Recently, the Indian Union Minister of Power & New and Renewable Energy launched a new market segment known as the Green Day Ahead Market (GDAM), which is exclusively for renewable energy. With this move, India became the only large electricity market in the world to have this specialized market.
Indian Energy Exchange and Green Day Ahead Market
The first and largest energy exchange platform in India, the Indian Energy Exchange (IEX), provides an automated trading platform for physical delivery of electricity, Renewable Energy Certificates and Energy Saving Certificates. The recently introduced GDAM is a marketplace for trading renewable power on a day-ahead basis. The market begins at midnight, with deliveries for any/some/all 15-minute time blocks in the next 24 hours.
Role of National Load Despatch Center and Power System Operation Corporation Limited
The National Load Despatch Center (NLDC) and Power System Operation Corporation Limited (POSOCO), as nodal agencies, have prepared appropriate technologies and infrastructure for the GDAM launch. With GDAM, renewable energy generating companies can freely set up and sell renewable energy on the exchange.
Working Mechanism of GDAM
GDAM is fully integrated with the conventional day-ahead market. The separate bidding windows allow the market participants to submit bids for both conventional and renewable energy. This allows renewable energy sellers to bid in the conventional segment if their green market bids are not cleared. Different price discoveries will be made for both the conventional and renewables.
Expected Benefits of GDAM
The introduction of GDAM comes with several potential benefits. It deepens the green market and offers competitive price signals. Market participants will get an opportunity to trade in green energy in a transparent, flexible, competitive, and efficient manner. GDAM will accelerate renewable capacity addition and align India’s vision of a sustainable and efficient energy economy.
Distribution utilities can also sell their surplus renewable power generated in the area. There will be a gradual shift from Power Purchase Agreements (PPAs) based contracts to market-based models, which will deepen the markets and help India reach its ambitious target of 450 GW green capacity by 2030. Curtailment of green power will also decrease, unlocking untapped renewable energy potential and ensuring instant payment to Renewable Energy generators.
India’s Position in the World of Renewable Energy
India ranks as the world’s third-largest consumer of electricity and the third-largest renewable energy producer, with 38% (136 GW out of 373 GW) of total installed energy capacity in 2020 from renewable sources. The Paris agreement in 2016 saw India committing to produce 450 GW or 40% of its total electricity from non-fossil fuel sources by 2030. This launch of GDAM is quite timely as the country currently faces a shortage of coal and needs to decrease its dependence on imported fossil fuel sources.
Related Initiatives
Besides GDAM, several initiatives have been launched to promote renewable energy in India. Some of these include National Solar Mission (NSM), National Biofuels Policy, SATAT, Small Hydro Power (SHP), National Hydrogen Energy Mission (NHEM), Production-Linked Incentive (PLI) Scheme, and SAYAY. All these ventures aim to reduce the country’s fossil fuel dependence and embrace cleaner and more sustainable energy sources.