Report release on “Regulatory & Market Guidelines on Key Insights and Considerations of Priority Areas for Renewable Energy Integration in India Application”
With increasing renewable energy (RE) portfolio the markets and regulations also need to be “future-ready”. India’s electricity sector is currently transitioning from multi-decade generation contracts and limited dispatch flexibility to a greater reliance on shorter term contracts and electricity spot markets. In this transition, policymakers and regulators face questions around contract regulation, spot market design, requirements and incentives for spot market participation, potential risks and tools to hedge risk, resource adequacy, and ensuring competitive markets. Policymakers and regulators in the United States have encountered and grappled with many of these same questions in the ongoing development of U.S. electricity markets. These U.S. experiences are compiled in the report “Regulatory & market guidelines on key insights and considerations of priority areas for renewable energy integration in India.”
The report examines the evolution of electricity contracting in U.S. electricity markets. The report has drawn lessons from California and New York, which represent different points along a spectrum of industry structure and regulation. In California, most generation is non-utility owned but the retail sector has historically been heavily regulated. In New York, all generation is non-utility owned and the state has a competitive retail market. The study recognizes key insights for Indian policymakers and regulators, some of which includes:
- Long-term bilateral contracting can be compatible with merit order dispatch, but enabling compatibility between them may require changes in markets and regulation to reduce self-scheduling
- Hedging tools are critical for managing electricity spot market risks, but the development of exchange-traded financial products for electricity will likely be demand-driven and iterative
The report was released by Chairperson Mr. P.K. Pujari from the Central Electricity Regulatory Commission (CERC) and Michael Satin, Director of Clean Energy & Environment Office, USAID/India on January 3, 2020. Speaking at the report launch, Chairperson – Mr. P.K. Pujari said “India has already come out with regulations on the real time markets, which is expected to become valid from April 1st, 2020. Draft regulations on ancillary services will follow soon. Any such studies that apply to the Indian conditions is extremely useful for us to design the market and inform all the stakeholders. This USAID’s Greening the Grid (GTG) report is extremely useful and will help us in developing other products in the market”.
The report has been prepared under USAID’s GTG Program, a joint initiative with the Ministry of Power by National Association of Regulatory Utility Commissioners (NARUC) and Ethree (Energy + Environmental and Economics), USA. It has been developed in close collaboration with CERC with inputs from members of the Forum of Regulators (FOR), Power System Operation Corporation Limited (POSOCO) and numerous other stakeholders.
The GTG Program, as a part of its central component GTG- RISE initiative, is also implementing a series of innovation pilots to validate technologies and solution to manage large-scale integration of RE into the grid. This includes pilots on battery energy storage system, automatic generation control, coal flexibility and market re-design including implementation of a National Open Access Registry (NOAR), which is aimed to improve electricity trading within shorter time intervals, in line with global electricity markets.