How CERC plans to make 'one grid one price' a reality in power sector, Pg19

Key Highlights:

• CERC has issued draft regulations for market coupling to establish a uniform electricity price across power exchanges.
• Grid Controller of India (Grid India) is proposed as the central operator for price discovery.
• The draft regulation, Central Electricity Regulatory Commission (Power Market) (Second Amendment) Regulations, 2026, amends the CERC (Power Market) Regulations, 2021.
• Grid India will establish a separate cell to manage market coupling and formulate the Power Market Coupling Procedure (PMCP) within six months.
• The short-term power market has grown at a CAGR of 8.9%, with short-term transactions accounting for 13.03% of total electricity generation in 2024-25.

Detailed Insights:

• Market coupling aims to replace the current decentralized system where each power exchange sets its own price based on supply and demand.
• Gencos traditionally use long-term PPAs, but power exchanges allow them to sell surplus power at market price, optimizing output and revenue.
• The spot market includes the real-time market (RTM), the intraday market, the day-ahead market (DAM), and the term-ahead market (TAM), each catering to different delivery timings.
• The renewable energy certificates (REC) mechanism enables utilities to meet renewable purchase obligations (RPOs) by purchasing RECs, promoting green energy adoption.
• Grid India's responsibilities include price discovery and formulating the PMCP, which standardizes bid submission and outlines the price discovery algorithm.
• The price discovery mechanism will maximize economic surplus, adopting market splitting in case of transmission corridor congestion.
• Market coupling will initially apply to the Day-Ahead Market (DAM) and Real-Time Market (RTM), with potential expansion to other segments.

Key Concepts Involved:

• Market Coupling: A process that matches bids from all power exchanges to discover a uniform market-clearing price.
• Power Purchase Agreement (PPA): A long-term contract between electricity generators and buyers, typically spanning 25 years.
• Renewable Purchase Obligation (RPO): Requirement for utilities to purchase a certain percentage of their electricity from renewable sources.