Ministry of Power Waives ISTS Charges for Wind and Solar Projects Commissioned up to 2022

In a recent order, the Central Electricity Regulatory Commission (CERC) has asked the Power System Operation Corporation (POSOCO) to implement a pilot for the security constrained economic dispatch (SCED) of electricity for Inter-State Generating Stations (ISGS) across India.


There is a large matrix comprising 29 states and seven union territories that are beneficiaries of about 150 regional inter-state generating stations (ISGSs). Some of the ISGSs have as many as 15 beneficiaries spread across India and some of the states have a share from more than 40 ISGSs in their portfolio. Distribution companies (DISCOMs) meet majority of their daily power need by requisitioning or scheduling the generation from their portfolio of long-term, medium-term and short-term contracts following merit order dispatch of generation from its own portfolio of contracts. DISCOMs use all methods to harness the most economical resource. But, there is still scope for optimization by dispatching cheaper stations which are fragmented throughout India.

Objective of the pilot program

With the increase in renewable generation in the system, DISCOMs would need to take into account the generation from intermittent energy sources to ensure flexibility in the system while catering to net load (demand minus the generation from embedded renewable energy resources) and scheduling generators from the non- renewable energy sources. Hence, the need for optimization becomes all the more relevant.

POSOCO – The implementing agency

POSOCO has already submitted a detailed report on optimizing the scheduling and dispatch of the power generation resources and reducing overall cost of production of electricity and the CERC is exploring the possibility of creating a regulatory framework for the same.

Now, the CERC has directed POSOCO to implement the order as follows:

Key Highlights

  • POSOCO will implement SCED optimization model for all the thermal inter-state generating stations that are regional entities and whose tariff is determined or adopted by the CERC for their full capacity without violating grid security and while honoring the existing scheduling practices on trial basis for six months.
  • POSOCO will need to frame detailed procedure within one month of this order.
  • Detailed procedure is expected to contain the guidelines regarding operational aspects of SCED including scheduling, dispatch, accounting, settlement and any residual matter.
  • Variable charges declared by the generators for the purpose of reserve regulation ancillary services will be considered in the optimization process.
  • Schedules of the states or beneficiaries will not be changed, and the beneficiaries will continue to pay the charges for the scheduled energy directly to the generator as per the existing practices.
  • National load dispatch center will be opening a separate bank account called National Pool Account. All payments on account of SCED schedules will flow to and from this account.
  • For increment in injection of power, generator will be paid for the incremental generation at the rate of its variable charge.
  • For decrement in injection of power, generator will pay at the rate of its variable charge after discounting compensation due to part load operation.
  • POSOCO will procure the hardware and develop the necessary software along with the optimization tools for the implementation of the SCED framework.

The CERC in its order has stated that the pilot for the SCED will be implemented by POSOCO with effect from April 1, 2019.

This is another step taken towards ensuring uninterrupted power at reasonable price to all Indian citizens. Working towards the same target, in January 2019, the CERC had released a discussion paper titled Market Based Economic Dispatch of Electricity: Re-designing of Day-Ahead Market (DAM) in India, in which it has analyzed India’s power market, highlighting the scope for further optimization of scheduling and dispatch of generation.