Optimising transmission capacity allocation among market participants

Rajesh K Mediratta, Director (Business Development), Indian Energy Exchange details the means of optimising transmission capacity allocation and its benefits
Past decade had been stupendous for power sector in India. The regulatory reforms not only brought in investment but also boosted competition in the sector. Generation segment has outshined with these reforms. Today, we have almost doubled the generation capacity to 234 GW in a decade. Similar efforts are being made to improve efficiency of transmission and distribution segment.
Open access refined the mechanism of connectivity to power by segmenting the market into long-, medium- and short-term open access consumers. According to Monthly Market Monitoring Reports published by CERC, power exchanges constitute about 3 per cent of the total power transactions in the country during Apr – Dec 2013. Other modes of power transaction include long-term agreements (88 per cent), bilateral transactions – direct (2 per cent) and traders -4 per cent and unscheduled interchanges (2 per cent). A short-term power market owes huge potential to grow. At Indian Energy Exchange (IEX), the transacted volumes are growing with the CAGR of 56 per cent in span of 5 years with monthly average volume transacted in FY14 (up to February) is about 2,422 MU.
Even though short-term power markets have grown and matured in a very short span, same is not reflected in the transmission planning and capacity allocation methodology. Transmission network capacity is created for long-term PPAs with some natural inherent margins. Competition which is mainstay of Electricity Act is possible only when the buyer or seller has choice in shorter timeframes. But if we do not build flexibilities in transmission capacities for these shorter timeframes, transactions and therefore competition is thwarted.

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