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Home News Power Sector News Indian Energy Exchange proposes national bulk market for power supply to retailers

Indian Energy Exchange proposes national bulk market for power supply to retailers

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IEXRetail consumers do not get 24×7 power in many parts of the country, even though substantial generation capacity has been added. As a result many of the consumers have to use diesel generation sets where the cost of power is more than Rs 13/ kWh. To break this impasse, the Indian Energy Exchange has proposed to set up a national bulk market in the country where 15,000 bulk consumers (consumers above 1MW) are brought into the market and supplied power.

 Jayant Deo, Managing Director, IEX has written to P Uma Shankar, Secretary, Union Ministry of Power and also to the electricity regulatory commissions of each state and has urged the creation of a National Bulk Market. This would entail development of a voluntary pool of bulk, Deo said.

As more power is required the cost of procurement goes up and the retail tariff is set based on average cost of supply and hence, becomes unaffordable. At least 99.99% are retail consumers and only 0.01% or approximately 15,000 are bulk consumers with 1 MW and above load. An average bulk consumer operates a business with an annual turnover of Rs 25-30 crore while spends a few crore annually on power bills.

Hence, it would be fair to say that bulk consumers are capable of managing market based pricing for all their inputs including energy. By having market-based hourly/15min pricing these consumers will be motivated to conserve and adapt to Time-Of-Use (TOU) pricing, explains Deo.

Open access provides consumers of 1 MW and above the freedom to choose their own supplier. According to the Electricty Act, 2003, distribution companies no longer have the universal service provider obligation and if the consumers choose another supplier, they will have to pay wheeling and cross subsidy charges.

Citing examples worldwide, Deo said that in Spain, consumer with a connected load of 10 kW or above is given the choice of supplier while in Ghana the same facility is provided to consumers with 3 MW and above load. In India, DISCOM's do not know how to negotiate price under Section 49 which would satisfy auditors. Similarly, many commissions mix supply and Universal Service Obligation (USO) thereby allowing load shedding and putting heavy burden on retail consumers, Deo added.

The Indian power sector will add 50,000 to 55,000 MW of generation capacity during the ongoing five-year plan, with an additional 90,000 MW expected over the next four to five years. The private sector is contributing a significant portion of this expansion (roughly 37 per cent between 2007 and 2012). Driven by increased competition, concerns regarding the financial health of state electricity boards (SEBs), and changes in the market structure, private-sector generators have become more amenable to evaluating newer supply models, including power tolling and power purchase agreements (PPAs) with bulk customers, feel energy experts.

Source- Indian Express


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