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Comments on CERC’s Staff Paper:
Developing a Common Platform for
Electricity Trading
S. A. Khaparde, A. R. Abhyankar and V. Sarkar
Indian Institute of Technology Bombay
Topics of suggestions
 Congestion Management
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Issue of congestion surplus
Utility of market splitting under meshed
network situation
 Transmission Pricing
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Compatibility of PX transmission costs with
those of bilateral trades
Ex-ante or ex-post?
Point-of-connection (POC) scheme
gestions related to Congestion Managem
Proposed approach for handling
congestion surplus
50 MW
150 MW
Area A
(2000Rs/MWh)
Area B
(3000Rs/MWh)
150 MW
100 MW
50 MW
Proposed approach for handling
congestion surplus (con..)
 Original pricing rule:
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Generator at area A is paid a price of
2000Rs/MWh
Load at area A pays a price of 2000Rs/MWh
Generator at area B is paid a price of
3000Rs/MWh
Load at area B pays a price of 3000Rs/MWh
ISO collects a net congestion surplus of
100000Rs/h
Proposed approach for handling
congestion surplus (con..)
 Proposed pricing rule:
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Generator at area A is paid a price of
2000Rs/MWh
Load at area A pays a price of 2000Rs/MWh
Generator at area B is paid a price of
3000Rs/MWh
Load at area B pays a price of
(50*3000+100*2000)/150= 2333.33Rs/MWh
ISO collects a net congestion surplus of 0
Rs/h
problem of power mixing
100 MW
180 MW
80 MW
200 MW
Area C
(3000Rs/MWh)
100 MW
Area A
(2000Rs/MWh)
Area B
(2200Rs/MWh)
120 MW
100 MW
200 MW
70 MW
Area D
(3500Rs/MWh)
70 MW
130MW
Problem of power mixing (con..)
 Area ‘A’ & ‘B’ are generation surplus areas
 Area ‘C’ & ‘D’ are generation deficit areas
 100 MW from area ‘A’ and 50 MW from area ‘B’ are
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mixed first to form a net surplus amount of 150 MW.
Areas ‘C’ and ‘D’ get shares in this mixed amount in a
ratio of 8:7
It can’t be immediately determined how much power
is delivered from a sending end area to a receiving
end area
Therefore an additional tie-breaking strategy is
required to implement the proposed method
Principle of proportional sharing may be adopted for
the purpose of tie-breaking
Compatibility of Nord Pool version of
area pricing with Indian system
 Nord Pool approach of market splitting considers only
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area power balance and inter-zonal capacity limit
constraints
This approach is mainly applicable to a radial system
where removal of any inter-zonal link separates the
original system into two totally disconnected systems
In case of a radial system, for a certain zonal
injection and withdrawal pattern, power balance
equations give a unique solution to the inter-zonal
flows
However, for a meshed system, Nord Pool approach
may lead to multiple solutions
Unfortunately, our system is a meshed system
Structure of the Indian system
NR
NER
ER
WR
SR
Structure of the Indian system (con..)
 Three loops are there in the system
 NR-WR-SR-ER
 NR-WR-ER
 WR-SR-ER
 There is no synchronous loop in the current system
 However, an additional tie breaking strategy is to be
designed to distribute the net incoming or outgoing
flow of each of the regions NR, WR, SR & ER over
the corresponding interfaces
 In presence of synchronous loop, Nord Pool
approach will fail!
Our proposal
 To go for a direct OPF based congestion
management mechanism considering regions as
nodes
 Joint clearance of power exchange and bilateral
trades for a better utilization of transmission
resources
 Financial transmission rights to give financial security
to bilateral traders
 Setting up curtailment priority among the bilateral
trades by means of transmission service request
mechanism
uggestions related to Transmission Char
Compatibility of PX transmission costs
with bilateral trades
 It is not clear whether the transmission
charges for PX in Rs/MW/Hour would be
comparable with prevailing long term rates or
short term rates?
 The staff paper mentions that the usage of
pre-assigned transmission capacity by PX on
inter-regional corridors shall be ‘akin’ to long
term usage.
 If this is so, whether, the charges would be
comparable with long term rates?
Compatibility of PX transmission costs
with bilateral trades (con..)
 We believe that the PX trades and short term
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bilateral trades would act as two parallel activities
for sale and purchase of power.
It is expected that the PX would help the price
discovery for bilateral transactions
This would hold true only if the entities involved
in both mechanisms are subjected to common
transmission prices
Common platform for transmission capacities
mandates common platform of its pricing
The transmission charges for PX trades and
short term bilateral trades should be comparable
Ex-ante or Ex-post?
 No specific details about socializing total
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transmission cost among the participants are given in
the staff paper
Ex-post scheme of transmission usage charge
Members of PX would come to know about their
share in transmission cost, only after market
clearance
If the costs are made distance based or direction
sensitive (rightly so!), then participants are exposed
to vagaries of transmission charges
Socializing transmission costs does not necessarily
mean assigning charges based only on MWs traded
Our Suggestions
 The transmission pricing scheme should be
‘ex-ante’
 The transmission charges should be sensitive
to distance and topology of the network
 This gives rise to appropriate price signals for
generator and load investments
 The ‘point-of-connection’ (POC) transmission
tariff provides a good solution to the above
problem
Point-of-Connection (POC) Scheme
 The payment at one point, the point of connection,
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gives access to the whole network system, and thus
the whole electricity market place
Single charge in Rs/MW/Hr, depending upon the level
of connection
Real power tracing can be employed to arrive at point
charges in POC tariff
Tracing results are topology dependent and hence
give rise to spatially variant price signals
POC scheme can be applied to both, i.e., PX trades
and short term bilateral transactions
Thank You
[email protected]