Energy Strategy Reviews 23 (2019) 163–177

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Review

Assessment of power exchange based electricity market in India T

∗
Furkan Ahmad , Mohammad Saad Alam
Electrical Engineering Department, Aligarh Muslim University, Aligarh, 202002, India

A R T I C LE I N FO A B S T R A C T

Keywords: The effectiveness and liquidity of the Power Exchange (PX) has improved since their commencement in 2008.
Day-ahead market Under the impact of Indian electricity Act 2003, it introduces the open access provision to end up the monopolies
Term ahead market that have been adopted by various state electricity boards. The presented work comprises of two parts. The first
Renewable energy certificates part includes the current scenario of Indian energy infrastructure. Second part deals with the assessment of the
Energy saving certificates
total transacted energy at various contracts of PXs. The various contracts include the day ahead market, term
Short-term power market
ahead market, renewable energy certificates, and energy saving certificates. The assessment reveals that the total
Power exchange
Congestion management renewable energy source contribution through PXs under the renewable purchase obligation (RPO). Further, the
Risk management assessment presents the analysis of unmet target of RPOs. Furthermore, we discuss the new norm set by the GoI
in order to fulfill the targeted goal of 8% solar based and 11% non-solar RPOs. Moreover, the structure and
achievements of energy saving certificates are investigated. The total uncleared transacted electricity volume
due to congestion has been shown. Moreover, the detailed steps taken by PXs to handle the risk management is
discussed.

1. Introduction In economic terms, electrical energy is a commodity which is cap-

Globally, the exchange-based electricity market is being re-
structured. An ultimate goal is to meet a more extensive scope of des-
tinations. The key points include accelerating private speculation, ad-
vancing liquidity and productivity. Further, it empowering the
improvement as well as the deployment of non–fossil fuel resources of
energy, and expanding adaptability in framework operation. In light of
this, developing enthusiasm for setting up or transforming PXs based
markets; there is a strong demand for a universal healthy argument of
the market outline standards and ideal models that can directly move to
21st energy framework that coordinates variable RESs and rising in-
novations. For example, smart grid, demand-side response management
system, distributed generators, and appropriated energy storage and
energy management systems [2].
India's energy infrastructure is very much diversified with market
progression. Wellsprings of electrical power era have now been ex-
tended from traditional sources, such as coal, natural gas, oil, lignite,
hydro and atomic energy to available non-conventional and RESs, such
as wind power, solar PV system, and rural as well as household waste.
In order to deal with the exponentially increasing demand for power in
the nation, the power inventory network comprising of generating
units, transmission and distribution (T&D) has experienced a period of
renovation to effectiveness [3].
able of being bought, sold and traded. An electricity market is a system
which enables the purchasing of electrical energy [4].
Worldwide, the power market is being reformed to decrease the
monopolism and enhance the liquidity & competition. In this path,
Chile is generally considered to be pioneer which reformed the power
sector in modern times because it was the first country to introduce
innovations for sector organization and regulation that many other
countries subsequently adopted. Before the Chilean power sector was
reformed, most of the electricity services were concentrated in two
large states based on vertically integrated suppliers, namely Empresa
Nacional de Electricidad (ENDESA) and Compañía Chilena de
Electricidad (CHILECTRA) [5].
The process of reforming the Chilean power sector was implemented
through legal and institutional changes. Private participation was en-
couraged by establishing new investor financed enterprises to purchase
existing facilities or to construct new facilities [5]. Table 1 describes the
Heterogeneity in early and comprehensive reforms of few countries
around the world, where comprehensive reform defines deregulation,
privatization, and liberalization. However, the detailed reformation of
205 countries can be seen in Ref. [5].
Globally, the electricity market is broadly categorized as long,
medium, and short term. The durability of each type of market is a
concern for policy regulation of respective countries. Further, the STPM

∗
Corresponding author.
E-mail addresses: furkanahmad@zhcet.ac.in, ahmdfurkan@gmail.com (F. Ahmad).

https://doi.org/10.1016/j.esr.2018.12.012
Received 11 July 2017; Received in revised form 12 December 2018; Accepted 20 December 2018
Available online 11 January 2019
2211-467X/ © 2018 Elsevier Ltd. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/BY-NC-ND/4.0/).
F. Ahmad, M.S. Alam Energy Strategy Reviews 23 (2019) 163–177

Nomenclature NLDC National load dispatch center

OA Open access
BEE Bureau of energy efficiency PAT Perform, achieve & trade
BU Billion units (1 units = 1 kWh) PPA Power purchase agreement
DAC Day-ahead contingency PXIL Power exchange India limited
DAM Day-ahead market PXs Power Exchange
DCs Designated consumers RECs Renewable energy certificates
DISCOMs Distribution companies RESs Renewable energy sources
DSs Designated sectors RLDC Regional load dispatch center
ESA Electricity supply act RPO Renewable purchase obligation
ESCs Energy saving certificates SEBs State electricity boards
FY Financial year SLDC State load dispatch center
GoI Government of India STPM Short term power market
IEA Indian electricity act STU State transmission utility
IEX Indian energy exchange TAM Term ahead market
IPPs Independent power producers T&D Transmission and distribution
MCP Market clearing price UI Unscheduled interchange
MCV Market clearing volume

comprises of bilateral, over the counter and exchange based. Finally, work, which includes a detailed analysis of DAM as well as TAM
the PXs based energy market regulates the wholesale, pool based and transactions, congestion, and risk analysis is handled by PXs since its
retail type energy market. This manuscript is entirely devoted to the inception in India. By the end of financial year (FY) 2015-16 from the
Indian power market and does not cover the worldwide power market beginning of PXs, the total transaction of 153.84 and 5.818 billion unit
reformation in detail [6]. (BU-Billion kWh) energy under DAM and TAM contract have been re-
Indian power market has been a highly complex entity due to se- corded. While, a total of 143.71 lac RECs traded since 2011-12 by the
parate SERCs of each state and most of them follow the vertically in- various state as well as private firm in order to meet their RPO [27].
tegrated market. The implementation of IEA 2003 introduces the OA The Manuscript provides the overview of PXs based market in the
market to end up the monopolies and to enhance the liquidity in the Indian scenario. This manuscript will be highly resourceful for policy-
electric power market. The Indian power market is broadly categorized makers and hence, electric industries will participate in the Indian
into three type of contracts: long-term contracts that follow the power power market. For updated information, few of the references are taken
purchase agreement (PPA), medium-term contracts and short-term from government websites. None of the figures are copied directly from
contracts [7,8]. After the inception of the PXs market in 2008, the ef- an existing source, whereas the data is taken from various references
ficiency and competition in the power market have improved and vo- and by combining them all, the different graphs have been drawn.
latility has decreased. In India, two PXs (IEX and PXIL) are dealing with This manuscript will be highly useful for all kinds of electricity-or-
the power trading, based on double side closed bidding mechanism for iented business industry/government firms.
various contracts such as DAM, TAM, RECs, and ESCs [9–11]. Various The significant work presented in this manuscript accentuates the
researchers have contributed to the assessment of RECs [12–19] and following objectives:
saving instruments i.e. ESCs [13,15,16,20–26]. However, the detailed
transaction is not covered. Along with these, this is the first kind of - An overview of Indian power market: from monopoly set by SERCs
till the inception of PXs
- Details of PXs contracts in the Indian power market, their char-
Table 1 acteristic, procedure, timelines and trading executions.
Describes the Heterogeneity in early and comprehensive reforms. - Assessment of the whole trading structure at PXs under DAM, TAM,
Country Early reform Comprehensive reform and RECs contracts.
- Structure, achievements, and target of ESCs
Argentina 1991 1993 - Assessment of congestion based non-cleared volume at PXs
Australia – 1996
- Risk management in various contracts of PXs (i.e. DAM, TAM, and
Barbados – 1991
Belize 1992 – RECs) is discussed.
Bolivia – 1996
Chile 1978 1986 Rest of the paper is organized as follow: Section 2 deals with the
Colombia 1992 1997
Indian energy infrastructure which comprises of the generation as well
Dominican Republic – 1999
Grenada 1992 –
as transmission structure. Section 3 covers the overview of the trans-
Honduras 1991 – formation of the Indian power market, pre, and post of IEA 2003 and
Italy – 1999 STPM. Section 4 deals with the details of PXs since their inception till
Nepal 1992 – FY 2015-16. Section 5 covers the total untranslated volume of elec-
Netherlands – 1999
tricity at PXs due to congestion in the transmission line. Section 6 deals
New Zealand 1986 –
Norway 1991 – with the steps taken by PXs to mitigate the Risk in DAM, TAM, & RECs
Panama – 1998 trading and Section 7 concludes the presented work.
Peru 1992 1995
Portugal – 1998
South Africa 1987 – 2. Indian energy infrastructure
Spain 1988 1998
Trinidad & Tobago – 1997
The unpredicted developing economic system of India needs elec-
United Kingdom 1990 1991
Venezuela 1992 – trical power to fulfill its future goals in a sustainable way. To handle the
expanding demand, the power inventory network comprises of

164
F. Ahmad, M.S. Alam
generating unit and T&D that has experienced a period of renovation in
an effective way. India's per capita power consumption has consistently
been growing over time. In FY2008-09, the recorded per capita con-
sumption was 734 kWh, which further increased to 1075 kWh in 2016.
This increment shows a prosperous growth of 46% in the span of eight
years, i.e. an average of 6% per year. While, 8% as the highest upswing
per capita electricity consumption is reported during the FY 2011-12
[28].
2.1. Generation scenario
As shown in Fig. 1, coal is the most vital source of power era in
India. The total installed capacity for electricity generation in the
country is 3,31,118 MW as on Oct 31st, 2017. 44.4% generation is
credited to the private sector, 31.1% to the central sector and 24.5% to
the state sector. The majority of electricity generation is thermal based
accounting for 2,19,415 MW i.e., 66.3%. Coal-based thermal power
plant is the most dominant in thermal-based electricity generation by
generating 1,93,427 MW which is 58.4% of the total installed capacity
in India. The generation is trailed by hydro (14.2%), RESs (14.2%),
natural gas-based (8.1%), nuclear-based energy (1.9%) and diesel oil
(0.3%). Another rising sector is the Renewable Energy sector whose
installed capacity stands at 60,158 MW as of Oct 31st, 2017 which is
equivalent to 18.2% of the total installed capacity. RES includes Small
Hydro Project, Biomass Gasifier, Biomass Power, Urban & Industrial
Waste Power, Solar, and Wind Energy. Combining with the hydro-based
installed capacity which is 44,765 MW or 13.5% of the total installed
capacity, the total installed generation from the renewable sources is
31.8% of the total electricity generation in India [3]. With energy de-
mand of India expected to reach 4,00,000 MW, a major share of the
demand is expected to be fulfilled by renewable energy sources. It is
estimated the around 2,15,000 MW of electricity will be generated by
renewable energy sources by 2030 with hydel plants generating
50,000 MW, wind farms producing 65,000 MW and 60,000 MW tapped
from solar energy [97]. For realizing this potential of renewable energy,
the present electricity grid needs to be restructured to seamlessly in-
tegrate generation from these sources into the main utility grid.
The percentage of coal-based generating installed capacity has ex-
panded from 53.7% to 61.3% in the duration of FY 2006-07 to FY 2015-
16. Amid the period, a fall of 12% (26.2%–14.2%) has reported in
hydro-based generating installed capacity, while RESs based power
systems exponentially raised (5.9%–14.2%). Currently, the total in-
stalled capacity stands at 331 GW, making India the fifth-largest power
system in the world after China, the United States, Japan, and the
Russian Federation. Recently, the capacity addition of 54 GW, parti-
cularly in the 11th five-year plan (2007–12), has been the highest in the
history of India. However, it was only 69% of the targeted 78 GW. The
best implementation performance, by far, was in the 7th plan when
96% of the target was met. Fig. 1 shows the total installed capacity in
India. Table 2 shows sector wise contribution for FY 2015-16. While
Table 3 describes the total net peak availability and required demand
for the FY 2015-16. It is observed that, in Sep 2016, the peak demand,
as well as peak availability, were 167.280 GW and 160.474 GW, re-
spectively [29–31]. The GoI has targeted an installed capacity of
100 GW based on a solar PV system, by 2022. To achieve this target, a
faster adoption rate is required. In this regard, the Ministry of new and
renewable energy has designed various missions and policies. However,
a significant part of the target capacity will be generated through small
sources which will be distributed domestically such as a solar rooftop.
Thus, domestic consumers may participate in the local power market to
balance the deficit and surplus power. The individual participation of
consumers at system level would not be possible for two main reasons:
i) their individual capacity is below the required minimum to partici-
pate in power system markets, and ii) the number of market partici-
pants would be large and thus the volume of individual transactions
would be difficult to manage. In order to facilitate the interactions
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Energy Strategy Reviews 23 (2019) 163–177
between consumers and the power grid, an aggregating agent would be
required.
2.2. Transmission infrastructure
Transmission framework is the spine for the operation of a focused
power market. The inter-state (i.e. between two or more states) trans-
mission system, which is the incorporating spine of India's endless na-
tional electricity grid, accomplished colossal development throughout
the year. There has been a checked increment in the development of
central transmission framework and transformation capability amid the
eleventh plan. Despite that, transmission clog (congestion) in a few
sections of the framework underlines the requirement for accentuation
on the advancement of sufficient power transmission line framework
[32,33].
The planning commission estimates a power demand of 450 GW and
total installed capacity of 600 GW by 2022. To satisfy the increasing
demand, the national grid's transmission capacity is needed to be gra-
dually increased by 150 GW. The target set by the 12th plan is to in-
crease the transmission capacity by 40 GW. Currently, 19 GW is under
construction and out of which 78% is in the private sector. Table 4
describes the record of the Indian inter-regional transmission capacity
which expanded up to Nov 2016. Furthermore, during the period of
three years (form FY 2012-13 to FY 2015-16) in transmission line
system of “up to 220 kV” a gradual increment of 84070 km (from
257481 km to 341551 km) has been recorded. In between the period,
yearly development in the mass transmission line was wavering from
6% to 9%. The transmission limit of substations has likewise expanded
from 399801 MVA to 643949 MVA from 2012 to 2016. While yearly
development in the transmission limit of substations was wavering from
11% to 15%. There has been a remarkable development in the trans-
mission capacity in recent five years [32–35].
3. Indian power market
3.1. Back ground
The Indian power market edifice is has been transforming since
1910 through various IEAs, policies, and regulation to enhance the
reliability of the electricity market. Numerous actions taken by GoI is
tabulated in Table 5 [7,8,38–42], [37,43–45].
In India, the power exchanging is in a developing stage (Fig. 2) and
the transacted electricity through PXs is not immense. Most of the en-
ergy trading is being served by their individual SEBs through the ver-
tically integrated market as shown in Fig. 3 (power flow downward and
cash flow upward) or their successor substances. In India, the gen-
erators of electrical energy, like central generating stations, in-
dependent power producers (IPPs) and SEBs have their own abilities
tied up. Each SEB has an allocated share in central sector/jointly owned
projects and is expected to draw its share without much say about the
Fig. 1. Total Installed capacity at the end of FY 2015-16.
F. Ahmad, M.S. Alam Energy Strategy Reviews 23 (2019) 163–177

Table 2 level to advance electricity trading between state and intra-state in

Sector-wise contribution in MW and % at the end of FY-2015-16 [27]. India. Afterward, the basics of electricity trading, for example, au-
State Central Private Total State Central Private thorizing power brokers and guaranteeing open, non-biased access to
transmission administrations – have been established to take into con-
101790 76297 124001 302088 34% 25% 41% sideration the development of chances in all electricity business sectors.
Subsequently, there has been an outlook change in generation systems,
T&D exercises, which encourage electricity trading [7,49,8,36,50].
Table 3
Peak Availability and Demand for the fiscal year 2015-16 [27,3].
3.3. Open access (OA) and trading
All India Peak Demand Peak Surplus(+)/Deficit(−) %
(MW) Availability (MW)
The IEA 2003, which came into effect from tenth June 2003 repeals
(MW)
the IEA1910; electricity supply act (ESA) 1948; and electricity reg-
Apr-15 149781 146576 −3205 −2.13 ulatory commissions act 1998. In perspective of an assortment of
May-15 156089 151647 −4442 −2.84 components, money related execution of the state electricity boards
Jun-15 159202 155159 −4043 −2.53
(SEBs) has decayed. The cross endowments have achieved unsustain-
Jul-15 163377 158101 −5276 −3.22
Aug-15 163157 157266 −5891 −3.61
able levels. Coupled States in the nation has gone in for changes that
Sep-15 167280 160474 −6806 −4.06 include unbundling into isolated generation and T&D companies. To
Oct-15 164747 157549 −7198 −4.36 address the ills of the division, the new act accommodates amongst
Nov-15 152023 149894 −2129 −1.40 others, more up to date ideas like power trading and OA [36,45,49,51].
Dec-15 151703 148348 −3355 −2.21
Still, numerous states are not participating in the OA market as
Jan-16 154843.502 151201.678 −3641.824 −2.35
Feb-16 155721.37 153206.52 −2514.85 −1.61 generators as well as consumers both.
Mar-16 156640.079 154474.67 −2165.409 −1.38 Generators: Bihar, Delhi, Jharkhand, Kerala, North East states ex-
cept Meghalaya, Tamil Nadu, Uttar Pradesh, and Union Territories.
Consumers: Bihar, Chhattisgarh, Delhi, DVC, Goa, Himachal
price. Moreover, the providers of power have a minimal choice about Pradesh, Jammu & Kashmir, Jharkhand, North State (except Assam,
whom to offer the power and the purchasers must choose between Meghalaya & Arunachal Pradesh) Sikkim, Uttar Pradesh, Union
limited options available to them from whom to buy their energy Territories except Daman and Diu, West Bengal [9].
[25,47,48]. The OA power market under IEA 2003 is defined as “The non-dis-
The central and state governments have principally settled/con- criminatory provision for the use of transmission lines or distribution system
trolled the electricity pricing. However, this is now being done by the or associated facilities with such lines or system by any licensee or consumer
Regulatory Commissions at the Center and also in the States wherever or a person engaged in a generation by the regulations specified by the
they are already functional. Power generation/transmission is highly Appropriate Commission” (GOI, IEA, 2003).
capital intensive and the Fixed Charge component makes up a major Following are the main issues covered in OA; sovereignty to pur-
part of the tariff. India being a predominantly agrarian economy, power chase/trade, and right to use the market, the acceptability of prevailing
demand is seasonal, weather sensitive and there exists a substantial transmission, transmission/wheeling charges, handling of transmission
difference in demand of power during different hours of the day with losses, energy secretarial, scheduling, metering, and UI settlement. To
variations during peak hours and off-peak hours. Further, the geo- solve the issues related to the interaction of various state regulatory
graphical spread of India is very large and different parts of the country commissions, the OA has been categorized as intrastate (purchasing and
face different types of climate and different types of loads [25,48]. selling entity belongs to same states) and interstate (purchasing and
The overall market is categorized in long-term & medium term that selling entity belongs to different states) OA market. Further, both kinds
covered 90% of total trading though IPPs, and STPM. The STPM in- of market include long-term OA for 12–25 years, medium-term OA from
cludes unscheduled interchange (UI) (2%) also known as real-time 3 months to 3 years, and short time OA from intraday to 3 months [51-
market, PXs based market (3%) and bilateral cover 10% of the total 53], [45,48].
power trading [27].
3.3.1. OA charges and losses
3.2. Indian electricity act (IEA) 2003 There are numerous concerns to be paid by OA consumers to T&D
licensees and other associated entities after the power purchasing cost
The IEA 2003 opened the power area by setting down arrangements is paid to the electricity generating units or power supplying the body.
for advancing rivalry in the power showcase. By recognizing electrical These duties include point of connection charges, connectivity charges,
power trading as a particular action, IEA 2003, alongside compatibility cross subsidy surcharge, transmission (CTU and STU) & wheeling
controls from the central electricity regulation commission (CERC), charges and as well as losses, and state load dispatch center and re-
became ready for an outlook change in the power division. The Act gional load dispatch center operation charges [54].
visualizes the advancement of competitive power trading platforms for
advancing productivity, economy and for inciting new interests in the 3.3.2. Transmission and wheeling
power segment. To this end, the open get-to directions at both between With the presentation of compulsory OA, the outsiders will be in-
state and intra-state level opened up roads for more dynamic co- terested in the wheeling of power through the current transmission
operation from the private and state claimed generators and ad- systems, notwithstanding by wheeling being attempted for bringing in
ditionally modern purchasers, with a contracted load equivalent to power from outside the locale for different recipients presently. In this
1 MW or above. The act is guided by institutional and administrative connection, CERC has the authority for the direction of transmission

Table 4
Region wise transmission capability (“Inter-regional transmission capacitytle,” 2016).
Break-up ER - NR ER - WR ER - SR ER – NER WR - NR WR - SR NR - NER 132 kV (Inter-Regional) Grand Total

(Up to Nov-16) 19530 12790 3630 2860 12920 7920 3000 600 62650

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F. Ahmad, M.S. Alam Energy Strategy Reviews 23 (2019) 163–177

Table 5
Various act and regulations designed by the central/state government (gov) to enhance the reliability of electricity market [36,37].
Act/Regulations Main theme/Objective

IEA1910 Acquaint with the private urban licensing system

ESA1948 Provision for state involvement
ESA1956 Amendment of ESA 1948
IEA 1991 Introduced the IPPs mechanism to set up electricity generating power stations and sell power to the vertically integrated SEBs
through long-term PPAs
ERCA 1998 Designed a framework for voluntary creation at the state level
IEA 2003 Unbolted the power sector by laying down provisions for promoting competition in the power market through the expulsion of
key prohibitive boundaries and epitomizes rule that will move the market structure from a single buyer/seller market to a
multi-buyer, multi-vendor framework
OA Regulations 2004 Short term OA was granted on inherent margins under first CERC OA regulations
Regulations 2005 Trading License regulations for OA
Guidelines-2006 Competitive bidding manufacturing guidelines
CERC-OAR, 2008 & 2009 Defined PXs, transaction losses and transmission charges
Amendments & power market regulations-2010 Deals with the procedure for application, eligibility criteria, shareholding pattern, Net worth, risk management by PXs and
defined principle of price discovery for the PXs
Electricity (amendment) bill, 2014 Changes aimed at promoting competition, efficiency in operations and improvement in the quality of supply of electricity
5th Amendment regulations, 2016 Sharing of inter-state transmission charges & losses

shared by the two coterminous districts on a 50:50 premise and

further shared among the recipients inside the particular locale.
- Transmission duties between provincial lines may not be pooled
with those for the other transmission resources in the separate areas.
- Transmission duties (in the wake of deducting the wheeling/clog
charges acknowledged from others) for the provincial resources
(other than the between local resources) might be shared by the
"territorial recipients" (regional recipients implies recipients situated
in the area concerned)
- If an inter-regional asset is used for wheeling by a third party, the
balance transmission charges after accounting for the payable
wheeling/congestion charges may be shared by the beneficiaries of
the contiguous region on 50:50 basis.

3.4. Short-term power market (STPM)

Fig. 2. Current scenario of Indian power market [46].
In India, the STPMs are quite short of exploiting their factual pos-
sible accepted limits. The STPM comprised 10% of the total electrical
power trading during the FY 2015-16. Various SEBs and distribution
companies (DISCOMs) covered the rest of 90% of total generated
electricity, through long-term, medium-term and a small part through
short-term intra-state transactions. Regarding the total transacted vo-
lume through STPM, it was 115.23BU during the FY 2015-16, 16%
higher than the total transaction (16.24BU) of the previous FY. The
development in the volume of 16.24BU was accounted fundamentally
by the positive development in the transaction through PXs (5.60 BU)
and by direct bilateral exchanges between the DISCOMs (8.47 BU). The
detailed year wise electricity transactions under STPM are shown in
Fig. 4 and month wise total transactions have been given in Fig. 5
[27,45,57].
Fig. 3. Vertically integrated market.

and wheeling charges for all, between states and between provincial
power streams. According to the current warning, the wheeling charges
are payable at the same rate as the transmission charges for a specific
locale [55].

3.3.3. Methodology for sharing of transmission charges in OA

Despite the fact that the standards for sharing of transmission/
wheeling charges have been listed in point of interest in the immediate
notice, they have all been earmarked for further clarification. The ac-
companying strategy for sharing of transmission and wheeling/
blockage charges is proposed for discourse (GOI, IEA, 2003; [9,56]:

- Transmission duties/charges between provincial lines might be Fig. 4. Short-term transactions of electricity in BU.

167
F. Ahmad, M.S. Alam
Fig. 5. Total electricity transactions under short-term market in BU.
The national electricity policy 2005 [58] visualizes that 15% of
electrical energy from new installing capacity might be contracted
outside the long-term PPA. It is estimated that traders in the electricity
market will execute an essential piece of this 15% electrical energy
through market components. An examination done by AF Mercados
shows a purchasing capability of 15.35% and an offering capability of
4.57% crosswise over states for the STPM at the present levels of load-
demand met. This potential is just because of co-skewness of the re-
quired energy met in every state. The positive potential is, however,
higher and would be about 23% if demand shedding in power terms is
accepted conservatively at 10%. The potential would additionally en-
hance if all the states were to permit their boundless energy required
industrial customers (> 1 MW) to get from STPM. STPM is not just
helping in enhancing the consistent quality of the power frameworks by
decreasing the load demand-supply hole, but also an additional flag the
"sort" of required capacity conserving the utilization of energy gen-
eration and transmission assets sent by the power supply industry. PXs
construct costs are shutting in on the variable expenses of generation of
the power plants working at the edges of the legitimacy arrange stack
up of generators [35,21].
STPM comprises of bilateral, over the counter, and exchanged based
power market. The characteristic of each type of market is shown in
Fig. 6 [59–61,9].
4. PXs based market
The effectiveness and liquidness of the PXs has enhanced since their
commencement in 2008. It has been displayed by a decrement in some
value pinnacles, lessened instability and, the impression of business
sector data in costs. The measure of PXs based markets has developed
around 3% of the aggregate power produced, since the beginning. With
further fixing of the regulation band in terms of frequency, and a
normal zero-resilience towards frequency deviation, the volume mostly
relies on DAM or intraday electricity trading through the PXs. The
combined rate of power trade through UI and PXs today remains at
roughly 6%. Currently, the PXs accounts for approximately 29% of the
STPM. The development in the volume of 16.24BU on STPM was ac-
counted fundamentally by the positive development in the transaction
through PXs (5.60 BU) in the FY 2015-16 which has witnessed the in-
crement of 19% transaction in total STOM. A detailed year-wise
transaction of electricity at PXs since their inception are shown in Fig. 7
and month wise total electricity transaction is shown in Fig. 8. The
weighted average price of electricity transacted through PXs for the FY
2015-16 was INR 2.72/kWh as given in Fig. 9. In the FY 2015-16, IEX,
as well as PXIL, transacted 99% of the total cleared volume of electrical
power at a price of a lesser amount than INR 6/kWh while nearly 92%
at IEX and 76% at PXIL of the volume was transacted at a price of a
lesser amount than INR 4/kWh. Fig. 10 shows the average monthly-
discovered price per kWh at both PXs i.e. IEX and PXIL. It was perceived
from the block-wise and region-wise prices of electrical power trans-
acted over PXs in FY 2015-16 that the price of electrical power in
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Energy Strategy Reviews 23 (2019) 163–177
southern region (S1 and S2 regions as referred in Fig. 11) was higher as
compared to the price in other regions in both the PXs [11,27,9,62].
In numerous developing countries such as India, the grid infra-
structure is still in conventional mode and at the peak of its complexity,
which frequently causes low available transmission capacity and leads
to congestion (i.e. constraint in power flow from one region to another),
and introduces the multiple bid area system. In Indian, the PXs based
market has been divided into 12 areas as shown in Fig. 11. Sellers are
restricted to bid in their respective areas, but a buyer can bid in any of
the 12 bid areas, and thereby different area clearing prices (ACP) are
established. Further, the PXs comprises of various contracts as discussed
in Section 1, while more explanation is given in Fig. 12 [9,65].
4.1. DAM in Indian scenario
DAM is a physical electricity trading market for deliveries for any/
some/all 15-min time blocks in 24 h of next day starting from midnight.
The prices and quantum of electricity to be traded are determined
through a double-sided closed auction bidding process, where the in-
formation of both the members (buyer as well as a seller) is kept con-
fidential [9,10].
The different elements related to DAM are as per the following:
Trading is allowed for 15-min quantum under single uniform bidding as
well as block bidding mechanism. The sellers or buyers may participate
for a minimum of 100 kW. Minimum required price step is INR 1 for
each MWh (i.e. 0.1p/kWh). The DA based market is based on double-
sided closed bidding mechanism. Clearance from SLDC will be required
for both the seller as well as the buyer, in light of accessibility of the
system and ABT meters. Congestion mitigation by the market splitting
methods and deciding of ACP for each zone. Risk handling through the
essential margin, including any additional margin as indicated for the
individual exchanging fragment or the kind of agreements [66,67].
4.1.1. DAM trading process
The DAM trading process comprises of (a) bidding process in
scheduled duration, matching i.e. determination of market clearing
price (MCP) and market clearing volume (MCV), (b) transmission cor-
ridor to transmit the power, (c) funds availability in client/member
account to execute the money transaction, (d) market status i.e. who's
bidding are accepted and rejected, (e) confirmation through load dis-
patch agencies and their scheduling to procure the power at various bus
nodes throughout the country. The detailed process to participate in
DAM at PXs is shown in Fig. 13 whereas Table 6, presents the detailed
timeline from participation in DAM at PXs until the execution and
scheduling of accepted bid in regard of the injection and drawing of
electrical power.
In Indian exchange-based market, three types of bidding are
Fig. 6. Characteristic of STPM contracts.
F. Ahmad, M.S. Alam Energy Strategy Reviews 23 (2019) 163–177

Fig. 7. Total transactions at PXs from FY 2008-09 to 2015-16.

Fig. 11. Bid Area for Trading at PXs [9].

Fig. 8. Total electricity transactions at PXs in BU during the FY 2015-16.

Fig. 12. A layout of the PXs Contracts [63]; [9]; [24–26,64].

Fig. 9. Yearly avg. Discovered price at PXs (INR/kWh).

Fig. 13. Detail Procedure to Participate in DAM at PXs [9].

executed in order to participate in various contracts of PXs, Single bid:

15-min bids system, with varying price as well as quantity for single
quantum or set of the quantum of the series bid or randomly selected
i.e. partial execution of the bids entered, is possible. Block bids: rela-
tional block bid for any 15-min block or series of 15-min blocks during
the same day can be entered. Although no partial execution is possible
i.e. complete bided quantum will be in/out. Mother-child bid: such a
bidding process where the acceptance of one duration bid depends
upon other duration [9,10,67,68].
Fig. 10. Monthly Avg. Discovered Price at PXs (INR/kWh) [9,10].

4.1.2. Trading transaction under DAM at PXs

Fig. 14, presents the detail of yearly electricity transaction of DAM
for both PXs, which shows the volume of the transaction is rising

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F. Ahmad, M.S. Alam
Table 6
Timeline to participate in DAM at PXs [9,10].
Process
Initial margin check
Bidding session
B. Double side closed bidding (single or block), each block 15 min.
C. Member/client may edit, modify/delete buy and sell bids.
Calculation of MCP, MCV & provisional obligations of the members/NOC from the states.
Communication with NDLS for the unconstrained solution.
Confirmation from the bank regarding the funds available in member/client accounts
NDLS check the congestion and deal with the situation.
Buyers pay to PXs(Pay-in)
ACP calculation based on transmission availability and scheduling through NLDC.
NLDC confirms Scheduling. PXs sends a detailed schedule to SLDCs
RLDCs/SLDCs incorporate collective transactions in the daily schedule
PXs settled payments to the seller (playouts)
Fig. 14. Transactions under DAM (BU) from the financial year 2008-09 to
2015-16.
gradually since their inspection. During the FY 2008-09, the total
transaction of electricity was only 2.77BU, while in FY 2015-16,
34.1BU, total transacted electricity was recorded. Fig. 15 and Fig. 16,
shows the monthly comparison of total volume cleared by OA con-
sumers and total volume cleared in DAM at both of the PXs. During the
FY 2015-16, the total volume of electricity consumed by OA consumers
as a percentage of total transacted electricity at IEX and PXIL was
varying from 34.61% to 74.37% and 27.4% to 100%. While, for the
same FY, the total cleared volume by OA consumers was 59.54% (i.e.
20284.49MU) of total cleared volume at IEX (34066.52 MU) and
57.58% (i.e. 78.78MU) at PXIL (i.e. 136.84MU). Fig. 17, shows the
trend of the monthly average discovered price at IEX under DAM for FY
2015-16, the minimum price was recorded during September (2.29
INR/kWh) whereas the maximum price was discovered in June (3.68
INR/kWh). Further, Fig. 18 and Fig. 19 shows the seasonal (winter and
summer) comparative study of one day MCV and MCP in DAM at both
the PXs for 15-min block bidding. The study reveals that, in the winter
season, load demand as well as discovered price, are low during the
night period, while both are high for the same duration in the summer.
The flatter “price curve” for PXIL indicates the possibility of the ac-
cepted bid of the same entity/industry/OA consumers [27,57], [9,10],
[45,67].
4.2. TAM in Indian scenario
TAM provides a variety of contracts permitting the partakers to
buy/sell electrical power on a term basis from intraday to weekly i.e. up
to 11 days ahead.
The TAM follows the scheduling procedures as per bilateral trans-
actions, governed by the CTU, under CERC regulations, 2008 (provision
of OA in inter-state transmission). Currently, the PXs under TAM
comprises of intraday, day ahead contingency (DAC), daily and weekly
contracts.
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Energy Strategy Reviews 23 (2019) 163–177
Schedule
09:30 a.m.
10:00 a.m. To 12:00 a.m.
12:00 a.m. to 01:00 p.m.
01:00 p.m. to 02:00 p.m.
By 02:30 p.m.
By 03:00 p.m.
By 05:30 p.m.
By 06:00 p.m.
Next day By 02:00 p.m.
The detailed timeline and procedure to participate in the various
contracts of TAM at PXs have been given in Fig. 20 and Table 7
[9,10,69].
4.2.1. Trading transaction under TAM at PXs
Fig. 21, presents the detailed yearly electricity transaction of TAM
at both the PXs, which shows the volume of electricity transaction is
varying from 0.098BU (0.095 at IEX and 0.003 at PXIL) to 1.98BU
(0.91 at IEX and 1.07 at PXIL). Maximum electricity transaction was
recorded during FY 2010-11 followed by minimum electricity transac-
tion in FY 2009-10. Total cleared volume under TAM in FY 2015-16 was
0.91BU (0.33 at IEX and 0.58 at PXIL) [9,10,27].
4.3. Renewable energy certificates (RECs)
4.3.1. Inception of RECs in India
PXs regulation 2010 was issued on the 14th of January 2010, for the
advancement of the market in power from non-conventional energy
sources by the issuance of transferable and saleable credit endorse-
ments/certificates. These regulations should be applied through all
states of India except the state of Jammu and Kashmir. The CERC has
assigned NLDC as the implementing agency (for the central registry),
which provides techniques and an electronic stage for the RECs in-
strument. The RECs system was formally propelled on 18 November
2010 [70].
The RECs tool delivers an unconventional deliberate route to a
generator, to trade their electricity from RESs just like conventional
electricity and trade the green attribute unconnectedly to obligated
entities to accomplish their RPO. Such electricity generators can either
go for power that is available to be purchased at special full cost duty to
a distribution licensee or can select to take the RECs way for such
Fig. 15. OACs participation and total transaction in DAM at IEX
F. Ahmad, M.S. Alam
Fig. 16. OACs participation and total transaction in DAM of PXIL
Fig. 17. Monthly average discovered price at IEX under DAM
Fig. 18. Seasonal Comparative Study of One Day MCV at PXs [9].
Fig. 19. Seasonal Comparative Study of One Day MCP at PXs [9].
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Energy Strategy Reviews 23 (2019) 163–177
Fig. 20. Detail Procedure to Participate in TAM at PXs [9,10].
unfastened capacity. On the off chance that he settles on the RECs way,
he can offer his power to a DISCOMs licensee, for example, a traditional
source based generation at an average power procuring cost. On the
other hand, he can offer it to an outsider, that is, to OA consumers at
commonly settled costs, or even on PXs. On each MWh of such power
produced, is qualified for getting one REC from the focal registry
(managed by the CERC) in the wake of being enlisted once with this
registry. Such enrolment requires earlier accreditation with the state
nodal office for confirming the wellspring of generation capacity, and
smart grid metering [12,16,18,71].
4.3.2. Structure and pricing mechanism of RECs
RESs is categorized, as solar of INR 3500/REC and non-solar of INR
1500/REC, to fulfill the required RPO by the various utility as well as
industries of the corresponding category. The higher cost of solar-based
RECs implies the higher cost required to generate the same amount of
energy as compared to other RESs. Within three months of generation
of green energy, a REC can be issued with the validation of 1099 days.
The detailed timeline for RECs trading is given in Table 8. Obligated
entities can accomplish their RPO by purchasing green energy at full
cost preferential tariff or by procuring REC corresponding to their re-
quired RPO. Voluntary purchasers can also procure REC. Regulatory
charge for shortfall of RPO compliance is at the rate of forbearance
price (solar: INR5800/REC and non-solar: INR3300/REC) and INR 20/
REC as PXs charge [12–14,16,18,72,73].
4.3.3. Transaction of RECs at PXs
Fig. 22 shows the contribution of RECs at PXs. In the initial year, it
jumped from 10.15 lac RECs to 25.9 lac but in the next three con-
secutive years, the slow growth rate was recorded. In 2015-16, 49.55
lac RECs were cleared (62% increment from FY 2014-15). While in
March 2011 it was only 10.15 lac. Fig. 23 and Fig. 24 shows the total
monthly solar, as well as non-solar, cleared RECs at both PXs during the
FY 2015-16. While Fig. 25 and Fig. 26 shows the monthly trend of solar
and non-solar RECs at IEX and PXIL. In FY 2015-16, the total number of
solar and non-solar RECs volume cleared at IEX and PXIL were 465456,
182745, 2673434 and 1633518 respectively. Out of 29, 22 SEBs/DIS-
COMs failed to fulfill their RPO target for 2016 set by their respective
SERCs. This lead to the loss of more than 25% electricity that was ex-
pected to be generated from RESs [74,27,57,9,75].
F. Ahmad, M.S. Alam Energy Strategy Reviews 23 (2019) 163–177

Table 7
Timeline to Participate in TAM at PXs [9,10].
Features Intraday DAC Daily Weekly

Duration The same day, hourly, for 10 h Hourly for next day All or hourly in a single day Monday to Sunday
Trading day Every Day Wednesday and Thursday
Delivery period 02:00 p.m. to 12:00 p.m. RTC for next day 4th day to next 7 days Max 11 days
Trading Time 10:00 a.m. to 05:00 p.m. 03:00 p.m. to 05:00 p.m. 12:00 a.m. to 03:00 p.m. 12:00 a.m. to 04:00 p.m.
Bid matching Continuous trading Double side open auction system
Delivery point Regional periphery
Pay in Delivery day-1
Payout Delivery day+1
Transaction fee 2Paisa/kWh, fixed by CERC

Fig. 21. Transactions under TAM (BU) from the financial year 2008-09 to 2015-
16.
Fig. 23. Transaction of total Solar-RECs during 2015-16.

Table 8
Timeline for Recs [9,10,71].
Trading process Schedule

Trading day Last Wednesday of each month

Market type Closed double-sided auction
Trading schedule 01:00 p.m. to 03:00 p.m.
By 15:30 p.m. Validation of REC by the central agency
By 04:00 p.m. Confirmation from a central agency
By 04:30 p.m. PXs finalizes trade
By 05:00 p.m. Buyers & sellers informed to the central agency
By 06:00 Hrs Invoice raised

Fig. 24. Transaction of total non-solar RECs during 2015-16.

Fig. 22. Transactions of RECs at PXs in last five years.

4.3.4. GoI norm to set a new target of RPOs

The GoI has issued new standards for green energy, by means of
rules for states to purchase RECs, through overhauled RPOs. These are
the focal government rules, at the end of the day, RPOs should originate Fig. 25. A trend of Transaction of Solar-RECs during 2015-16 at Both PXs.
from SERCs. Verifiably, states have had weaker RPOs and constrained
implementation or penances for not meeting targets. The RPO rules are

172
F. Ahmad, M.S. Alam
Fig. 26. A trend of Transaction of Non-Solar RECs during 2015-16 at Both PXs.
stringent, and the threat is not being accomplished. Then again, in the
event that one uses 175 GW of green energy demand by FY 2021-22 as a
standard, the RPO buy rules could even overshoot the prerequisites,
contingent upon the development of whole demand. The RPO rules
Figure the share of solar RECs in supply by era barring hydro. This
includes another variable for the count and adding extra instability.
The RPO rules break out solar based versus non-solar based in a way
that does not coordinate the 100 GW sun oriented out of the 175 GW
adds up to green energy targets. (Solar-based green energy is intended
to be 8% of total electricity generation, apart from hydro-based power
generation, by 2022.) The development of solar PV based (and general
RESs) has a brokenness in regards to the required volume development,
with a great deal, more development is required in a coming couple of
years than the last three years. It is not clear if this is the ideal situation.
An essential variable for adjusted green energy is keeping it inside the
arrangement of supply alternatives that takes care of overall demand.
Any green energy (or other RESs) over the ideal share will contrarily
affect the share of other generation, not cost-adequately. Coal is the
backbone of primary energy in India, and its consumption has declined
lately. India's green energy for 2022 infers a limited development rate
of around 25% for every annum. Conversely, highly proclaimed ar-
rangements like the state of California for 50% by 2030 just require a
yearly development of the share of around 4% for every annum. Indeed,
even contrasted with the EU or China, India's objectives require a much
higher development rate. India's eager green energy targets are not
required to meet the INDC target since carbon-emitting industrial sector
can likely be met through different means. The new target value of
RPOs has been given in Fig. 27, which comprises 11% from non-solar
and 8% from solar-based RECs by 2022. [22,76–78].
4.4. Energy saving certificates (ESCs)
4.4.1. Overview of ESCs in India
To promote the energy efficiency, the Ministry of power had laun-
ched the first of its kind energy conservation Act in March 2002. This
act laid out energy consumption norms for the large energy consumers
to adhere to, formulated new energy conservation building codes for
new buildings. These would follow the efficient energy performance
standards as well as display energy consumption labels on appliances.
The Act also created the Bureau of Energy Efficiency (BEE) to imple-
ment the provisions and this act was further amended and strengthened
in 2010 [79].
As per Tata strategic estimates, between 2007 and 2010, BEE pro-
grams have resulted in savings of 12.15 Mtoe or 18,875MU of elec-
tricity which is equivalent to electricity generated of 4 GW of genera-
tion capacity or INR 15000 to 20000 crore worth of additional
investment (Manish [80]).
Further, to enhance the energy saving, BEE launched its perform,
achieve & trade (PAT) mechanism on July 2012 under the effect of the
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Energy Strategy Reviews 23 (2019) 163–177
ministry of power. ESCs is also referred to the white certificate. 478
designated consumers (DCs) were covered from eight power oriented
designated sectors (DSs)-thermal power (TP), Aluminium industry (Al),
Iron and Steel (IS), Cement (Ct), Pulp and Paper (PPr), Fertilizer (Fr),
Chloralkali (CA), and Textiles (Tt). All these sectors contribute to 25%
of GDP and accountable for approximate 45% of India's primary energy
consumption. The detailed salient features of ESCs trading are given in
Table 9 [9,21].
4.4.2. Target and achievements of ESCs
Fig. 28, Fig. 29 and, Fig. 30 shows the total energy consumption
threshold, avoided additional investment and, savings potential, while
Fig. 31 shows the achievement of the cycle I in terms of savings by DCs
under various DSs. The 31 million ton of CO2 mitigation and 8.67
million ton of energy (Mtoe) saving was recorded as the achievement
from cycle I. The maximum saving was done by Thermal Power (TP)
sector (3.06 Mtoe) while the minimum saving was from Chloralkali
(CA) sector (i.e. 0.1 Mtoe) [75], (Manish [80]. In PAT Cycle I, the total
targeted energy saving was 6.686 Mtoe. 80% of which lies in three
industries, viz. TP, IS, and Ct with targets of 3.211, 1.486 and, 0.816
Mtoe respectively [13,15,16,20–26].
Stakeholders, specifically the DCs opined that the current policy has
helped them to reduce their energy bill by 3–4%. However, they also
expressed their concerns regarding weak handholding by regulators and
designated energy auditors, an inflexible approach for normalization,
less clarity for M&V, the absence of regulations for ESCs trading, a
possible oversupply of ESCs, and financing of EE capex, especially for
Cycle II targets. Cycle II with three more sectors (refinery, DISCOMs,
and railway) comprises of 621 DCs and having a total target of 8.869
Mtoe by 2018-19 [81].
5. Congestion at PXs
In a competitive power market, the system operator is in charge of
deciding the major activities to guarantee that no infringement of grid
constraints should arise. The precise arrangement of activities or
methodology is stated as congestion management, which chiefly com-
prises of re-dispatch of load and generation levels to build up a fra-
mework state without infringement of system constraint. Furthermore,
the system operator may partition a framework into discrete valuing
zones to oversee congestion such as splitting market mechanism
[82,83].
The total electrical power transacted through PXs is occasionally
constrained/inhibited due to less transmission capacity i.e. transmis-
sion congestion. The total unconstrained cleared volume of 170.7BU at
PXs since 2009 has been recorded, out of which the only 151.17BU was
actually cleared and scheduled volume (i.e. 19.53BU was constrained
Fig. 27. New set of targeted RPO
F. Ahmad, M.S. Alam Energy Strategy Reviews 23 (2019) 163–177

Table 9
Salient features of ESCs trading [26].
Compliance Mandatory

Target entities DCs

Buyers Industries not accomplishing the target
Sellers Industries achieving beyond the target
Target 6.6 million toes for 1st Cycle
Mechanism Cap and trade
Phase cycle 3 Years
ESCs 1 ESCs = 1 Mtoe (Metric ton of oil equivalent)
Trading platform PXs only
Penalty As per energy conservation act, 2001(link with a market
value of oil equivalent)
Banking Allowed for two consecutive cycles
Compliance period 3 Years for DCs

Fig. 30. Savings Potential (Million kWh) by various DCs under various DSs
during Cycle I.

Fig. 28. Energy Consumption threshold (toe) by various DCs under various DSs
during Cycle I.

Fig. 31. Savings (Million's toe) by various DCs under various DSs during Cycle
I.

Fig. 29. Avoided additional Investment (INR Cr) by various DCs under various
DSs during Cycle I.

due to congestion). Fig. 32 shows the comparative study of a year wise

total unconstrained cleared and uncleared volume due to congestion at
PXs. The maximum congestion of 5.59BU was recorded in 2013-14.
While percentage-wise maximum congestion of total unconstrained
cleared volume was in 2012-13 (i.e. 17%) as shown in Fig. 33 Fig. 32. Year wise total unconstrained cleared, actually cleared and non-
[9,10,27,57]. cleared volume due to congestion.

6. Risk management in the DAM, TAM and REC market
Along with trading, scheduling, procuring, injection of power, the
risk associated with cash flow has been a great concern. Aside from
giving installment security, PXs is likewise the counter-party for all
exchanges. Thus, the participants need not to know and are concerned
about the risk profile of the other party. The PXs gathers imperative
margins before the delivery of electricity and the conveyance to guar-
antee payment security.

174
F. Ahmad, M.S. Alam
Fig. 33. Year wise total non-cleared volume due to congestion and as % of total
unconstrained cleared Volume.
In DAM, a member/client is permitted to execute just when the
margin stored by the member/client is proportionate to the proper es-
timation of exchanges that have been done in the last one week, or the
underlying margin recommended by the PXs for any member/client.
In TAM, the member/client should make the accompanying sorts of
margins to accessible the PXs once in a while as portrayed beneath:
- Initial Margin (Operational Limit): Initial Margins are computed on
the total order value. This initial margin is blocked automatically
from the total available deposits. The trading system will auto-
matically reject orders in case the initial margin exceeds the balance
deposits available.
- Basis Margin: Additional Margin is computed as a percentage of the
traded value as per the risk curve defined and are collected in dif-
ferent trenches as per the contract specifications.
- Variation Margin: The Exchange on a pre-decided day also computes
the Variation Margin of Members based on their trades (open po-
sition).
- Extreme Loss: The Exchange may collect any ad hoc margins from
time to time in case if it feels that the available margins collected by
the exchange are inadequate due to variation in the prices in the
Market.
All the previously mentioned margins can be deposited in a framed
letter of credit, fixed-deposit, cash, and bank-guarantee.
In the REC Market, Members are permitted to put in a buy request
against the amount made accessible, correspondent to 100% of the
request value. Subsequent to getting affirmation about the accessibility
of RECs in the depository account of an eligible entity from the nodal
organization (NLDC), the PXs continues to prepare the final bid co-
ordinating arrangement. The bid of the sellers for whom the balance in
the depository account with the central agency is reported short is not
considered [84,85].
7. Smart grid and power market
With the passage of time, existing technologies are being modified
and innovations are integrated. The greatest artificial engineering
marvel of 20th century i.e., the electric grid has also undergone and is
still going through overhauling making it more resilient, stable and
intelligent and hence it is termed as “smart grid”. It is an intelligent
integration of distribution, transmission, and generation for the effi-
cient delivery of secure, sustainable and economic electricity [4,6,86].
It enables various smart and automatic applications such as advanced
metering infrastructure [87], demand response, smart distribution
management, intelligent energy storage, advanced electricity mar-
keting, emission trading and integration of electric vehicles [88–93].
With the accessibility to the incentives, disincentives, choices, and
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Energy Strategy Reviews 23 (2019) 163–177
knowledge, consumers' electricity purchasing pattern and behavior are
changed. Based on the consumers' choices, incorporation of the latest
technologies is necessary. The government-centric energy sector is also
viewing massive non-central involvement thus increasing competitive-
ness, accountability, and responsibility. Thus, the advancement in the
technology has increased the consumer's participation in the local en-
ergy market.
Renewable energy sources (RESs) which are intermittent in nature
are easily integrated into smart grid and the availability of real-time
information enables system operators to select generation from clean
energy sources, thus substituting renewable energy whenever possible.
Hence, the participation of local level generators/consumers such as
rooftop solar system has increased dramatically.
The smart grid oriented load management techniques like pricing
based schemes, direct load control, curtailable services, and demand
bidding, etc. are used to help the consumers to lower their payments
and utility to minimize the need of peaking plants. Demand-side re-
sponse based smart grid functioning enables the electric vehicle in-
tegration to support the grid stability [94] by participating in ancillary
services (regulation up and down). Furthermore, the smart grid in-
cludes interruptible and dynamic rates, real-time pricing, critical peak
pricing, time-of-use pricing to flatten the overall demand over time and
thereby reduces peak load [95].
8. Conclusion
The presented work comprises of an overview of the Indian power
market (pre and post of IEA 2003), STPM, and a detailed analysis of the
PXs based electricity trading market. The assessment of the PXs based
energy trading platform reveals the various challenges associated with
it, such as minimization of complexity, encouragement to convince
various stockholder to invest in PXs based market, harmonization
across spans, and ensuring market depth. The detailed finding of this
work is concluded as:
Indian power market is still a highly complex entity due to separate
SERCs of each state. Even after the IEA 2003, OA regulations 2004,
2006, and 2010, a significant portion of the market fragment (i.e. 90%)
is indulged in the long term, and medium-term power market through
PPA followed by the vertically integrated market.
Still, more than half of the total number of states are not partici-
pating in the OA power market. The STPM has only 10% of the total
transacted volume, while PXs covers 3% (i.e. 35.01BU at the end of
March 2016). Since the inception of PXs in 2008, a gradual fall has been
observed in discovered MCP (i.e.7.49 INR/kWh in FY 2008-09 to 2.72/
kWh in FY 2015-16) which indicates the liquidity of the market due to
competitive zone.
The total 143.71 lac RECs have been traded since 2011-12 by var-
ious states as well as the private firms to meet their RPOs. However, 22
states did not fulfill their targeted RPO set by the Ministry of new and
renewable energy for 2016, which accounted for a 25% loss of electrical
energy that was expected from RESs. In this regard, GoI has designed
new norms to achieve 11% from non-solar and 8% from solar-based
REC by 2022. However, apart from this, high penalty norms should be
designed against the states as well as private firms who are not meeting
their targeted RPOs, respectively.
Under PAT mechanism, in cycle I, ESCs saved the 8.67 Mtoe that
mitigated approx. 31 million ton of CO2. While, cycle II with three more
sectors (refinery, DISCOMs, and railway) comprises 621 DCs and
having a total target of 8.869 Mtoe by 2018-19.
By the end of March 2016, the total 19.53BU was constrained to
clear due to congestion that indicated the lower transfer capability of
the existing power transmission system. The GoI along with the state
governments should converge to a common point so that all the states
could allow their consumers to participate in a split market that will
help to mitigate the congestion problem.
F. Ahmad, M.S. Alam
Acknowledgment
This research work was supported by Center of Advanced Research
in Electrified Transportation, AMU, Aligarh. The author is also thankful
to the Council of Scientific & Industrial Research (CSIR), New Delhi and
IEX India Limited for their valuable support.
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