 years) and in the longer-term (above 12 years). The planning and execution of transmission corridor for thermal projects above 500 MW, hydro projects above 250 MW and 100 MW customers is entrusted to the Central Transmission Utility (CTU). Prior agreement of gencos with a beneficiary is not a precondition for network expansion. Access to the national market through the interstate grid to new generators (both IPPs and MPPs) provides comfort for the evacuation of power and significantly reduces the risks generators would otherwise carry due to the denial of open access by state governments. This would force gencos to sell power in the local market and hence be unable to get the best price. The reduction of operational risk makes these projects much more bankable. This regulation is over and above the short-term open access regulation which already exists and is used as the framework for short-term power scheduling and despatch. In the transmission sector, 20,700 MW of interstate
transmission lines for regional power transfer are being added under the 11th
Source: CERC
policy and undertake price risk management when they are fully exposed to market price risks. Sophisticated risk management and risk analytics, like the use of forward price curves and volatility based risk analysis, should be introduced by power sector players. As the proportion of short-term contracts increases in the portfolio of generators and discoms, the need for derivative instruments to hedge prices for these companies will grow further. Market participants will then ask for a derivative marketplace. Presently, 90% of the market consists of long-term contracts, with the short-term market at 5%, the other 5% being real-time market (called the Unscheduled Interchange market). Figures 1 & 2 show this breakup.
126 Five year Plan. These are 765 KV Single ckt, 400
KV Double Ckt and Bipole HVDC lines. With this the national grid shall have a capacity of 37,150 MW with 73,000 ckt km EHV lines. To step back and look at the growth of the transmission
network in India in 1950, the transmission systems were isolated and developed in and around urban and industrial areas. These were integrated to form the state grids. In 1975, with the establishment of large Central Sector generation utilities with regional generation units, the construction of associated transmission systems for the evacuation of power as well as delivery of power to the beneficiaries was made. This shifted the focus from state grid system to regional grid systems with the Central Electricity Authority (CEA – the technical body responsible for planning generation and transmission systems) playing its role. In 1989, the transmission wings of these Central Generating companies were separated to set up a Central
worldPower 2010
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