Heavy transmission congestion is affecting smooth power flow in south India especially when temperatures soar. Despite availability of power in the grid and on power exchanges, power demands in the southern states are not met.
In view of this unique situation, the Indian Energy Exchange (IEX) and Power Exchange India (PXI) have sought the intervention of the Central Electricity Regulatory Commission (CERC) for an early solution. They have called upon CERC to allow transmission capacity reservations to power exchanges by utilising the congestion revenue fund. Part of the transmission capacity (approximately 25 per cent) should be kept for day-ahead markets.
Further, IEX and PXI sources told Business Standard that inter-regional corridors may be booked through the day-ahead transmission capacities auction (as done globally), instead of the existing 90 days advance booking procedure.
According to data available on the IEX and PXI, engaged in the day-ahead power transactions, during first six days of March, the average flow required in south India was close to 935 Mw with a maximum of 1,740 Mw and a minimum of 300 Mw every hour. However, the average corridor which was available for the same period was 100Mw with a maximum of 495 Mw and minimum of zero Mw. On an average, only 10% of the transmission requirement is met.
IEX and PXI sources said southern states buy up to 830 MW but are deprived of available power from rest of India due to transmission congestion. Participants in southern India have paid an average price of Rs 6.30 per unit as compared to the sellers in other states who got Rs 3.20 per unit a difference of almost 100 % which is going to Congestion Revenue. The Short Term Transmission capacity is open for booking 3 months in advance. The state have booked power and transmission corridor 3 months in advance. Contrary to the general perception, the prices in day-ahead market are on the lower side.
While the prices in the bilateral market is more than Rs 5 this month, the average prices on exchanges are about Rs 3.5 per unit. According to the CERC report for December 2009, the average rate for bilateral market was RS 4.99 per unit while on exchanges it was around Rs 3.22. "What this means is that cheaper power is not getting dispatched. It should be noted that the transmission planning was done years back, primarily for long-duration transactions. However, with the inception of the exchange platform trading for even 1 hour and volume as low as 1 MW is also possible. This has made lot of capacity optimization as captive power producers seek opportunity of trading surplus on an hourly basis," sources said.
A Mumbai based analyst, who did not want to be quoted, said for intra regional transmission capacity these issues were addressed to some extent. However, it is now felt that the inter-regional transmission capacity should be reviewed in light of the present challenges. This is a very serious issue as market participants are likely to lose confidence in the day-ahead markets of the exchange.
