The following article discusses the recent banning and unbanning of Telangana’s power utilities from participating in the Indian Energy Exchange, the function of the Indian Energy Exchange and the regulatory frameworks surrounding it. It also provides insight into topics such as the Electricity Act 2003 and the Central Electricity Regulatory Commission.
Recent Ban on Telangana Power Utilities and Subsequent Lift
In a recent development, the power utilities of Telangana (Discoms) were erected from participating in the day ahead market with the Indian Energy Exchange (IEX) on grounds of non-payment of dues to Gencos. This ban was imposed by the National Load Dispatch Centre (NLDC) prior to reconciling accounts with the concerned Gencos. Objecting to this, Discoms cleared ₹1,360 crore out of ₹1,381 crore dues and claimed that the agency was acting beyond its mandate as per the Electricity Act, 2003. The lift on the ban was officially given on 19th August 2022, thus allowing the Discoms to resume procuring energy.
Indian Energy Exchange: An Overview
The Indian Energy Exchange holds the distinction of being the first and the largest energy exchange in India. It provides a nationwide, automated trading platform for physical delivery of electricity, Renewable Energy Certificates and Energy Saving Certificates. It is a publicly listed company with listing on National Stock Exchange (NSE) and Bombay Stock Exchange (BSE), and is regulated by Central Electricity Regulatory Commission (CERC). Operational since 2008, the IEX aims to leverage technology and innovation to create transparent and efficient energy markets.
The IEX Trading Platform: Facilitating Market Activities
IEX facilitates various market activities such as electricity trading in the Day-Ahead Market (DAM) and Term-Ahead Market (TAM), real-time market and cross border electricity trade. The Exchange also invites bids for conventional and renewable products through separate bidding windows, thus ensuring an integrated and efficient trading mechanism.
Green Market: An Initiative towards Renewable Energy
The Green Term Ahead Market (G-TAM) is a new market segment developed for trading in renewable energy with approval from CERC. This new segment focuses on contracts such as Green-Intraday, Green-Day-ahead Contingency (DAC), Green-Daily and Green-Weekly. The trading process involves continuous or spot trading for Green-Intraday, Green-DAC and Green-Daily contracts and a double-sided open auction process for Green-Weekly.
Certificate Market: Encouraging Green Energy Generation
Two significant initiatives under the certificate market are the Renewable Energy Certificates (REC) and the Energy Saving Certificates (ESCerts). Under the REC mechanism, obligated entities can purchase the certificates to meet their Renewable Purchase Obligation compliance. On the other hand, ESCerts are tradable certificates under the Perform, Achieve, Trade (PAT) Scheme of the Bureau of Energy Efficiency (BEE), aimed at incentivising energy efficiency among large energy-intensive industries.
Electricity Act 2003 & Central Electricity Regulatory Commission: Shaping Regulatory Framework
The Electricity Act, 2003 governs the power sector in India by providing for Electricity Regulatory Commissions both at central and state levels. The central level commission, CERC, functions as a regulator promoting competition, efficiency and economy in bulk power markets, improving the quality of supply and encouraging investments.
The regulatory framework surrounding the power sector in India has vast implications for power distribution companies, and it is critical for these entities to adhere to the regulations and policies for seamless operations.
