Power Sector Deregulation

Suneel Kumar
Assistant Professor
Department of Electrical Engineering
Rajkiya Engineering College Bijnor
Traditional Integrated Power System
Deregulated Power System
Restructured electric power industry
Deregulation

 Deregulation is a re-structuring of the rules and economic

incentives that government setup to control and drive the
electric supply industry.
 It is known in different names
 Re-regulated market
 Open Power Market
 Competitive power market
 Vertically unbundled power system
 Open access:
 Power system restructuring( Privatization and deregulation)
Why Deregulation of Electric Supply Industries?

 Better experience of other deregulated market such as oil and

gas, airlines, telecommunications.
 Competition among energy suppliers and wide choice for
electric customers.
 Why was the electric utility industry regulated?
 Regulation originally reduced risk, as it was perceived by both
business and government.
 Several important benefits:
 It legitimized the electric utility business.
Why regulation of ESI
It gave utilities recognition and limited support
from the local Govt. in approving ROW and
easements.
It assured a return on the investment, regulated as
that might be.
It established a local monopoly in building the
system and quality of supply without competitors.
Simplified buying process for consumers.
Deal with the conflicting claims, standards and
offerings of different power companies.
Least cost operation.
Meeting social obligations
Huge investments with high risk
 Transformation Process

Generation Vertical
Separation
Vertical Unbundling Horizontal cut
Business

(of a vertically bundled

system) Transmission
Business

Distribution
Business
 Vertical cut
Generation
Business Horizontal
Separation

Transmission
Business

Distribution
Business

Horizontal Unbundling (of a vertically

unbundled system)
ELECTRIC SECTOR REFORMS
 1978 U.S. Public Utilities Regulatory Policy Act
 (starting point-opened generation market)
 1982 Chile- A new electricity act
 1990-96 New Zealand (1990)
 U.K. (1990)
 Argentina (1992)
 US Energy Policy Act (1992)
 Australia (1993)
 Norway, Sweden & Finland (1996)
 (India - A policy in 1991 to encourage private
 participation)
 1998 California
 2003 Indian Electricity Act (reforms, open access and
 competition in phases
 2010* European Union
 Power Sector Institutions
Institution Functions

CEA 1950 Arbitration, Advice, Power Policy

CPRI 1960 Power Engineering Research
Equipment Testing and Certification
REC 1969 Finance and Planning for Rural
Electrification
MOEF 1974 Policy, Legislation
NTPC 1975 Thermal Power Generation
NHPC 1975 Hydro Power Generation
PFC 1986 Finance for Power Projects, T&D and
Renovation
PGCIL 1989 Regional Grid Monitoring, Transfer of
Power, Transmission Line Construction
EMC 1989 Energy Conservation Information,
Research, Training
Institutional

• Federal Structure

• Power a Concurrent subject

• RLDCs (Regional System Operator ): apex bodies in regional

grid operation. Supervise and control inter regional and inter
state transmission systems.

• RLDCs can give directions to intra state utilities for security of

the grid.

• SLDCs (State level System Operator): to supervise and control

state power systems.
 Central Government Authorities
• Ministry of Power

• Public Sector Enterprise

• NTPC, NHPC, NPC-Generating companies

• PTC-Trading Company

• Power Grid- Transmission company

• Undertakings owned by central government

• DVC, BBMB

• Educational Institutions NPTI, CPRI etc…

• Regulators – Autonomous

• Appellate Tribunal for Electricity

• Central Electricity Regulatory Commission

 Central Government Authorities
• CEA (Central Electricity Authority)

• Advises the ministry on technical, financial and economic matters.

Concurrence for hydro stations

• National Hydroelectric Power Corporation (NHPC)

• Plans, promotes and integrates the development of hydro electric, tidal

and wind power in India

• National Thermal Power Corporation (NTPC)

• Operates and sets up thermal and gas based power projects

• Rural Electrification Corporation

• Provides financial assistance for rural electricification programmes

 Central Government Authorities
• Power Finance Corporation

• Mobilizes capital from non – budgetary sources to provide term finance for
power generation projects

• Power Grid Corporation of India Limited

• Setting and operating EHV transmission network in country. Responsible for

all the existing and future transmission projects in the central sector and for the
formation of the National power grid. It also functions as the central
transmission utility and is currently responsible for regional grid operations as
well.
 Complete Institutional structure of the
Power Sector in India
Center State

Policy MOP
State Governmet
Plan CEA

Regulations CERC SERC

Generation CGS GENCOs IPPs Private

Players
Transmission CTU STU in
Generation
System Operations NRLDC RLDC SLDC &
Distribution
Distribution Distribution
Licensee
Trading
Trading Licensee Trading Licensee

Appeal Appellate Tribunal Appellate Tribunal

Unbundling of the power system

GENERATION GENCO

Unbundling

TRANSCO
TRANSMISSION

DISCO

DISTRIBUTION
 Basic Objectives of Restructuring

Protect interests of consumers

Protect interests of service providers

Provide transparency, independency and public participation

Prevent exploitation, restrictive and unfair practices

Ensure quality of service to consumers

 Regulatory Bodies

Electricity is a subject matter of concurrent list

 The Electricity Regulatory Commissions Act 1998 paved the

way for Electricity Regulation in the Country
 Central Electricity Regulatory Commission (CERC)
 State Electricity Regulatory Commission (SERC)
 Joint Electricity Regulatory Commission (JERC)
 Appellate Tribunal for Electricity ( ATE)
 Forum of Regulators ( FOR)
 Recent Policy Initiatives by GOI

 National Electricity Policy (NEP) – 2005

 Competition and protection of consumer

 National Tariff Policy (NTP) – 2006

 Tariff structuring

 Ultra Megawatt Power Policy (UMPP) – 1995

 Setting up of Mega Power Plants

 Composition of CERC, SERC & JC
 Composition of Central Commission
◦ Chairperson and 3 members appointed by Central

 Composition of State Commission

◦ Chairperson and 2 members

 Composition of Joint Commission

◦ One member from each State
◦ One among them will be a chairperson or by rotation
◦ Two JCs – Manipur, Mizoram and Goa & other UTs
 Forum of Regulators (FOR)
The Forum consists of Chairperson of Central Electricity
Regulatory Commission (CERC) and Chairpersons of
State Electricity Regulatory Commissions (SERCs).
 RES Planning and Transaction Mechanisms
in India
 Introduction

 Structural and Operational Aspects of Indian ESI

 Proposed RES Planning for Indian Context

 Renewable Energy Certificate Mechanism

 REC Market Status

 Moving towards DSOs

 INTRODUCTION

 DGs are often owned and operated by the distribution companies (DISCOs) or
customers at distribution level, which helps to maintain the quality and
reliability in electricity supply.
 These DG options may depend upon various attributes like economic, technical,
environmental and resource availability etc.
 Sometime, it becomes difficult in part of authorities to arrive at a suitable
decision on choosing the type of DG technology for a particular region.
 Analytic hierarchy process (AHP) has been exploited to identify the relative
importance of the chosen attributes at various regions.
 Since the cost of electricity generated from RE resources is expensive, large
scale development of renewable resources did not take place.
 Lately, in view of growing awareness about green environment, development of
renewable energy has been promoted by fiscal policies of Government of India.
Introduction

Gencos
Wholesale Competition
Generation
Vertically integrated utility

Transmission Transco

Distribution Discos
Retail Competition

Consumers Consumers
System Operation in Restructured Environment
Independent System Operator (ISO) Model:
 Prevalent in America, Canada and part of Australia.
 An Independent System Operator (ISO) is created to
facilitate competitive markets.
 ISO has been generally practiced in those countries,
wherein firstly, transmission companies are also providing
the generation and distribution services or equal sized
transmission companies exists in the market. Independent
System Operator is responsible to carry out operations
between the member utilities.
 The ISO responsibilities include short-term reliability through
balancing supply and demand, controlling voltages,
managing congestion/constraints and restoring supply
after a disturbance.
 Apart from above, ISO is also responsible for planning of
the transmission grid from the operational point of view.
System Operation in Restructured Environment
Transmission System Operator (TSO) Model:

Prevalent in whole of the Europe, part of

Australia, South Africa and also adopted in
India.
In TSO model, operation of the grid and the
ownership of the grid are integrated in a
single entity, which is responsible for
development of transmission system and to
provide non-discriminatory access to all
eligible market participants.
It is also responsible for system operation
functions. Neutrality is an important aspect of
the TSO to ensure an efficient market.
Structure of the Indian ESI
Indian ESI

NRG ERG NERG SRG WRG

Delhi
Punjab Bihar Assam Goa
Chandigarh Tripura Kerala
Jharkhand Madhya Pradesh
Rajastan Meghalaya
Karnataka
Jammu & Kashmir Orissa Arunachal Pradesh Chhatisgarh
Andhra Pradesh
Haryana Manipur
Sikkim Maharastra
Himachal Pradesh Mizoram Tamil Nadu
Uttar Pradesh West Bengal Nagaland Gujarat

Uttaranchal
 System Operation in India

 At regional level – Five RLDCs viz. NRLDC, SRLDC, ERLDC,

WRLDC and NERLDC were formed.
 SLDCs in each state were formed.
 RLDCs have been modernized with modern Energy
Management System tools.
 SLDCs carry out the optimum scheduling of the state
generating units and Discos, whereas the RLDCs are
responsible for scheduling the Central Sector Generating
Units and the beneficiaries.
 SLDCs send the requisition to the RLDCs against their
entitlements out of available power from Central Sector
Generation and the RLDCs allocate total available power
to various states in the ratio of their entitlements.
Operational Aspects of ESI in India

Other
RLDCs ISGSs/ CGSs/
IPPs

Offer Availability Disp. Sch.

NLDC (ISO)

MCV
PXs RLDC (RSO) Trader
&
s
MCP

Forecast Drawal. Sch.

Trader Bid Bid
s
SLDCs

State SEBs/Disco
Gen. s
 Operational Aspects (Cond…)
 The process starts with the Central generating stations in the region
declaring their expected output capability for the next day to the
RLDC. The RLDC breaks up and tabulates these output capability
declarations as per beneficiaries' plant-wise shares and conveys the
same to SLDCs.
 The SLDCs then carry out an exercise to see how best they can meet
the load of their consumers over the day, from their own generating
stations and their entitlement in the Central Stations and then convey
to the RLDC how they wish to draw power from the Central Stations
out of their entitlement for the day.
 The RLDC compiles these and determines the generation schedules
for the Central generating stations and the drawal schedules for the
beneficiaries, which acts as the operational & commercial datum.
 Deviations from these are allowed as long as they do not endanger
the system security. The schedules are also used for determination of
energy charges. Deviations from schedules are determined in 15-
minute time blocks through special metering, and these deviations
are priced.
 As long as the actual generation / drawal is according to the given
schedule, the third component of Availability Tariff is zero. In case of
under-drawal, a beneficiary is paid back according to the frequency
dependent rate specified for deviations from the schedule.
 Power Exchange
 Power Exchange is a forum for both suppliers and
wholesale purchasers to bid for the prices of electric
energy supply and purchase.
 Power Exchange is similar to stock Exchange in variety
of ways. Power Exchange is basically a flexible bid-
based power pool; wherein power is traded based
on the price quotations by the suppliers / the offers of
wholesale purchasers and thus creates a spot power
market.
 In the deregulated power market in India after de-
licensing the generation, any Genco can have either
the long-term/short-term bilateral agreements with
the Discos / bulk consumers/ retailers or sale his surplus
power in the spot market through the Power
exchanges.
 The time horizon of the Power Exchange usually is the
day-ahead to facilitate energy trading one day in
advance before each operating day.
OVERVIEW OF RE IN INDIA
 Today India is becoming one of the world’s fast growing and
most attractive market in renewable investment.

 As of April 2016 Solar ,wind , biomass and small solar hydro

power(<25MW) contribute about 14.15% of total installed
capacity for electricity.

 The total installed capacity touched the figure of

42,849.38MW with wind power contributing 26866.66 MW ,
Solar 6762.85MW, Bio energy 4946.41MW and small
hydro(<25MW capacity) 6762.85 MW.
 RENEWABLE ENERGY GROWTH PER YEAR IN MW [2]
45000 42849

40000
35000
31702
30000
28067
MW25000 24914

20000 19974
16817
15000 14792
12404
10000 10257
8088
6161
5000 3518
4880 5311
2906 3179

year

Data is taken from ministry of power till (30.04.2016)

 RENEWABLE POWER INSTALLED CAPACITY(MW) [2]

30000
26866.66
25000
hydro
20000
MW wind
15000
Bio -power

10000 Solar
4273.47 6762.85 power
4946.41
5000

0
hydro wind bio- power solar power

Data is taken from ministry of power

 DGs TECHNOLOGIES
36

 Solar PV
 Wind turbine
 Fuel cell
 Diesel engine
 Gas turbine
 Biomass
 Benefits
37 ATTRIBUTES
 Ranking of DG attributes in different regions
38

Ranking for all regions

DG attributes Eastern Western Northern Southern North
Eastern
Technical 2nd 3rd 3rd 2nd 1st

Economical 1st 2nd 2nd 3rd 3rd

Environmental 3rd 4th 1st 4th 4th

Resource 4th 1st 4th 1st 2nd

availability
REC IMPLEMENTATION MECHANISM
MASS
Moving towards DSOs

 Deployment of DSOs is becoming necessary in order

to improve the efficiency and reliability of the delivery
system.
 There is a potential need of an intermediate entity
between ISOs/RTOs and DER owners.
 A DSO may efficiently utilize DERs to improve system
reliability and resiliency and reduce emissions.
DSO Functions

 Grid Operator Functions

 A DSO will be responsible for conducting operational security
studies, addressing loading or voltage issues through switching or
other operational actions, respond to outages, and direct
restoration efforts.
 Moreover, a DSO will process interconnection requests and act as
the balancing entity for load and generation.
 Market Operator Functions
 A DSO will coordinate the electricity purchase and sale, the
interchange of power to other markets, and control resource
output.
The DSO and ISO exchange of
information.
DSO market
participants
AVAILABLE TRANSFER CAPABILITY
The roles and responsibilities of ISOs

 Power system operations function:

 This fundamental function includes the operation- planning
function and real-time control.
 Operation-planning function includes:
 Perform power system scheduling
 Co-ordinate with energy markets
 Perform power system dispatch
 Determine Available Transfer Capabilities (ATCs) ,Determine real time
ATCs
 Pre-calculate short-run costs and prices for transmission related
services.
 Ancillary services management
 Competing Generators Ancillary Services

Bid Dispatch

Normal
Power Exchange (PX) System Operator
ISO
(SO)

Sell Forecast Monitor Control

Distributors Transmission Facilities

Certain Technical Issues

 Transmission Pricing
 ATC Calculation
 Congestion Management
 Bid Settlement
 Transaction Allocation
 Ancillary Services Management (Volt/Var control, Freq.
control/AGC etc.)
AVAILABLE TRANSFER
CAPABILITY
 According to NERC Report
–“Available Transfer Capability (ATC) is a measure of the
transfer capability remaining in the physical transmission
network for further commercial activity over and above already
committed uses.”
 According to Gravener and Nwankpa
–“The ATC is the limiting transfer value between two control
areas(source and sink)that is available without any voilation of
power system operating properties , e.g. thermal limit and voltage
limit.”
Basic Definitions of ATC

TRM-Transmission Reliability Margin

CBM-Capacity Benefit Margin

ATC-Available Transfer Capability

TTC-Total Transfer ETC-Existing Transfer

Capability Commitments
 AVAILABLE TRANSFER
 CAPABILITY
ATC is defined as
ATC = TTC – CBM – TRM – “Existing TC”

 TTC: It is the amount of electric power that can be

transferred over the interconnected transmission
network in a reliable manner under a reasonable range
of uncertainties and contingencies. It is more or less
similar to the First Contingency Total Transfer Capacity
(FCTTC).
 While determining TTC, system conditions, critical
contingencies, system limits, parallel path flows and
effects of non-simultaneous and simultaneous transfers
are to be considered.
TRM, CBM, ETC, Curtailability, Recallability

 TRM: It is defined as the amount of transmission transfer

capability necessary to ensure that the interconnected
network is secure under a reasonable range of
uncertainties in the system conditions.
 CBM: It is the amount of transmission transfer capability
reserved by the load serving entities to ensure access to
generation from interconnected systems to meet
generation reliability requirements. It also helps to
reduce the installed capacity of the plant.
 ETC: refers to the power transfer capability that must be
reserved for already committed transactions
 Curtailability: is the right of the transmission service
provider to interrupt all or part of the transmission service
due to constraints that reduce the capability of the
transmission system.
Recallability
 is the right of a transmission service provider to interrupt all
or part of the service for any reason, including economic,
in consistence with the tariff and contract provisions and
prevalent policy.
 Based on the recallability concept two commercial
applications of ATC are defined as follows:
 Non-recallable Available Transfer Capability (NATC):
NATC = TTC – TRM - {Non-recallable reserved
transmission service + CBM }
 Recallable Available Transfer Capability (RATC):
RATC = TTC – TRM - {Recallable reserved transmission
Service+Non-recallable reserved transmission Service +
CBM }
 ATC and related Terms Source, NERC 1996 document

TTC
POWER TRM
TRM
FLOW
RATC NATC RATC
NATC

Recallable
Recallable
reserve
Scheduled
Non recallable
reserved
incl. CBM
Non recallable
Non recallable
reserved
scheduled

OPERATING HORIZON PLANNING HORIZON

Recallability is defined as the right of transmission provider to interrupt

all or part of transmission service due to reliability or economic
constraints
 IMPORTANCE OF ATC

 The value of ATC reflects the amount of power transfer that can
be permitted between the specified interfaces.
 Private parties get an idea of unused capacity of the system.
 In case of congestion, it can help relieve the congestion as it has
the knowledge of the limiting constraint.
 power transfer limits, contingency constraints, voltage limits,
static and dynamic limits are taken into account while
calculating the ATC, the system security is ensured as long as
new power transfers are within the ATC limits.
 The basic objective of the determination of ATC is to tell the
market entities about the system limitations beforehand in terms
of additional MW of power that can be transferred from one
area to another.
 Since private parties are interested only in commercial aspects, it
is the responsibility of the ISO to determine, update and post the
current value of ATC for every time interval.
Principles of ATC Determination
 ATC calculation must produce commercially viable results.
ATCs produced by the calculations must give a reasonable
and dependable indication of transfer capabilities
available to the power market.
 ATC calculations must recognize time-variant power flow
conditions on the entire inter-connected transmission
network.
 ATC calculations must recognize the dependency of ATC
on points of electric power injection, the directions of
transfers across the interconnected transmission network,
and the points of power extraction.
 Regional and wide-area co-ordination is necessary to
develop and post the information that reflects the ATCs of
the inter-connected transmission network.
 ATC calculations must conform to NERC (or equivalent
regulatory guidelines in the specific country), regional, sub-
regional, power pool, and individual system reliability and
operating policies, criteria or guides.
 The determination of ATC must accommodate reasonable
uncertainties in system conditions and provide operating
flexibility to ensure the secure operation of the
interconnected network.
CONSTRAINTS TO ATC

Static Constraints
 Line thermal limits
 Bus voltage limits
 Reactive power generation limits
 Static voltage stability limits
Dynamic Constraints
 Small signal stability limits
 Large signal stability limits (transient limits)