Comments on CERC

1
Comments on CERCs Staff Paper Developing a
Common Platform for Electricity Trading

• S. A. Khaparde, A. R. Abhyankar and V. Sarkar
• Indian Institute of Technology Bombay

2
Topics of suggestions

• Congestion Management
• Issue of congestion surplus
• Utility of market splitting under meshed network
  situation
• Transmission Pricing
• Compatibility of PX transmission costs with those
  of bilateral trades
• Ex-ante or ex-post?
• Point-of-connection (POC) scheme

3
Suggestions related to Congestion Management
4
Proposed approach for handling congestion surplus
150 MW
50 MW
Area A (2000Rs/MWh)
Area B (3000Rs/MWh)
100 MW
150 MW
50 MW
5
Proposed approach for handling congestion surplus
(con..)

• Original pricing rule
• 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

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Proposed approach for handling congestion surplus
(con..)

• Proposed pricing rule
• 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 (5030001002000)/
  150 2333.33Rs/MWh
• ISO collects a net congestion surplus of 0 Rs/h

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problem of power mixing
100 MW
180 MW
Area A (2000Rs/MWh)
Area C (3000Rs/MWh)
100 MW
80 MW
200 MW
100 MW
Area B (2200Rs/MWh)
200 MW
70 MW
120 MW
Area D (3500Rs/MWh)
70 MW
130MW
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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
  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 87
• It cant 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

9
Compatibility of Nord Pool version of area
pricing with Indian system

• Nord Pool approach of market splitting considers
  only 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

10
Structure of the Indian system
NR
NER
ER
WR
SR
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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!

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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

13
Suggestions related to Transmission Charges
14
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?

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Compatibility of PX transmission costs with
bilateral trades (con..)

• We believe that the PX trades and short term
  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

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Ex-ante or Ex-post?

• No specific details about socializing total
  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

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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

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Point-of-Connection (POC) Scheme

• The payment at one point, the point of
  connection, 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

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Thank You sak_at_ee.iitb.ac.in