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Market-Based Economic Dispatch (MBED)

The Ministry of Power plans to implement Phase 1 of Market-Based Economic Dispatch (MBED) starting April 1, 2022 to reduce consumers' power purchase costs by 5%. MBED will establish a day-ahead electricity market to optimize plant operations and transition away from long-term power purchase agreements. Interstate generators will participate initially on a voluntary basis while the system is tested to ensure smooth operations. The goal is to allocate power at the lowest price through a central pool, as opposed to higher pre-determined prices under current procurement methods.

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104 views

Market-Based Economic Dispatch (MBED)

The Ministry of Power plans to implement Phase 1 of Market-Based Economic Dispatch (MBED) starting April 1, 2022 to reduce consumers' power purchase costs by 5%. MBED will establish a day-ahead electricity market to optimize plant operations and transition away from long-term power purchase agreements. Interstate generators will participate initially on a voluntary basis while the system is tested to ensure smooth operations. The goal is to allocate power at the lowest price through a central pool, as opposed to higher pre-determined prices under current procurement methods.

Uploaded by

v praven kumar
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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‘Market-Based Economic Dispatch (MBED)’

Subject: Power Pricing & Power Pricing Agreement

Market-Based Economic Dispatch (MBED)

The Ministry of Power said that it is looking to implement Phase-I of Market-Based Economic
Dispatch (MBED) from April 1, 2022.

 The ministry has released the framework for the Phase-I programme, which is expected to
reduce consumers’ power purchase costs by five percent.
 A robust day-ahead market will form the basis for transitioning away from the country’s
over-dependence on long-term PPAs to sustainable market-based ops, said the ministry.

The Ministry of Power said on Friday that it is looking to implement Phase-I of Market-Based


Economic Dispatch (MBED) from April 1, 2022. The ministry has released the framework for the
Phase-I programme, which is expected to reduce consumers’ power purchase costs by five
percent. “It is hence widely recognised that an essential next step in reforming the electricity
market operations and in moving towards “One Nation, One Grid, One Frequency, One Price”
framework is to implement Market Based Economic Despatch (MBED) in the day-ahead horizon
initiated by the Central Electricity Regulatory Commission,” said an official statement.

Market-Based Economic Dispatch to reduce dependence on PPAs


Explaining the rationale behind bringing in a market-based economic dispatch programme, the
ministry said, “With success in generation capacity additions over the past few years and a well-
integrated national electricity grid, the time is right to move towards optimising the operation of
generating plants in the country to deliver benefits of reduced operating costs to the distribution
utilities and end consumers. A robust day-ahead market will also form the basis for transitioning
away from the country’s over-dependence on longer-term PPAs to sustainable market-based
operations.”

Under the programme, the power demand by all states is proposed to be met through a central pool
allocating power at the optimal price. As of now, discoms procure power from various power
generators within the states, usually at higher pre-determined prices.

The Central Electricity Regulatory Commission (CERC) will conduct trial runs to ensure the system
runs smoothly. Interstate generation facilities will participate in the first phase, while other generation
facilities can join voluntarily.

The ministry had issued a discussion paper on MBED in June this year for stakeholders to submit
their feedback. In July, it also organised a consultation workshop with state governments and
discoms, regulatory commissions, and state power generating companies in August.
Ministry of Power noticed substantial alignment amongst all key stakeholders on a phased approach
and the process to be followed for implementing Phase 1 of MBED starting with the mandatory
participation of the Inter State Generating Stations.

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