Cement Energy and Environment

POWER MARKETS (POWER EXCHANGES) K.G. Srinivasu/u Divisional Engineer, Commercial!APPCC APTRANSCO, Vidyut Soudha, Hyderabad What is a market? Large number of participants interact through a free, fair and transparent market place to provide appropriate goods and services at fair prices determined by both long-term and short-term demand-supply considerations. Indices of competitive market • Several Buyers and Sellers to avoid exercise of market power • Demand and supply responsiveness to price • Equal access to essential facilities like transmission and distribution • Liquid and efficient market place • A complete market. Electricity market " Electricity market" is a place where a generator & a distributor of power meets either on its own or through authorized market participants. Electricity markets are very different from commodities market and far more complex. Commodities markets deal with one product. Electricity markets deal with ancillary services such as Frequency management, Voltage control, Reactive Power & Power factor control, power losses, dedicated transport mechanism such as transmission lines and underground cables. Challenges in electricity market • Money economics follow the per capita income. We have yet to arrive at a similar concept in electricity market. • Electricity cannot be economically stored . Balance between consumption and availability is done on a real time basis. • Electricity demand varies intraday and during different seasons and weather. • Prices vary drastically as per the demand & supply conditions. • Power from various sources is pooled to customers due to system grid. Hence no defined path for delivery. • Electricity flows as per law of physics at a speed of light (3,00,000 km/s). Advance planning and split second decision management is necessary by the Load Dispatcher. Key issues in development of electricity market • Limited availability of surplus electricity • Limited participants • Availability of and Access to transmission capacity • Transmission charges • Cap on price of short term power Electricity Act 2003-A competitive market in power Compulsory unbundling of utilities Complete De-licensing of generation Separation ownersh ip" operation" of "transmission and "system Universal Open Access to transmission networks Consumer level choice of supplier Development of a multi buyer multi seller market in power EA 2003 brought in key changes to create market for electricity Generation De licensed The captive plants can be set up much more freely Transmission Non-discriminatory open access to all market participants Segregation of trading and transmission activities Distribution • All future power procurement by distribution licensees on a competitive tariff based bidding basis • Parallel networks have been allowed to be set up • Regulated utilities have been allowed to purchase from a generator/ trader of their choice • Consumers with more than 1MW load allowed open access by January 2009 • The retail tariffs are to be rationalized in a phased manner with transparent subsidy payment requirements. Trading • Trading has been made a licensed activity • Power Exchanges have been established. Elements of power market Market type: Bilaterai/OTC and Exchange-traded Participants: Grid entities, licensed traders, exchanges, clearing 17