The Ministry of Power (MoP) has proposed the introduction of a high price market segment for the day ahead market (HPDAM).

The stakeholders have time until August 21, 2022, to submit their comments and suggestions.

To address the concern of high prices in the spot market, a price cap was issued by the Central Electricity Regulatory Commission (CERC) in all market segments in April this year.

While the step ensured that the spot prices were within ₹12 (~$0.153)/kWh, the generators, based on high variable costs, could not participate in the market.

As per the new proposal, generators with variable costs higher than the day-ahead market (DAM) price cap of ₹12 (~$0.153)/kWh will be allowed to participate in the market.

These can be gas-based power plants, imported coal-based power plants, or any other entity that meets the variable cost eligibility criteria.

While there will be no minimum bid price, the maximum bid price will be decided on feedback from the stakeholders. The price cap will be higher than the existing DAM price cap.

In the integrated option, the HPDAM will operate similarly to the green day-ahead market (GDAM) in the integrated day-ahead market (IDAM). Sellers eligible for HPDAM will be allowed to place their bids, and the buyers will have the option to carry their uncleared bids from DAM to HPDAM. The buyers can also place their bids in HPDAM.

As per the proposed guidelines, bidding will take place between 10 am and 12 pm and power exchanges will send the provisional file to the national load despatch center (NLDC) at 1 pm. NLDC will provide the transmission capacity by 2 pm.

In the case of congestion, the transmission corridor allocation will be first for GDAM, then DAM, and last for HPDAM. Power exchanges will send the final file at 3 pm.

NLDC and the regional load despatch center will publish the final schedule by 5.30 pm.

The price discovery for HPDAM will be a double-sided closed auction similar to the one followed for GDAM, DAM, and real-time market (RTM).

In this segment, only such buyers who are in deficit and can afford to pay high prices will be able to participate. Other buyers and consumers will not be affected by this new segment.

In June this year, CERC approved Power Exchange India’s proposal to introduce delivery-based monthly contracts, which can be traded on one month, two-month, and three-month-ahead basis in conventional and renewable energy segments of the term-ahead market.

Last October, CERC approved the introduction of the green day-ahead contract at the Indian Energy Exchange and PXIL in the IDAM in a restricted manner.

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