DEVIATION SETTLEMENT MECHANISM (DSM)

Any power system needs to balance the generation and consumption of energy at any point
in time in order to maintain its frequency within limits. But there will be always deviation in actual
generation from the scheduled generation(in the case of generating stations) and deviation in actual
drawal from schedule drawal(in the case of discoms). Thus in order to handle these differences in
real time, there is an imbalance handling mechanism. Deviation Settlement Mechanism(DSM) is a
regulatory mechanism by which the grid stability is achieved by imposing penalty and incentive for
over drawal/injection or under drawal/ injection from the schedule.

In Indian grid system, for the purpose of scheduling electricity, a day(24hrs) is divided into 96 blocks
of 15 minute duration. A generating station shall generate electricity on each block based on their
generating schedule prepared by the regional load dispatch centre. Whenever there is an over
Injection or under injection by a generating station, the charges for the deviation is calculated as per
Central Electricity Regulatory Commission (Deviation Settlement Mechanism and Related Matters)
Regulations, 2014 and the subsequent amendments. The penalty/ incentive is to be paid to/from a
DSM pool account which is managed by National Load Dispatch Centre(NLDC).

The various clauses in the DSM regulations that are applicable for an interstate thermal generating
station (ISGS) is compiled as follows.

1. “Deviation” in a Time Block for a Seller means its total actual injection minus its total
scheduled injection. Ie Deviation = Actual Generation – Scheduled Generation.
2. Deviation price vector is linked to the daily average Area Clearing Price(ACP) in Day Ahead
Market(DAM) of the Indian power exchange(IEX). Deviation price for frequency band 50-
50.01Hz will be daily average ACP discovered at DAM. The charges for deviation for each
0.01Hz step is changing as per the following graph. DSM rate will have a dynamic slope
determined by joining the identified price point at 50Hz(average ACP), frequency <=
49.85(800p/u) and at frequency 50.05Hz (0p/u) on daily basis. Above 50.05Hz, the rate is
zero and below 49.85Hz, the rate is 800p/u.
3. The DSM rate is capped at 303.04p/u for interstate generating stations. (Capping for discoms
are set at 800p/u).
4. For each unit of electricity under injected, the generating station has to pay to the DSM pool
at DSM rate. For each unit of electricity over injected within the volume capping, the
generating station will be paid at DSM rate.
5. Volume Capping for over injection is as follows:-
The charges for over injection in excess of 12% of schedule or 150MW (whichever is less)
shall be zero. When schedule is less than 400MW, volume capping is fixed at 48MW (not at
12% of schedule)
6. Additional deviation charges payable for under injection beyond the volume capping is as
per the following table. When schedule is less than 400MW, no additional charge for a
deviation of upto 48MW.

When 12% Sch <=150MW When 12% Sch >150MW Additional Charge

12-15% deviation from 150 -200MW 20% of Normal deviation

schedule. charge

15 - 20% of schedule 200 – 250MW 40%

Above 20% above 250 MW 100%

7. When frequency >50.05, an additional deviation charge is payable at daily average ACP or
303.04paisa/unit, whichever is minimum.
8. In the event of sustained deviation from schedule in one direction(positive or negative), such
station have to change sign of their deviation from schedule changed at least once in 6 time
blocks or come within a band of -20MW<Deviation<20MW once in 6 time blocks . Otherwise
an addl. charges as a percentage of the daily base DSM shall be applicable in case of each
said violation as shown in the following table. “Daily Base DSM Charge” means the sum of
charges for deviations for all time blocks in a day payable or receivable as the case may be,
excluding the additional charges.

No. of sign change violations Additional Charge payable

in a day

From First to fifth violation For each violation, an additional charge @ 3% of daily Base
DSM charge payable or receivable.

From sixth to tenth violation For each violation, an additional charge @ 5% of daily Base
DSM charge payable or receivable.

From eleventh violation For each violation, an additional charge @ 10% of daily
 onwards Base DSM charge payable or receivable.

PROBLEM
NTECL (NTPC Tamil Nadu Energy Company Ltd) is a joint venture company between NTPC
Ltd and Tamil Nadu Electricity Board. It is an interstate thermal generating station (ISGS) having a
capacity of 3x500MW. The fuel cost per unit of generation is Rs 2.80/unit. The average ACP
discovered in DAM of Indian Power Exchange is Rs 2.60/unit.

The company wants to prepare a summary report of the DSM charges inquired for the date 15-09-
21. The report requires the following information.

1. The average, minimum and maximum frequency for the day.

2. The DSM charge for any particular frequency.
3. The breakeven frequency(freq at which DSM rate/unit equals fuel cost per unit) when the
fuel cost per unit (ECR) is available.
4. The total electricity scheduled for the day in million units
5. The total actual generation of the plant.
6. The number of time blocks where the station generated more than schedule.
7. The total charges receivable by the station for over injection and the total cost of fuel
consumed for over injection
8. The additional charges payable by the station for over injection when the frequency is more
than 50.05Hz.(as per clause 7).
9. The number of time blocks where the station generated less than schedule.
10. The additional deviation charges charge payable for under injection beyond volume capping
(as per clause No. 6).
11. The total charges payable by the station for under injection and the total cost of fuel saved
due to under injection.
12. The number of sign change violations(as per clause no 8) and the total penalty for the
violation.
13. The total deviation charges for the day. Find out net cost of fuel saved/consumed because of
under/over injection
14. The Net gain/loss for the station from DSM.

The Generation schedule of the station for the date 15- DATE 15-09-2021

Sept-21 is given in the following table.XSCHEDULED GENERATION

Time Block Time Desc LDC Schedule AGC Grand Total

1 00:00-00:15 820.03 42.74 862.77

2 00:15-00:30 773.5 46.29 819.79

3 00:30-00:45 773.5 46.14 819.64

4 00:45-01:00 773.5 27.01 800.51

5 01:00-01:15 773.5 43.45 816.95

6 01:15-01:30 773.5 46.83 820.33

7 01:30-01:45 773.5 40.40 813.90

8 01:45-02:00 773.5 16.24 789.74

9 02:00-02:15 773.5 -5.07 768.43

10 02:15-02:30 773.5 -5.13 768.37

11 02:30-02:45 773.5 -4.51 768.99

12 02:45-03:00 773.5 7.71 781.21

13 03:00-03:15 773.5 -5.15 768.35

14 03:15-03:30 773.5 -5.16 768.34

15 03:30-03:45 773.5 -5.16 768.34

16 03:45-04:00 773.5 -5.16 768.34

17 04:00-04:15 773.5 11.08 784.58

18 04:15-04:30 773.5 28.32 801.82

19 04:30-04:45 773.5 40.12 813.62

20 04:45-05:00 773.5 45.88 819.38

21 05:00-05:15 773.5 23.86 797.36

22 05:15-05:30 773.5 31.07 804.57

23 05:30-05:45 773.5 28.14 801.64

24 05:45-06:00 773.5 6.01 779.51

25 06:00-06:15 773.5 5.15 778.65

26 06:15-06:30 773.5 31.53 805.03

27 06:30-06:45 773.5 46.74 820.24

28 06:45-07:00 773.5 46.77 820.27

29 07:00-07:15 773.5 46.79 820.29

30 07:15-07:30 773.5 46.41 819.91

31 07:30-07:45 773.5 8.71 782.21

32 07:45-08:00 773.5 -9.23 764.27

33 08:00-08:15 773.5 14.11 787.61

34 08:15-08:30 773.5 -1.24 772.26

35 08:30-08:45 773.5 0.23 773.73

36 08:45-09:00 773.5 4.38 777.88

37 09:00-09:15 773.5 25.01 798.51

38 09:15-09:30 773.5 30.42 803.92

39 09:30-09:45 773.5 8.56 782.06

40 09:45-10:00 773.5 4.26 777.76

41 10:00-10:15 773.5 4.33 777.83

42 10:15-10:30 773.5 8.91 782.41

43 10:30-10:45 773.5 9.10 782.60

44 10:45-11:00 773.5 9.12 782.62

45 11:00-11:15 773.5 -10.06 763.44

46 11:15-11:30 773.5 44.40 817.90

47 11:30-11:45 773.5 -19.21 754.29

48 11:45-12:00 773.5 -25.27 748.23

49 12:00-12:15 773.5 -46.10 727.40

50 12:15-12:30 773.5 -24.84 748.66

51 12:30-12:45 515.6 11.75 527.35

52 12:45-13:00 515.6 8.42 524.02

53 13:00-13:15 515.62 8.41 524.03

54 13:15-13:30 515.62 8.45 524.07

55 13:30-13:45 515.62 28.51 544.13

56 13:45-14:00 515.62 32.85 548.47

57 14:00-14:15 515.62 24.54 540.16

58 14:15-14:30 515.62 24.68 540.30

59 14:30-14:45 515.6 26.72 542.32

The actual generation of the station for each time DATE 15-09-2021
block is given in the following table.XACTUAL
GENERATION
BLOCK NO TIME FREQ DECLARED AVERAGE
CAPACITY GENERATION
1 00:00-00:15 49.97 1430 847.64
2 60 00:15-00:30
14:45-15:00 515.6 49.96 1430 0.00 810.94
515.60

3 61 00:30-00:45
15:00-15:15 515.62 49.96 1430 7.63 804.76
523.25
4 62 00:45-01:00
15:15-15:30 515.62 50.00 1430 40.22 796.06
555.84
5 63 01:00-01:15
15:30-15:45 515.62 49.94 1430 45.14 797.86
560.76
6 64 01:15-01:30
15:45-16:00 515.62 49.88 1430 45.81 823.36
561.43
7 65 01:30-01:45
16:00-16:15 515.62 49.99 1430 7.85 813.28
523.47
8 66 01:45-02:00
16:15-16:30 515.62
50.00 1430 -12.83 784.03
502.79
9 67 02:00-02:15
16:30-16:45 515.62
50.02 1430 44.13 758.81
559.75
1068 02:15-02:30
16:45-17:00 515.62
50.02 1430 45.86 759.64
561.48
1169 02:30-02:45
17:00-17:15 665.62
50.01 1430 -23.99 762.51
641.63
12 02:45-03:00 50.01 1430 774.68
70 17:15-17:30 515.62 12.49 528.11
13 03:00-03:15 50.02 1430 759.83
71 17:30-17:45 665.62 -37.74 627.88
14 03:15-03:30 50.00 1430 757.75
72 17:45-18:00 815.62 -3.69 811.93
15 03:30-03:45 50.01 1430 760.34
73 18:00-18:15 937.5 -41.39 896.11
16 03:45-04:00 50.03 1430 757.11
74 18:15-18:30 937.5 1.18 938.68
17 04:00-04:15 50.00 1430 772.35
75 18:30-18:45 937.5 2.97 940.47
18 04:15-04:30 49.97 1430 790.19
76 18:45-19:00 937.5 -1.64 935.86
19 04:30-04:45 50.00 1430 802.63
77 19:00-19:15 937.5 -2.90 934.60
20 04:45-05:00 49.97 1430 814.98
2178 19:15-19:30
05:00-05:15 937.5
50.00 1430 -1.23 936.27
780.41
2279 19:30-19:45
05:15-05:30 937.5
49.97 1430 30.27 967.77
789.79
2380 19:45-20:00
05:30-05:45 937.5
49.99 1430 30.47 967.97
785.36
2481 20:00-20:15
05:45-06:00 937.5
50.01 1430 20.72 958.22
769.03
2582 20:15-20:30
06:00-06:15 937.49 50.04 1430 1.69 939.18
758.54
2683 20:30-20:45
06:15-06:30 937.5 49.97 1430 -9.92 927.58
793.81
2784 06:30-06:45
20:45-21:00 937.5 49.92 1430 18.11 813.88
955.61

2885 06:45-07:00
21:00-21:15 937.5 49.88 1430 40.46 821.94
977.96

2986 07:00-07:15
21:15-21:30 937.5 49.86 1430 45.58 818.79
983.08

3087 07:15-07:30
21:30-21:45 937.5 49.90 1430 37.26 814.00
974.76

3188 07:30-07:45
21:45-22:00 937.5 50.02 1430 17.40 791.45
954.90

3289 07:45-08:00
22:00-22:15 937.5 50.02 1430 -27.01 752.46
910.49

3390 08:00-08:15
22:15-22:30 937.5 49.99 1430 30.62 767.86
968.12

3491 08:15-08:30
22:30-22:45 937.5 50.01 1430 -41.46 772.50
896.04
3592 08:30-08:45
22:45-23:00 937.5 50.04 1430 -29.73 200.00
907.77
3693 08:45-09:00
23:00-23:15 937.5 50.04 1430 -11.17 757.89
926.33
3794 09:00-09:15
23:15-23:30 937.5 49.99 1430 -16.69 782.66
920.81
3895 09:15-09:30
23:30-23:45 787.5 49.97 1430 -5.40 789.39
782.10
3996 09:30-09:45
23:45-24:00 637.5 50.02 1430 18.53 770.26
656.03
40 09:45-10:00 50.06 1430 755.78
41 10:00-10:15 50.06 1430 750.71
42 10:15-10:30 50.03 1430 755.34
43 10:30-10:45 50.04 1430 753.82
44 10:45-11:00 50.01 1430 751.89
45 11:00-11:15 50.02 1430 734.86
46 11:15-11:30 50.00 1430 715.26
47 11:30-11:45 50.01 1430 752.75
48 11:45-12:00 50.02 1430 676.25
49 12:00-12:15 50.08 1430 661.66
50 12:15-12:30 50.04 1430 654.58
51 12:30-12:45 50.03 950 514.10
52 12:45-13:00 50.03 950 485.06
53 13:00-13:15 50.05 950 482.86
54 13:15-13:30 50.05 950 485.89
55 13:30-13:45 49.96 950 505.66
56 13:45-14:00 50.02 950 522.06
57 14:00-14:15 49.98 950 506.24
58 14:15-14:30 49.94 950 523.54
59 14:30-14:45 49.97 950 546.10
60 14:45-15:00 49.97 950 510.89
61 15:00-15:15 50.02 950 513.64
62 15:15-15:30 49.97 950 527.31
63 15:30-15:45 49.94 950 535.35
SOLUTION
 SUMMARY REPORT 15-Sep-21

Basic Data :
Frequency (Avg / Max / Min) Hz 49.98 / 50.08 / 49.71
Break Even Frequency for DSM Hz 50.00
Avg MW 770.02
Total Schedule
MU 18.48
Avg MW 741.18
Total Generation
MU 17.79
Total Deviations MU -0.6922

Over Injection Analysis :

MU 0.03
Total Over Injection
Total Time Blocks 9
Deviation Charges for Over Injection :
Capped Deviation Charges for Over Injection Rs. Lacs 0.70
Additional Deviation Charges for Over Injection when
Rs. Lacs 0.00
Freq. ≥ 50.1 Hz
Total Deviation Charges for Over Injection Rs. Lacs 0.70
Fuel Consumed for Over Injection Rs. Lacs -0.74
Net Gain / Loss for Over Injection Rs. Lacs -0.03

Under Injection Analysis :

MU -0.7185
Total Under Injection
Total Time Blocks 87
Deviation Charges for Under Injection :
Capped Deviation Charges for Under Injection Rs. Lacs -12.85
Additional Deviation Charges for Under
Rs. Lacs -57.78
Injection
Total Deviation Charges for Under Injection Rs. Lacs -70.63
Fuel Saving for Under Injection Rs. Lacs 20.12
Net Gain / Loss for Under Injection Rs. Lacs -50.51

Sign Change Violations :

Number of instances where deviation was
maintained in the same direction No.of.sign change
1
(positive/negative) wrt schedule continuously violations
for more than 6 blocks
Additional Penalty for sign change violation Rs. Lacs 0.36

Total Deviation Charge Analysis :

Deviation Charges for Over+Under Injection Rs. Lacs -12.15
Additional Deviation Charges for sign change Rs. Lacs -0.36
Total Deviation Charges Rs. Lacs -12.15
Fuel Charges Ps./kWh 280.00
Fuel Consumed (-) / Saving (+) for Deviations Rs. Lacs 19.38
Net Deviation Charges Rs. Lacs 7.23
EXPLANATION

1. Find out the average, minimum and maximum frequency for 15-09-21?
Used MAX, MIN and AVERAGE function to get the value. ROUND function is used to
round off the average to 2 decimal places. Formula used,
=ROUND(AVERAGE('DEV CHARGES'!C4:C99),2)&" / "&MAX('DEV CHARGES'!C4:C99)&" /
"&MIN('DEV CHARGES'!C4:C99)
Ans displayed as 49.98 / 50.08 / 49.71
2. Find out the DSM charge for any particular frequency?
The DSM rate varies as per the graph given in clause 2. The DSM rate is capped at
303.04 paisa/unit(Clause 3). DSM rate is arrived in the page. ‘DEV RATE CALCULATION’ sheet
in the workbook. Formula used,
=IF(A7>=50,MIN($B$2-$B$2/5*(A7-$A$22)*100,$B$3),MIN($B$22+(800-$B$22)/15*($A$22-
A7)*100,$B$3))

3. Find out the breakeven frequency(freq at which DSM rate/unit equals fuel cost per unit)
when the fuel cost per unit (ECR) is available?
The answer is arrived in ‘DEV RATE CALCULATION’ sheet in the workbook.
Flipped the Deviation rate/ freq table using the formula
=INDEX($B$7:$B$27,ROWS(B8:$B$27))
Breakeven frequency is found out using vlookup function. =VLOOKUP(ECR,I7:J27,2,TRUE)

4. Find out total electricity scheduled for the day in million units?
Average MW schedule for day is arrived using the formula in C6
“=AVERAGE('DEV CHARGES'!F4:F99)”
To convert to million units : =C6*24/1000

5. Find out the total actual generation of the plant?

Average MW generated for day is arrived using the formula in C8
“=AVERAGE('DEV CHARGES'!E4:E99)”
To convert to million units : =C8*24/1000

6. Find out the number of time blocks where the station generated more than schedule?
Used count if function, =COUNTIF('DEV CHARGES'!G4:G99,">0") to get no of time
blocks.

7. Find out the total charges receivable by the station for over injection and the total cost of
fuel consumed for over injection?
The total charges for over injection and the cost of fuel consumed for each time
block is calculated in ‘’DEV CHARGES’’ sheet in the workbook. The sum for all time blocks is
shown in Summary sheet.

8. Find out the additional charges payable by the station for over injection when the frequency
is more than 50.05Hz.?
The additional charges for over injection for each time block is calculated in ‘’DEV
CHARGES’’ sheet in the workbook. The sum for all time blocks is shown in Summary sheet.

9. Find out the number of time blocks where the station generated less than schedule?
Used count if function, =COUNTIF('DEV CHARGES'!G4:G99,"<0") to get no of time
blocks.
10. Find out the additional deviation charges charge payable for under injection beyond volume
capping (as per clause No. 6)?
The additional charges for under injection for each time block is calculated in ‘’DEV
CHARGES’’ sheet in the workbook. The sum for all time blocks is shown in Summary sheet.
11. Find out the total charges payable by the station for under injection and the total cost of fuel
saved due to under injection?
The total charges for under injection and the cost of fuel consumed for each time
block is calculated in ‘’DEV CHARGES’’ sheet in the workbook. The sum for all time blocks is
shown in Summary sheet.

12. Find out the number of sign change violations(as per clause no 8) and the total penalty for
the violation?
The no. of sign change violations is arrived in four steps in ‘’DEV CHARGES’’ sheet in
the workbook, column No, AL to AO. The total penalty is shown in the summary page.

13. Find out the total deviation charges for the day. Find out net cost of fuel saved/consumed
because of under/over injection?
The total deviation charges and the cost of fuel consumed for each time block is
calculated in ‘’DEV CHARGES’’ sheet in the workbook. The sum for all time blocks is
calculated in Summary sheet.

14. How much is the net gain for the station?

It is difference between total cost of fuel saved and total deviation charges. It is shown in
summary page of workbook.