The power ministry has circulated a discussion paper to seek stakeholders’ comments on Market-Based Economic Despatch (MBED).
New Delhi :The power ministry has circulated a discussion paper to seek stakeholders’ comments on Market-Based Economic Despatch (MBED).
This is a move toward competition in the power sector and to achieve the goal of One Nation, One Grid, One Frequency, One Price.The Ministry of Power has circulated a discussion paper on MBED on June 1, 2021, to all concerned stakeholders for obtaining their inputs and comments, an official statement said.
It covers the proposed framework for implementation, estimation of the indicative benefits of the mechanism, key issues and suggested mitigation mechanisms and the proposed way forward. The last date for providing comments is June 30 2021.
Through this discussion note, the power ministry intends to hold wider consultations with all the stakeholders to arrive at a consensual way forward on implementing phase-1 of MBED from April 1, 2022.
MBED will ensure that the cheapest generating resources across the country are despatched to meet the overall system demand and will thus be a win-win for both the distribution companies and the generators, and ultimately result in estimated annual savings in excess of Rs 12,000 crores for the electricity consumers.
MBED will also facilitate larger integration of variable renewable energy by enlarging the balancing area to the national level and is also expected to optimise the need for reserves and ancillary services.
It has been suggested to implement MBED in phases.
Phase 1 would involve only the thermal fleet of Central Generating Stations to test the efficacy of the MBED mechanism, identify deficiencies or potential issues that need to be addressed before a nationwide rollout, familiarise all key stakeholders with the framework and allow for necessary infrastructure and systems to be built out and tested before scale-up, the ministry said.
With the significant investments over the last decade, the Indian power system has achieved larger inter-regional transfers of electricity and eliminated most constraints to realise its status as “One Nation, One Grid, One Frequency”, it added.
The Indian power system currently ranks among the largest synchronised transmission systems in the world.
Despite this enablement, the existing electricity scheduling and despatch mechanisms in the country are siloed and the dayahead procedures result in sub-optimal utilisation of the country’s generating resources.
It has been observed that the states very often end up committing and utilising costlier generation plants, while cheaper generation plants are not fully scheduled/utilised across the country.
Security constrained economic despatch (SCED) was such an attempt towards optimisation of the system cost. This has already yielded substantial saving in system cost.
This was followed by the Real-Time Market – a half-hourly market, which provided for an opportunity for the buyers and the sellers
to buy and sell through an organised market closer to real-time.
The full benefit of physical integration would be realisable when India transits to an optimisation at the national level and a countrywide balancing area instead of the siloed self-scheduling and balancing mechanisms currently followed within state or regional boundaries.
Thus, the next step in reforming electricity market operations is to implement Market Based Economic Despatch, in moving towards a “One Nation, One Grid, One Frequency, One Price” framework.