Ar18 PDF

Report on
Short-term Power Market

in India: 2017-18
Economics Division
Central Electricity Regulatory Commission
The contents from the report can be freely copied/used with due
acknowledgement to CERC
Contents
S.No Particulars Page No
Contents i
List of Tables iii
List of Figures v
Preface vii
Abbreviations ix
Executive Summary xiii
Chapter-I: Overview of Power Sector

1 Generation 1
2 Transmission 6
3 Distribution 8
Chapter-II: Short-term Power Market in India

1 Introduction 12
2 Yearly Trends in Short-term Transactions of Electricity (2008-09 To 13
2017-18)
2.1 Total Short-term Transactions of Electricity with Respect to Total 14

Electricity Generation
2.1.1 Electricity Transacted through Traders & Power Exchanges 15

2.1.2 Electricity Transacted through DSM 19
2.1.3 Electricity Transacted Directly Between DISCOMs 20
3 Monthly Trends in Short-term Transactions of Electricity (April 21
2017-March 2018)
3.1 Volume of Short-term Transactions of Electricity 22

3.2 Price of Short-term Transactions of Electricity 26
3.3 Volume of Electricity Transacted in Various Price Slabs 28
4 Daily Trends in Short-term Transactions of Electricity (1st April 30
2017 to 31st March 2018)
4.1 Volume of Short-term Transactions of Electricity 30

4.2 Price of Short-term Transactions of Electricity 31
4.2.1 Price and its volatility in Power Exchanges 31
4.2.2 Price and its volatility in DSM 32
Report on Short-term Power Market in India, 2017-18 i

S.No Contents Page No
5 Time of the Day Variation in Volume and Price of Electricity 33
Transacted through Traders and Power Exchanges
5.1 Time of the Day Variation in Volume and Price of Electricity Transacted 33
through Traders
5.2 Time of the Day Variation in Volume and Price of Electricity Transacted 34
through Power Exchanges
6 Trading Margin Charged by Trading Licensees 35
7 Open Access Consumers on Power Exchanges 37

7.1 Types of Participants on Power Exchanges 37
7.2 Analysis of Open Access Consumers on Power Exchanges 39
8 Major Sellers and Buyers of Electricity in the Short term market 41
9 Effect of Congestion on Volume of Electricity Transacted through 45

Power Exchanges
10 Ancillary Services Operations 48
10.1 Background 48
10.2 Regulatory Framework of Ancillary Services 49
10.3 RRAS Instructions issued by Nodal Agency 51
10.4 RRAS Accounting and Settlement 53
Chapter-III: Tariff of Long-term Sources of Power

1 Background 55
2 Tariff of Central Public Sector power generating companies 56
Chapter-IV:Transactions of Renewable Energy

Certificates
1 Background of Renewable Energy Certificate Mechanism 60
2 Trading of Renewable Energy Certificates on Power Exchanges 61
Annexure-I: List of Transmission Licensees as on 31.03.2018 65

Annexure-II: List of Trading Licensees as on 31.03.2018 67
Annexure-III: Historic Volatility Formula 69
Annexure-IV: Herfindahl-Hirschman Index 70
Report on Short-term Power Market in India, 2017-18 ii

List of Tables
Table No. Details Page No.
Table-1 Installed Electricity Generation Capacity in India (GW), 2008-09 to 1
2017-18
Table-2 Sector-wise Growth of Installed Electricity Generation Capacity, 3
2008-09 to 2017-18
Table-3 Gross Electricity Generation in India (BU), 2008-09 to 2017-18 4
Table-4 Power Supply Position in India, 2008-09 to 2017-18 5
Table-5 Growth of Transmission System in India, 2008-09 to 2017-18 6
Table-6 Average Cost of Supply and Average Revenue of State Power 9
Utilities, 2008-09 to 2015-16
Table-7 Volume of Short-term Transactions of Electricity with Respect to 14
Total Electricity Generation, 2009-10 to 2017-18
Table-8 Volume of Electricity Transacted through Traders and Power 15
Exchanges, 2008-09 to 2017-18
Table-9 Electricity Transacted through Traders and Power Exchanges as % 16
of Total Short-Term Transactions
Table-10 Price of Electricity Transacted through Traders and Power 17
Exchanges
Table-11 Size of Short-term Power Market (Bilateral and Power Exchange) 18
Table-12 Volume and Price of Electricity Transacted through DSM 19
Table-13 Volume of Electricity Transacted Directly between DISCOMs 20
Table-14 Volume of Short-term Transactions of Electricity (BU), 2017-18 22
Table-15 Volume of Short-term Transactions of Electricity as % of Total 23
Electricity Generation, 2017-18
Table-16 Share of Electricity Transacted by Traders and HHI, 2017-18 24
Table-17 Price of Short-term Transactions of Electricity (`/kWh), 2017-18 27
Table-18 Trading Margin Charged by Trading Licensees, 2008-09 to 2017-18 36
Table-19 Trading Margin Charged by Trading Licensees, 2017-18 37
Table-20 Number of Open Access Consumers in Power Exchanges, 2010-11 39
to 2017-18
Report on Short-term Power Market in India, 2017-18 iii

Table No. Details Page No.
Table-21 Volume of Purchase by Open Access Consumers in Day Ahead 41
Market of Power Exchanges, 2010-11 to 2017-18
Table-22 Major Sellers of Electricity through Traders, 2017-18 42
Table-23 Major Buyers of Electricity through Traders, 2017-18 42
Table-24 Major Sellers of Electricity in the Day Ahead Market of IEX, 43
2017-18
Table-25 Major Buyers of Electricity in the Day Ahead Market of IEX, 44
2017-18
Table-26 Major Sellers of Electricity in the Day Ahead Market of PXIL, 44
2017-18
Table-27 Major Buyers of Electricity in the Day Ahead Market of PXIL, 45
2017-18
Table-28 Effect of Congestion on the Volume of Electricity Transacted 46
through Power Exchanges, 2009-10 to 2017-18
Table-29 Details of Congestion in Power Exchanges, 2017-18 47
Table-30 Congestion Charges of Power Exchanges, 2008-09 to 2017-18 47
Table-31 Number of times RRAS triggered based on Triggering Criteria, 51
2017-18
Table-32 Maximum Ancillary Despatched in a Time Block (MW), 2017-18 52
Table-33 Energy Scheduled and Payments made for Ancillary Services, 53
2016-17 to 2017-18
Table-34 Tariff of Central Thermal Power Stations, 2017-18 56
Table-35 Composite Tariff of Central Hydro Power Stations, 2017-18 58
Table-36 Floor and Forbearance Price applicable for REC Transactions 61
Table-37 Growth of Renewable Energy Certificates transacted on Power 62
Exchanges, 2011-12 to 2017-18
Table-38 Demand and Supply of RECs on Power Exchanges, 2012-13 to 63
2017-18
Table-39 Volume and Price of RECs Transacted on Power Exchanges, 64
2012-13 to 2017-18
Report on Short-term Power Market in India, 2017-18 iv

List of Figures
Figure No. Details Page No.
Figure-1 Installed Electricity Generation Capacity in India (%), 2008-09 2
to 2017-18
Figure-2 Sector-wise Growth of Installed Electricity Generation Capacity 3
(%), 2008-09 to 2017-18
Figure-3 Gross Electricity Generation in India (%), 2008-09 to 2017-18 4
Figure-4 Growth of Transmission System in India, 2008-09 to 2017-18 7
Figure-5 Growth of Electricity Consumption in India (Consumer 8
category-wise), 2008-09 to 2016-17
Figure-6 Average Cost of Supply and Average Revenue of State Power 10
Utilities, 2008-09 to 2015-16
Figure-7 Volume of Electricity Transacted through Traders and Power 16
Exchanges
Figure-8 Price of Electricity Transacted through Traders and Power 18
Exchanges
Figure-9 Volume and Price of Electricity Transacted through DSM 20
Figure-10 Volume of Electricity Transacted Directly between DISCOMs 21
Figure-11 Share of Market Segments in Total Electricity Generation, 21
2017-18
Figure-12 Share of Market Segments in Short-term Transactions, 2017-18 22
Figure-13 Volume of Short-term Transactions of Electricity, 2017-18 23
Figure-14 Share of Electricity Transacted by Traders, 2017-18 25
Figure-15 Concentration of Market Power in Volume of Trade undertaken 26
through Traders, 2008-09 to 2017-18
Figure-16 Comparison of Price of Bilateral, Power Exchange and DSM 27
Transactions in 2017-18
Figure-17 Price of Electricity Transacted through Traders during Round 28
the Clock, Peak and Off-peak Periods
Figure-18 Volume of Bilateral Transactions at different Price Slabs, 29
2017-18
Figure-19 Volume of IEX Transactions at different Price Slabs, 2017-18 29
Report on Short-term Power Market in India, 2017-18 v

Figure No. Details Page No.
Figure-20 Volume of PXIL Transactions at different Price Slabs 2017-18 30
Figure-21 Volume of Short-term Transactions of Electricity, 2017-18 31
Figure-22 Price and its Volatility in IEX during 2017-18 31
Figure-23 Price and its Volatility in PXIL during 2017-18 32
Figure-24 Price and its Volatility in DSM during 2017-18 32
Figure-25 Volume and Price of Electricity Transacted through Traders 33
during RTC, Peak and OTP, 2017-18
Figure-26 Block-wise Market Clearing Volume and Price in IEX during 34
2017-18
Figure-27 Block-wise Market Clearing Volume and Price in PXIL during 34
2017-18
Figure-28 Region-wise and Block-wise Price of Electricity Transacted 35
through IEX, 2017-18
Figure-29 Region-wise and Block-wise Price of Electricity Transacted 35
through PXIL, 2017-18
Figure-30 Trading Margin Charged by Trading Licensees, 2008-09 to 37
2017-18
Figure-31 Sell and Buy Volume of Various Types of Participants in IEX, 38
2017-18
Figure-32 Sell and Buy Volume of Various Types of Participants in PXIL, 38
2017-18
Figure-33 State-Wise Number of Open Access Consumers in IEX as on 40
March 2018
Figure-34 State-Wise Number of Open Access Consumers in PXIL as on 40
March 2018
Figure-35 Energy Scheduled to/from Virtual Ancillary Entity under RRAS 54
(MU), 2017-18
Report on Short-term Power Market in India, 2017-18 vi

Preface
The Electricity Act, 2003 consolidated the laws relating to generation,

transmission, distribution, trading and use of electricity and generally for taking measures
conducive to development of electricity industry, promoting competition therein,
protecting interest of consumers and supply of electricity to all areas, rationalization of
electricity tariff, ensuring transparent policies, etc. This is further strengthened by the
regulatory initiatives of the Electricity Regulatory Commissions through various
regulations and orders required to enable a framework for a robust and healthy power
market in the country.
The Central Electricity Regulatory Commission sets the regulatory process in

motion through Trading License Regulations, 2004, Open Access Regulations, 2004 and
Power Market Regulations, 2010. Under these regulations, short-term power market covers
contracts of less than a year for electricity transacted through Inter-State Trading Licensees
and directly by the Distribution Licensees, Power Exchanges and Deviation Settlement
Mechanism. The short-term power market as an integral part of the power sector has been
beneficial for meeting the short-term needs of the consumers, suppliers and the sector as a
whole. It constitutes about 11 per cent of the total electricity generation in India in the year
2017-18.
The annual report on short-term power market in India provides a snapshot on the
short-term transactions of electricity through different instruments used by various market
participants. The Central Electricity Regulatory Commission brings out the report to keep
market participants and other stakeholders aware and updated on the state of the power
market. Dissemination of information through the report is one of the key elements to
ensure efficiency and competition in the sector and for stakeholders and consumers to
maintain faith in the system. This report covers overview of power sector, trends in short-
term transactions of electricity on annual, monthly and daily basis, time of the day
variation in volume and price of electricity, trading margin for bilateral transactions,
analysis of transactions carried out by various types of participants with emphasis on open
access consumers on power exchanges, effect of congestion on volume of electricity traded
Report on Short-term Power Market in India, 2017-18 vii

on power exchanges and ancillary services operations. It also covers tariff of long-term
sources of power and analysis on transactions of Renewable Energy Certificates.
In order to ensure ease of access, this report is also made available on the CERC
website www.cercind.gov.in. We are confident that market participants and stakeholders
will find the Report on Short-term Power Market in India, 2017-18 useful.
Report on Short-term Power Market in India, 2017-18 viii

Abbreviations
Abbreviation Expanded Version
AC Alternating Current
ACE Area Control Error
APPCC Andhra Pradesh Power Coordination Committee
APCPDCL Andhra Pradesh Central Power Distribution Company
Limited
APSPDCL Andhra Pradesh Southern Power Distribution Company
Limited
AT&C Aggregate Technical and Commercial
Block 15 Minutes Time Block
BSPHCL Bihar State Power Holding Company Limited
BU Billion Units (Billion kWh)
CAGR Compound Annual Growth Rate
CCGT Combined Cycle Gas Turbine
CEA Central Electricity Authority
CERC Central Electricity Regulatory Commission
CGS Central Generating Station
Ckm Circuit km
CPP Captive Power Producer/Plant
CSPDCL Chattisgarh State Power Distribution Company Ltd
CTU Central Transmission Utility
DAM Day Ahead Market
DDUGJY Deendayal Upadhyaya Gram Jyoti Yojana
DISCOMs Distribution Companies
DSM Deviation Settlement Mechanism
DVC Damodar Valley Corporation
ER Eastern Region
FCAS Frequency Control Ancillary Services
FGUTPP Firoz Gandhi Unchahar Thermal Power Project
GOHP/GoHP Government of Himachal Pradesh
GPS Gas Power Station
GUVNL Gujarat Urja Vikas Nigam Limited
GW Giga Watts
HEP Hydro Electric Project
HHI Herfindahl-Hirschman Index
Report on Short-term Power Market in India, 2017-18 ix

HPP Hydroelectric Power Plant

HPPC Haryana Power Purchase Centre
HPSEB Himachal Pradesh State Electricity Board
HVDC High-Voltage Direct Current
IEGC Indian Electricity Grid Code
IEX Indian Energy Exchange
IPDS Integrated Power Development Scheme
IPP Indipendent Power Producers
ISGS Inter State Generating Station
JIPTL Jindal India Thermal Power Limited
KSEB Kerala State Electricity Board
KV Kilovolt
kWh Kilo Watt Hour
Ltd Limited
MCP Market Clearing Price
MPPGCL Madhya Pradesh Power Generating Company Limited
MSEDCL Maharashtra State Electricity Distribution Company Ltd
MU Million Units
MVA Mega Volt Ampere
MW Mega Watts
MWh Mega Watt Hour
NCAS Network Control Ancillary Services
NCTP National Capital Thermal Power Plant
NEEPCO North Eastern Electric Power Corporation Limited
NER North Eastern Region
NHDC National Hydro Development Corporation Limited
NHPC National Hydro-Electric Power Corporation Limited
NLC Neyveli Lignite Corporation Limited
NLDC National Load Dispatch Centre
NR Northern Region
NRSS Northern Region Strengthening Scheme
NSGM National Smart Grid Mission
NTPC National Thermal Power Corporation Limited
OA Open Access
Report on Short-term Power Market in India, 2017-18 x

OAC Open Access Consumer
OTP Other than RTC and Peak period
OTPC ONGC Tripura Power Company
PFC Power Finance Corporation
PGCIL Power Grid Corporation of India Limited
POSOCO Power System Operation Corporation Limited
PX Power Exchange
PXIL Power Exchange India Limited
REC Renewable Energy Certificate
RES Renewable Energy Sources
RGGVY Rajiv Gandhi Grameen Vidyutikaran Yojana
RGPPL Ratnagiri Gas and Power Private limited
RLDC Regional Load Despatch Centre
ROR Run of River
RPC Regional Power Committee
RPO Renewable Purchase Obligation
RRAS Reserves Regulation Ancillary Services
RTC Round The Clock
S1 Southern Region 1
SEB State Electricity Board
SGPL Sembcorp Gayatri Power Limited
SJVNL Satluj Jal Vidyut Nigam Limited
SRAS System Restart Ancillary Services
St Stage
STPP Super Thermal Power Plant
STPS Super Thermal Power Station
TAM Term Ahead Market
TANGEDCO Tamil Nadu Generation and Distribution Corporation
THDC Tehri Hydro Development Corporation Limited
TNEB Tamil Nadu Electricity Board
TPCIL Thermal Powertech Corporation of India Ltd
TPP Thermal Power Plant
Report on Short-term Power Market in India, 2017-18 xi

TPS Thermal Power Station
TSSPDCL Telangana State Southern Power Distribution Company
TSPCC Telangana State Power Coordination Committee
UDAY Ujwal DISCOM Assurance Yojana
UPPCL Uttar Pradesh Power Corporation Limited
UT Union Territory
VAE Virtual Ancillary Entity
WBSEDCL West Bengal State Electricity Distribution Company Ltd
WR Western Region
Report on Short-term Power Market in India, 2017-18 xii

Executive Summary
The report comprises of overview of the power sector, short-term power market in
India, tariff of long-term sources of power and transactions of renewable energy
certificates. Overview of power sector highlights electricity generation, transmission and
distribution including revenue gap of state electricity distribution companies
(DISCOMs)/SEBs and the measures taken by the Government of India in the recent years.
The salient features of the power sector are as under:
1. Thermal energy (mainly from Coal) is an important source of electricity generation in

India, contributing about 64.8% of the total installed generation capacity in 2017-18,
followed by Renewable Energy Source (RES) (20.0%), Hydro (13.2%), and Nuclear
(2.0%).
2. The Compound Annual Growth Rate (CAGR) of total installed generation capacity
was 10% during the period from 2008-09 to 2017-18. The CAGR in RES was 20%
whereas it was 8% in all other sources during the period.
3. During the period from 2008-09 to 2017-18, share of state sector in the total installed
generation capacity declined from 54% to 30% and share of central sector has declined
from 31% to 25%, while share of private sector increased from 15% to 45%. However,
the public sector continues to be the largest owner, holding 55% share in 2017-18.
4. Gross electricity generation in India increased from 747.06 BU in 2008-09 to 1308.15

BU in 2017-18 and it increased annually at the rate of 6%.
5. The annual growth in gross electricity generation was relatively low (6%) when
compared with the annual installed electricity generation capacity (10%). This could be
mainly due to (i) increase in capacity from RES with low utilization factor; and (ii)
decrease in PLF of thermal generation.
6. Increase in the installed capacity resulted in decrease in the demand shortage (energy
and peak shortage). The energy shortage decreased from 11.1% in 2008-09 to about
0.7% in 2017-18. During the period, the peak shortage decreased from 11.9% to 2.0%.
Report on Short-term Power Market in India, 2017-18 xiii

7. During 2008-09 to 2017-18, the annual growth in the bulk transmission was 7%, while
the annual growth in the transmission capacity of substations was 12%.
8. The total electricity consumption increased from 611.29BU in 2008-09 to 1066.27BU

in 2016-17(P) registering an annual growth of 7.2%. During the period, per-capita
consumption of electricity also increased from 734 kWh to 1122 kWh at an annual
growth of 5.5%.
9. All India average cost of supply and average revenue (without subsidy) increased from
`3.40/kWh and `2.63/kwh, respectively, in 2008-09 to `5.43/kWh and `4.23/kWh,
respectively, in 2015-16. During the period, the revenue as percentage of cost was
varying between 73% and 80%. This means, the weighted average tariff for all
categories of consumers was 20% lower than the weighted average cost of supply.
„Short-term transactions of electricity‟ refers to contracts of less than one year

period for electricity transacted under bilateral transactions through Inter-State Trading
Licensees (only inter-state part) and directly by the Distribution Licensees (also referred as
Distribution Companies or DISCOMs), Power Exchanges (Indian Energy Exchange Ltd
(IEX) and Power Exchange India Ltd (PXIL)), and Deviation Settlement Mechanism
(DSM). The analysis includes (i) yearly/monthly/daily trends in short-term transactions of
electricity; (ii) time of the day variation in volume and price of electricity transacted
through traders and power exchanges; (iii) trading margin charged by trading licensees for
bilateral transactions (iv) analysis of open access consumers on power exchanges; (v)
major sellers and buyers of electricity in the short term market; (vi) effect of congestion on
volume of electricity transacted through power exchanges; and (vii) ancillary services
operations. The report also covers analysis on tariff of long-term sources of power, and
transactions of renewable energy certificates (RECs) through power exchanges. Salient
features of the short-term power market are as under:
1. Of the total electricity procured in India in 2017-18, the short-term power market
comprised 11%. The balance 89% of generation was procured mainly by distribution
companies through long-term contracts and short-term intra-state transactions.
Report on Short-term Power Market in India, 2017-18 xiv

2. During 2009-10 to 2017-18, the volume of short-term transactions of electricity
increased at a higher rate (9%) when compared with the gross electricity generation
(6%).
3. In terms of volume, the size of the short-term market in India was 127.62BU in the
year 2017-18. As compared to the volume of electricity transacted through short-term
market in the year 2016-17 (119.23BU), this was about 7% higher. The growth in
volume of 8.4BU was accounted mainly by the positive growth in transactions through
power exchanges (6.6BU).
4. Excluding DSM and direct bilateral sale between the DISCOMs, the volume of
electricity transacted was 86.64BU in 2017-18. This was about 16% higher than in
2016-17. In monetary terms, the size of this segment of the short-term market was
`30,427 crore in the year 2017-181, which was 38% more than in the year 2016-17.
The increase in size of the market can be attributed to higher volume and higher
electricity prices in 2017-18.
5. The volume of electricity transacted through power exchanges increased at an annual

growth rate of 27% whereas the volume of electricity transacted through traders
increased at an annual growth rate of 5% during 2009-10 to 2017-18.
6. The volume of DSM in 2017-18 increased by 4% over 2016-17. The share of DSM as a
percentage of total volume of short-term transactions of electricity continued a
downward trend in past years and it declined from 39% in 2009-10 to 19% in 2017-18.
7. In terms of volume, the direct bilateral transactions between DISCOMs witnessed a

decrease of about 22% in 2017-18 as compared to 2016-17. The share of direct
bilateral transactions between DISCOMs as a percentage of total short term transaction
volume increased from 9% in 2009-10 to 21% in 2015-16 and then declined to 13% in
2017-18.
1
Excluding transactions pertaining to banking transactions.
Report on Short-term Power Market in India, 2017-18 xv
8. The weighted average price of electricity transacted through power exchanges was
`3.45/kWh and through trading licensees it was `3.59/kWh in 2017-18. The
corresponding values for the year 2016-17 were `2.50/kWh and `3.53/kWh,
respectively. In the year 2017-18, the weighted average price of electricity transacted
through Day Ahead Market sub-segment of the power exchanges was `3.43/kWh and
that through Term Ahead Market sub-segment was `3.97/kWh.
9. During 2017-18, about 99.95% of the volume of electricity transacted through traders
was at a price less than `6/kWh. About 66% of the volume was transacted at a price
less than `4/kWh.
10. During 2017-18, IEX transacted 96% of the volume of electricity at a price less than
`6/kWh while about 73% of the volume was transacted at a price less than `4/kWh.
During the year, PXIL transacted 98% of the volume of electricity at a price less than
`6/kWh while about 94% of the volume was transacted at less than `4/kWh.
11. During 2017-18, of the total electricity bought under bilateral transactions from traders,
79% was on round the clock (RTC) basis, followed by 19% in periods other than RTC
and peak (OTP) and 2% was during peak hours. The per unit price of electricity
procured during Peak period was high (`3.84/kWh) when compared with the price
during RTC (`3.61/kWh) and OTP (`3.44/kWh).
12. It is observed from the block-wise and region-wise prices of electricity transacted
through power exchanges in 2017-18 that the price of electricity in Southern Region
(S2 and S3 regions) was marginally higher than the price in other regions in IEX.
13. During 2008-09 to 2017-18, number of traders who were undertaking trading increased
from 15 to 28. HHI, based on volume of electricity transacted through traders, declined
from 0.24 in 2009-10 to 0.18 in 2017-18. The concentration of market power was
moderate. The competition among the traders resulted an increase in volume and
decrease in prices in the short-term bilateral market.
Report on Short-term Power Market in India, 2017-18 xvi

14. The weighted average trading margin charged by the trading licensees in 2017-18 was
`0.03/kWh, which is in line with the CERC Trading Margin Regulations, 2010.
15. The procurement of power by the industrial consumers through power exchanges
began in the year 2009. In both power exchanges, Open Access industrial consumers
bought 14.73BU of electricity, which formed 32% of the total day ahead volume
transacted in the power exchanges during 2017-18.
16. The weighted average price of electricity bought by open access consumers at IEX and
PXIL was lower (`2.92/kWh and `2.79/kWh respectively) compared to the weighted
average price of total electricity transacted through IEX and PXIL (`3.42/kWh and
`3.80/kWh respectively).
17. The year witnessed very few constraints on the volume of electricity transacted through
power exchanges, mainly due to transmission congestion. During 2017-18, the actual
transacted volume was about 0.5% less than the unconstrained volume. Because of
congestion and the splitting of day ahead market at both the power exchanges, the
congestion amount collected during the year was `56.56 crore.
18. NLDC, in coordidation with RLDCs, has started ancillary services operations w.e.f.
April 12, 2016. In 2017-18, the NLDC has issued 3690 RRAS Up/Down Instructions
on account of various triggering criteria. Of the total, there were 3326 RRAS Up
Instructions and 364 RRAS Down Instructions. Majority of the Regulation Up
Instructions were on account of multiple reasons followed by trend of load met, and
low frequency while majority of the Regulation Down Instructions were on account of
multiple reasons followed by high frequency and trend of load met.
19. The energy scheduled under Regulation UP of RRAS increased from 2212.28MU in
2016-17 to 4149.25 MU in 2017-18 showing an increase of 88%. However, the energy
scheduled under Regulation DOWN of RRAS declined from 286.00MU in 2016-17 to
243.72MU in 2017-18 showing a decline of 15%.
Report on Short-term Power Market in India, 2017-18 xvii

20. In 2017-18, the number of Solar RECs transacted on power exchanges were 2.08 lakh
and the weighted average of market clearing price of these RECs was `1000/MWh.
During the year, the number of Non-Solar RECs transacted on power exchanges were
159.76 lakh and the weighted average of market clearing price of these RECs was
`1483/MWh.
Report on Short-term Power Market in India, 2017-18 xviii

Chapter-I
Overview of Power Sector
India‟s power sector is well diversified with market dynamics. Power

generation ranges from conventional sources such as coal, lignite, natural gas, oil,
hydro and nuclear power to non-conventional sources such as wind, solar, and
agricultural and domestic waste. Electricity demand in the country has increased
rapidly and is expected to rise further in the years to come. In order to meet the
increasing demand for electricity in the country, the electricity supply chain consisting
of generation, transmission and distribution has undergone a phase of transformation
to competitiveness.
1. Generation
Sources of electricity generation are of two types i.e. conventional and non-
conventional. The conventional sources of power generation are thermal (coal, lignite,
natural gas and oil), hydro and nuclear power, and non-conventional sources of power
generation (renewable energy sources) are wind, solar, agricultural and domestic
waste etc. Table-1 and Figure-1 show the installed electricity generation capacity in
India by source.
Table-1: Installed Electricity Generation Capacity in India (GW),

2008-09 to 2017-18
Year Thermal Hydro Nuclear RES Total
2008-09 93.73 36.88 4.12 13.24 147.97
2009-10 102.45 36.86 4.56 15.52 159.40
2010-11 112.82 37.57 4.78 18.45 173.63
2011-12 131.60 38.99 4.78 24.50 199.88
2012-13 151.53 39.49 4.78 27.54 223.34
2013-14 168.26 40.53 4.78 34.99 248.55
2014-15 188.90 41.27 5.78 38.96 274.90
2015-16 210.68 42.78 5.78 45.92 305.16
2016-17 218.33 44.48 6.78 57.24 326.83
2017-18 222.91 45.29 6.78 69.02 344.00
Source: CEA, Growth of Electricity Sector in India, various issues.
Report on Short-term Power Market in India, 2017-18 Page 1

Figure-1: Installed Electricity Generation Capacity in India
(%), 2008-09 to 2017-18
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Thermal Hydro Nuclear RES
As can be seen in Figure-1, thermal is the most important source of electricity

generation in India, contributing about 64.8% of the total capacity of generation in
2017-18, followed by Renewable Energy Source (RES) (20.0%), Hydro (13.2%) and
Nuclear (2.0%). The percentage of thermal based generation capacity increased from
63.3% in 2007-08 to 64.8% in 2017-18. During the period, hydro based generation
capacity decreased from 24.9% to 13.2% whereas renewables based generation
capacity increased from 8.9% to 20.0%. There is a sharp increase in the installed
electricity generation capacity of RES when compared with all other sources. The
CAGR in RES was 20% whereas it was 8% in all other sources.
The Electricity Act of 2003 liberalised the electricity generation through a

license-free regime. As a result, the entry of private players into the generation
segment significantly increased their share in the total electricity generation.
The players in the electricity generation segment can be divided into three
types based on ownership and operations. These are (i) Central public sector
undertakings includes National Thermal Power Corporation, National Hydroelectric
Power Corporation, and similar organizations. (ii) State public sector
undertakings/State Electricity Boards; and (iii) Private sector enterprises includes Tata
Power Company Ltd, Reliance Power Ltd, Adani Power Ltd., and similar entities.

Sector-wise growth of installed generation capacity has been shown in Table-2
and Figure-2. It is observed from the table that CAGR of total installed generation
capacity was 10% during the period from 2008-09 to 2017-18. During the period, the
share of state sector in the total installed generation capacity has declined from 54%
to 30% and the share of central sector has declined from 31% to 25%, whereas the
share of private sector has increased three fold i.e. from 15% to 45%. However, the
public sector continues to be the largest owner, holding 55% share in total installed
generation capacity in 2017-18.
Table-2: Sector-wise Growth of Installed Electricity Generation Capacity,

2008-09 to 2017-18
Installed Generation Capacity (GW)
Year
State Central Private Total
2008-09 79.31 45.78 22.88 147.97
2009-10 82.91 47.48 29.01 159.40
2010-11 87.42 50.76 35.45 173.63
2011-12 85.92 59.68 54.28 199.88
2012-13 89.13 65.36 68.86 223.34
2013-14 92.27 68.13 84.87 245.26
2014-15 95.08 72.52 104.12 271.72
2015-16 101.79 76.30 124.00 302.09
2016-17 103.97 80.26 142.62 326.85
2017-18 103.97 84.52 155.51 344.00
Figure-2: Sector-wise Growth of Installed Electricity

Generation Capacity (%), 2008-09 to 2017-18
100%
80%
60%
40%
20%
0%
State Central Private

Actual Electricity generation by source is shown in Table-3 and Figure-3. It is
observed from the table that gross electricity generation in India has increased from
747.06 BU in 2008-09 to 1308.15 BU in 2017-18. During the period, the gross
electricity generation increased at the annual growth rate of 6%. The annual growth in
gross electricity generation was low (6%) when compared with the annual installed
electricity generation capacity (10%). This may be primarily due to (i) increase in
capacity from RES with low utilization factor; and (ii) decrease in PLF of thermal
generation.
Table-3: Gross Electricity Generation in India (BU), 2008-09 to 2017-18

Year Thermal Hydro Nuclear RES Bhutan Total
Import
2008-09 588.28 110.10 14.93 27.86 5.90 747.06
2009-10 640.21 104.06 18.64 36.95 5.40 805.25
2010-11 665.00 114.30 26.30 41.15 5.60 852.35
2011-12 708.43 130.51 32.29 51.23 5.30 927.75
2012-13 760.45 113.72 32.87 57.45 4.80 969.29
2013-14 792.05 134.85 34.23 59.62 5.60 1026.34
2014-15 877.94 129.24 36.10 61.79 5.00 1110.07
2015-16 943.01 121.38 37.41 65.78 5.20 1172.78
2016-17 994.22 122.31 37.66 81.87 5.64 1241.70
2017-18 1037.06 126.12 38.35 101.84 4.78 1308.15
Figure-3: Gross Electricity Generation in India (%), 2008-09

to 2017-18
100%
80%
60%
40%
20%
0%
Thermal Hydro Nuclear RES Bhutan Import

Of all the sources, electricity genearation from thermal source (mainly coal)
plays a dominat role in India. The electricity generated from thermal has remained
constant at about 80% of the total generation during 2008-09 to 2017-18. The amount
of electricity generated through hydro declined from 15% to 10% where as the
electricity generated from RES doubled i.e from 4% to 8%, during the period.
As shown in the above tables, the total installed electricity generation capacity
in India has increased from 147.97 GW in 2007-08 to 344.00 GW in 2017-18. The
increase in installed electricity generation capacity made an impact on the power
supply position as shown in Table-4. Both energy requirement and peak demand
increased from 777.04 BU and 109.81 GW, respectively in 2008-09 to 1212.13 BU
and 164.07 GW, respectively in 2017-18. Increase in the installed capacity resulted in
decrease in the demand/shortage (energy and peak shortage). The energy and peak
shortages declined from 11.1% and 11.9%, respectively in 2008-09 to about 0.7% and
2.0%, respectively in 2017-18.
Table-4: Power Supply Position in India, 2008-09 to 2017-18
Energy (BU) Peak (GW)

Year Require- Deficit Peak Deficit
Availability Peak Met
ment (%) Demand (%)
2008-09 777.04 691.04 11.1% 109.81 96.79 11.9%
2009-10 830.59 746.64 10.1% 119.17 104.01 12.7%
2010-11 861.59 788.36 8.5% 122.29 110.26 9.8%
2011-12 937.20 857.89 8.5% 130.01 116.19 10.6%
2012-13 995.56 908.65 8.7% 135.45 123.29 9.0%
2013-14 1002.26 959.83 4.2% 135.92 129.82 4.5%
2014-15 1068.92 1030.79 3.6% 148.17 141.16 4.7%
2015-16 1114.41 1090.85 2.1% 153.37 148.46 3.2%
2016-17 1142.93 1135.33 0.7% 159.54 156.93 1.6%
2017-18 1212.13 1203.57 0.7% 164.07 160.75 2.0%
Source: Ministry of Power
Electricity demand is defined in the narrowest sense because it is counted as

the amount of electricity that distribution utilities buy, but not the actual demand of
the millions of people in India who remain unserved or under served.

2. Transmission
The transmission sector was opened for private investments in 1998. The
Central Transmission Uility (CTU) is the nodal agency for providing the medium-
term (3 months to 5 years) and long-term (exceeding 7 years) access (the right to use
the inter-state transmission system) typically required by a generating station or a
trader acting on the station‟s behalf. The PGCIL is responsible for inter-state
transmission and development of the national grid, and it acts as the CTU. The
RLDCs are the nodal agencies for grant of short-term open access (upto 3 months).
The nodal agency providing transmission access to the power exchanges is the
NLDC.
Open Access refers to the right to generators of electricity [Captive Power

Plants (CPP)/Independent Power Producers (IPP)] and bulk consumers3 to sell the
2
generated electricity at a certain transmission surcharge and to access the transmission

and distribution networks of any generator without any discrimination by the
distribution/transmission line owners. The principle of open access is based on the
premise that while it is uneconomical to lay down multiple transmission lines in the
same region because of the large sunk costs involved, it is still best to give consumers
a choice to decide which firm‟s electricity they want to consume.
The growth of transmission lines and transmission capacity in India during

2008-09 to 2017-18 has been shown in Table-5 and Figure-4.
Table-5: Growth of Transmission System in India, 2008-09 to 2017-18
Year Transmission Lines (AC + AC Substations

HVDC) (ckm) Transformation Capacity
(MVA)
2008-09 220794 288615
2009-10 236467 310052
2010-11 254536 345513
2011-12 257481 399801
2
Captive Power refers to generation from a unit set up by industry for its own
consumption
3
Bulk consumers are consumers with power requirement of 1MW or above
2012-13 274588 459716
2013-14 291336 517046
2014-15 313437 582600
2015-16 341551 643949
2016-17 367851 721265
2017-18 390970 804458
Source: CEA, Monthly Reports.
Figure-4: Growth of Transmission System in India, 2008-09 to

2017-18
900000
800000
700000
600000
Ckt/MVA
500000
400000
300000
200000
100000
0
Transmission Lines (AC+ HVDC) (ckm)

AC Substations Transformation Capacity (MVA)
It is observed from the Table-5 that bulk transmission (transmission lines upto
220kv) has increased from 2,20,794 ckm in 2008-09 to 3,90,970 ckm in 2017-18.
During the period, the transmission capacity of substations has also increased from
2,88,615 MVA to 8,04,458 MVA. The CAGR in the transmission lines and
transmission capacity of substations was 7% and 12% respectively.
The sector is having natural monopoly as there are high sunk costs in investing
in the infrastructure needed to transmit electricity, such as transmission lines. Because
of these characteristics, non-public entities also face entry barriers, and private
investments are allowed in transmission projects only after approval from CERC.
Although the transmission market is largely dominated by the public sector, there are
many lines including High-Voltage Direct Current (HVDC) lines owned by private
players. There are about 50 Inter-state transmission licensees as on 31.3.2018 granted
by CERC (Annexure-I).

3. Distribution
State Electricity Distribution Companies (DISCOMs)/State Electricity Boards

(SEBs) own the majority of the distribution segment in the electricity supply chain. In
order to boost competition and make the sector more efficient, the government is
emphasizing the importance of a well-performing distribution sector and has been
focusing on the improvement of the financial health of utilities. This is necessary to
meet the goal of providing people a reliable and good-quality power and universal
access to electricity. To meet this goal, it is required to increase rural electricification,
reduce aggregate technical and commercial (AT&C) losses incurred while distributing
electricity, ensure the financial viability of DISCOMs, and encourage private sector
participation.
The growth in electricity consumption (consumer category-wise) is provided

in Figure-5. The total electricity consumption increased from 611.29 BU in 2008-09
to 1066.27 BU in 2016-17(P) at an annual growth rate of 7.2%. During the period, per
capita consumption of electricity in India has increased from 734 kWh to 1122 kWh,
registering an annual growth rate of 5.5%. Despite this considerable growth, the level
of per capita energy consumption in India is low when compared to the international
average per capita energy consumption.
Figure-5: Growth of Electricity Consumption in India

(Consumer category-wise), 2008-09 to 2016-17
450.00
400.00
350.00
Electricity (BU)
300.00
250.00
200.00
150.00
100.00
50.00
0.00
Domestic Commercial Industrial

Agriculture Traction Misc.

The AT&C Losses declined from 28.44% in 2008-09 to 23.98% in 2015-16.
More than 90% of these losses can be attributed to Transmission and Distribution
Losses which correspond to electricity produced but not paid for. These losses should
be reduced to the international standard of 10%.
The electricity tariffs charged by the DISCOMs are not cost reflective. The
DISCOMs sell electricity below cost or provide electricity at free/subsidized rates for
agriculture and domestic consumers. The tariffs for residential and agricultural
consumers are subsidized by overcharging industrial and commercial users. Average
cost of supply and average revenue of all state power utilities has been provided for
the period from 2008-09 to 2015-16 in Table-6 and Figure-6.
Table-6: Average Cost of Supply and Average Revenue of State Power

Utilities, 2008-09 to 2015-16
Year Average Cost Average Revenue Revenue Revenue as
of Supply (without subsidy) Gap % of Cost
(`/kWh) (`/kWh) (`/kWh)
2008-09 3.40 2.63 0.77 77%

2009-10 3.55 2.68 0.87 75%
2010-11 3.98 3.03 0.95 76%
2011-12 4.55 3.30 1.25 73%
2012-13 5.03 3.76 1.27 75%
2013-14 5.19 4.00 1.19 77%
2014-15 5.21 4.15 1.06 80%
2015-16 5.43 4.23 1.20 78%
Source: PFC, Report on The Performance of State Power Utilities.
All India average cost of supply and average revenue (without subsidy)
increased from `3.40/kWh and `2.63/kwh, respectively, in 2008-09 to `5.43/kWh and
`4.23/kWh, respectively, in 2015-16. However the gap between the cost of supply and
revenue has increased during the period. The revenue as percentage of cost of supply
varied between 73% to 80%. This means, the weighted average tariff for all categories
of consumers was 20% lower than the weighted average cost of supply. This gap is
financed through budgetary support as subsidy by the government.

Figure-6: Average Cost of Supply and Average Revenue of
State Power Utilities, 2008-09 to 2015-16
6.00 82%
Cost/Revenue (`/kWh) 5.00 80%
4.00 78%
76%
3.00
74%
2.00 72%
1.00 70%
0.00 68%
Average Cost of Supply Average Revenue (without subsidy)

Revenue as % of Cost
The DISCOMs in the country are trapped in a vicious cycle with huge
operational losses and outstanding debt due to legacy issues. Financially stressed
DISCOMs are not able to supply adequate power at affordable rates. To improve
their financial health, several policy initiatives have been taken by the Union
Government during last few years like Ujwal DISCOM Assurance Yojana (UDAY,
launched in 2015), Integrated Power Development Scheme (IPDS, launched in 2014),
National Smart Grid Mission (NSGM), etc. UDAY is being implemented in various
states for the financial turnaround and revival of the DISCOMs through four
initiatives (i) improving operational efficiencies of DISCOMS; (ii) reduction of cost
of power purchase; (iii) reduction in interest cost of DISCOMs; (iv) enforcing
financial discipline on DISCOMs through alignment with State finances.
The IPDS works with the objectives of reducing AT&C losses, establishment
of IT enabled energy accounting/auditing system, improvement in billed energy based
on metered consumption and improvement in collection efficiency. While the IPDS is
focused on urban areas, the Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY,
launched in 2014) is centred on improving distribution and electrification in rural
areas. The scheme includes the Rajiv Gandhi Grameen Vidyutikaran Yojana
(RGGVY) as a key component of the rural electrification initiative.
The implementation of the above mentioned programmes has led to

considerable improvements in the distribution segment. However, the achievements
have remained much below the targets. AT&C losses have come down to about 23
per cent, which is still way higher than the 15 per cent target. The schemes have also
received a push from the UDAY which has set strict loss reduction targets for
discoms.

Chapter-II
Short-term Power Market in India
1. Introduction
Prior to the Electricity Act 2003, the electricity industry recognized

generation, transmission and supply as three principal activities, and the legal
provisions were also woven around these concepts. Bulk purchase and sale is a
regular phenomenon between DISCOMs and licensees that was construed as part of
the activity of supply of electricity. It is with the enactment of the Electricity Act, that
the transaction involving purchase and sale of electricity has been recognized as a
distinct licensed activity. Recognition of trading as a separate activity is in sync with
the overall framework of encouraging competition in all segments of the electricity
industry. The Electricity Act 2003 laid down provisions for promoting competition in
the Indian power market. Introduction of non-discriminatory open access in electricity
sector provided further impetus for enhancing competition in the market. The
responsibility of developing the market in electricity has been vested with the
Regulatory Commissions. The open access regulations, inter-state trading regulations,
trading margin regulations, power market regulations etc., of the Central Commission
have facilitated power trading in an organized manner.
Bulk electric power supply in India is mainly tied in long-term contracts. The
DISCOMs who have the obligation to provide electricity to their consumers mainly
rely on supplies from these long-term contracts. Nevertheless, to meet the short-term
requirements of the market participants, short term trading plays an important role in
the power market.
A brief analysis of the short-term transactions of electricity in India has been

done in this Report4 for the year 2017-18. Here, “short-term transactions of
electricity” refers to the contracts less than one year for the following trades:
4
Although Deviation Settlement Mechanism (DSM) is not a market mechanism, electricity
transacted under DSM is often considered a part of short-term transaction. Also,
(a) Electricity traded under bilateral transactions through Inter-State
Trading Licensees (only inter-state trades),
(b) Electricity traded directly by the Distribution Licensees (also referred
as Distribution Companies or DISCOMs),
(c) Electricity traded through Power Exchanges (Indian Energy Exchange
Ltd (IEX) and Power Exchange India Ltd (PXIL)), and
(d) Electricity transacted through Deviation Settlement Mechanism(DSM).
The analysis includes:

(i) Yearly/monthly/daily trends in short-term transactions of electricity;
(ii) Time of the day variation in volume and price of electricity transacted
through traders and power exchanges;
(iii) Trading margin charged by trading licensees for bilateral transactions;
(iv) Analysis of open access consumers on power exchanges;
(v) Major sellers and buyers of electricity in the short term market;
(vi) Effect of congestion on volume of electricity transacted through power
exchanges; and
(vii) Ancillary services operations
2. Yearly Trends in Short-term Transactions of Electricity (2008-

09 to 2017-18)
The analysis on yearly trends in short-term transactions includes the electricity

transacted through the following segments:
 trading licensees (inter-state part only) under bilateral transactions or
“bilateral trader” segment ,
 power exchange segment with transactions in both Day Ahead and Term
Ahead Markets,
 DSM segment, and
 Direct transactions of electricity between DISCOMs.
electricity transacted bilaterally directly between the distribution companies (without

involving trading licensees or power exchanges) is also considered a part of short-
term market. In the year 2017-18, the volume of DSM was about 24.21BU and that
between distribution companies was about 16.77BU.
Inter-state trading licensees (traders) have been undertaking trading in
electricity since 2004 and the power exchanges started operating since 2008. The two
power exchanges, IEX and PXIL started their operations in June 2008 and October
2008 respectively. As of March 2018, there were 36 inter-state trading licensees (list
is enclosed at Annexure-II) and two power exchanges.
2.1 Total Short-term Transactions of Electricity with respect to Total

Total volume of short-term transactions of electricity increased from 65.90BU

in 2009-10 to 127.62BU in 2017-18. During the period, the volume of short-term
transactions of electricity increased at a higher rate (annual growth rate of 9%) when
compared with the total electricity generation5 (annual growth rate of 6%). The
volume of short-term transactions of electricity as percentage of total electricity
generation varied from 9% to 11% during the period (Table-7).
Table-7: Volume of Short-term Transactions of Electricity with respect to Total

Electricity Generation, 2009-10 to 2017-18
Volume of Volume of Short-term

Short-term Total Electricity Transactions of Electricity
Year
Transactions of Generation (BU) as % of Total Electricity
Electricity (BU) Generation
2009-10 65.90 768.43 9%

2010-11 81.56 811.14 10%
2011-12 94.51 876.89 11%
2012-13 98.94 912.06 11%
2013-14 104.64 967.15 11%
2014-15 98.99 1048.67 9%
2015-16 115.23 1107.82 10%
2016-17 119.23 1157.94 10%
2017-18 127.62 1202.97 11%
Source: NLDC & CEA
5
Total electricity generation excluding generation from renewable and captive power
plants in India.

The analysis of yearly trends of short-term transactions of electricity for
various segments, i.e. electricity transacted through traders and power exchanges,
DSM, and directly between DISCOMs is included in the sections that follow.
2.1.1 Electricity Transacted through Traders and Power Exchanges
Table-8, Table-9 and Figure-7 show details of volume of electricity transacted

through traders under bilateral transactions and through power exchanges for the
period from 2008-09 to 2017-18. The volume of electricity transacted through traders
and power exchanges increased from 24.69BU in 2008-09 to 86.64BU in 2017-18.
The share of electricity transacted through traders and power exchanges as a
percentage of total short-term transactions of electricity increased from 51.45% in
2009-10 to 67.89% in 2017-18. The annual growth in volume of this segment during
2009-10 to 2017-18 was 12% and the growth during 2017-18 was 16%.
Table-8: Volume of Electricity Transacted through Traders and Power Exchanges,

2008-09 to 2017-18
Year Electricity Electricity Electricity Electricity Total

Transacte Transacted through Transacted through Transacte (BUs)
d through IEX (BUs) PXIL (BUs) d through
Traders Day Term Day Term IEX and
(BUs) Ahead Ahead Ahead Ahead PXIL
Market Market Market Market (BUs)
2008-09 21.92 2.62 0.15 2.77 24.69

2009-10 26.72 6.17 0.095 0.92 0.003 7.19 33.91
2010-11 27.70 11.80 0.91 1.74 1.07 15.52 43.22
2011-12 35.84 13.79 0.62 1.03 0.11 15.54 51.38
2012-13 36.12 22.35 0.48 0.68 0.04 23.54 59.66
2013-14 35.11 28.92 0.34 1.11 0.30 30.67 65.78
2014-15 34.56 28.12 0.22 0.34 0.72 29.40 63.96
2015-16 35.43 33.96 0.33 0.14 0.58 35.01 70.43
2016-17 33.51 39.78 0.74 0.25 0.35 41.12 74.63
2017-18 38.94 44.84 1.37 0.73 0.75 47.70 86.64
Note1: The volume of electricity transacted through traders in 2008-09 (April to July
2008) includes cross border trading and intra-state trading volume.

Figure-7: Volume of Electricity Transacted through Traders and
Power Exchanges
60
50
Volume (BU)
40
30
20
10
Electricity Transacted through Traders Electricity Transacted through PXs
A comparison between the volume of electricity transacted through traders and

power exchanges has been shown in Figure-7. It is observed from the figure that the
volume of electricity transacted through traders was relatively high when compared
with the volume of electricity transacted through power exchanges during 2008-09 to
2015-16. During the latest two years, i.e. in 2016-17 and 2017-18, the volume of
electricity transacted through power exchanges was relatively high when compared
with the volume of electricity transacted through traders. This shows that there was
more demand for electricity through DAM of power exchanges than the bilateral
transactions through traders. The volume of electricity transacted through power
exchanges increased at an annual growth rate of 27% whereas the volume of
electricity transacted through traders grew at 5% during 2009-10 to 2017-18.
Table-9: Electricity Transacted through Traders and Power Exchanges as %

of Total Short-term Transactions
Year Electricity Total Short-term Electricity Transacted
Transacted through Transactions of through Traders & PXs
Traders & Power Electricity (BUs) as % to Total Short-
Exchanges (BUs) term Transactions
2009-10 33.91 65.90 51.45%
2010-11 43.22 81.56 53.00%
2011-12 51.38 94.51 54.37%
2012-13 59.66 98.94 60.30%

2013-14 65.78 104.64 62.87%
2014-15 63.96 98.99 64.62%
2015-16 70.43 115.23 61.12%
2016-17 74.63 119.23 62.60%
2017-18 86.64 127.62 67.89%
The prices of electricity transacted through traders and Power Exchanges are
shown in Table-10 and Figure-8. The weighted average price of electricity transacted
through traders and power exchanges declined from `7.29/kWh and `7.49/kWh
respectively in 2008-09 to `3.59/kWh and `3.45/kWh respectively in 2017-18. Except
in 2008-09, the price of electricity transacted through traders was relatively high when
compared with the price of electricity transacted through power exchanges. This could
be for various reasons, mainly the delivery of electricity through traders is mostly at
state periphery whereas in case of power exchanges the delivery of electricity is at
regional periphery. The electricity contracts in case of bilateral transactions take place
well in advance (i.e. weekly/monthly upto one year) whereas the electricity contract in
case of DAM of power exchanges is one day before. Therefore, the nature and
duration of contract influence the price of power. However, due to the demand and
supply of electricity, the price of electricity transacted through traders and power
exchanges is closer to each other in 2017-18.
Table-10: Price of Electricity Transacted through Traders & Power

Exchanges
Year Price of Electricity Price of Electricity transacted
transacted through through Power Exchanges
Traders (`/kWh) (DAM+TAM) (`/kWh)
2008-09 7.29 7.49

2009-10 5.26 4.96
2010-11 4.79 3.47
2011-12 4.18 3.57
2012-13 4.33 3.67
2013-14 4.29 2.90
2014-15 4.28 3.50
2015-16 4.11 2.72
2016-17 3.53 2.50
2017-18 3.59 3.45

Figure-8: Price of Electricity Transacted through Traders &
Power Exchanges
10.0
Price (`/kWh) 8.0
6.0
4.0
2.0
0.0
Price of Electricity Transacted through Traders

Price of Electricity Transacted through Power Exchanges
The size of the bilateral and power exchange market increased from `17,617
Crore in 2009-10 to `30,427 Crore in 2017-18 and the size of this market increased at
an annual growth rate of 7% (Table-11). Variation in volume and price affected the
size of bilateral and power exchange market. During 2009-10 to 2017-18, the volume
of electricity transacted through bilateral and power exchange registered a positive
growth of 5% and 27% respectively, while the price of electricity transacted through
both bilateral and power exchange registered a negative growth of 8%. During 2017-
18, due to increase in volume and price, the size of bilateral and power exchange
market increased by 38% over the previous year.
Table-11: Size of Short-term Power Market (Bilateral and Power Exchange)
Year Electricity Price of Size of Electricity Price of Size of Total Size

Transacted Electricity bilateral Transacted Electricity Power of the
through Transacted trader through Transacted Exchange bilateral
trading through Market Power through Market in trader +
Licensees Trading in ` Exchanges Power ` Crore Power
(BU) licensees Crore (BU) Exchanges Exchange
(`/kWh) (`/kWh) Market (`
Crore)
2009-10 26.72 5.26 14055 7.19 4.96 3563 17617

2010-11 27.7 4.79 13268 15.52 3.47 5389 18657
2011-12 35.84 4.18 14979 15.54 3.57 5553 20532
2012-13 36.12 4.33 15624 23.54 3.67 8648 24272
2013-14 35.11 4.29 15061 30.67 2.90 8891 23952

2014-15 34.56 4.28 14801 29.40 3.50 10288 25089
2015-16 35.43 4.11 14557 35.01 2.72 9539 24096
2016-17 33.51 3.53 11844 41.12 2.50 10280 22124
2017-18 38.94 3.59 13970 47.70 3.45 16457 30427
2.1.2 Electricity Transacted through DSM
The volume and price of electricity transacted through DSM is shown in

Table-12 and Figure-9. It can be observed from the table that there was a declining
trend in the volume of electricity transacted through DSM from 2010-11 to 2014-15
and there was an increasing trend from 2014-15 to 2017-18. However, the volume of
DSM as percentage of total short-term volume declined to 19% in 2017-18 from 39%
in 2009-10. It can also be observed from the table that the average price of DSM
declined from `4.62/kWh in 2009-10 to `2.03/kWh in 2017-18. This was mainly due
to changes in DSM regulations issued by CERC from time to time. Since the DSM is
not a market mechanism, the decline in DSM volume is good for the market. As far as
the electricity market is concerned, the volume in this segment of the short-term
should be as minimal as possible. Price of DSM plays an important role in ensuring
system balance and secure reliable grid operation.
Table-12: Volume and Price of Electricity transacted through DSM
Year Volume of Total Volume of Price of

Electricity Volume of DSM as % of Electricity
Transacted Short term total volume of Transacted
through (BU) Short term through DSM
DSM (BU) (`/kWh)
2009-10 25.81 65.90 39% 4.62

2010-11 28.08 81.56 34% 3.91
2011-12 27.76 94.51 29% 4.09
2012-13 24.76 98.94 25% 3.86
2013-14 21.47 104.64 21% 2.05
2014-15 19.45 98.99 20% 2.26
2015-16 20.75 115.23 18% 1.93
2016-17 23.22 119.23 19% 1.76
2017-18 24.21 127.62 19% 2.03

Figure-9: Volume and Price of Electricity transacted through
DSM
35.00 10.00
9.00
30.00
8.00
Price ( `/kWh)
Volume (BU)
25.00 7.00
6.00
20.00
5.00
15.00 4.00
3.00
10.00
2.00
5.00 1.00
Volume of Electricity Transacted through DSM (BU)

Price of Electricity Transacted through DSM (`/kWh)
2.1.3 Electricity Transacted Directly Between DISCOMs
The volume of electricity transacted directly between DISCOMs is shown in

Table-13 and Figure-10. It can be observed from the table that the volume of
electricity transacted directly between DISCOMs increased from 6.19 BU in 2009-10
to 16.77 BU in 2017-18. It can also be observed that there was a declining trend in the
volume of electricity transacted directly between DISCOMs as well as its share in
total volume of short-term transaction of electricity during 2015-16 to 2017-18.
Table-13: Volume of Electricity Transacted Directly between DISCOMs
Year Volume of Electricity Total Volume Volume of Bilateral

Transacted Directly of Short term Direct as % of
between DISCOMs (BU) Total Volume of
(BU) Short term
2009-10 6.19 65.9 9%
2010-11 10.25 81.56 13%
2011-12 15.37 94.51 16%
2012-13 14.52 98.94 15%
2013-14 17.38 104.64 15%
2014-15 15.58 98.99 16%
2015-16 24.04 115.23 21%
2016-17 21.38 119.23 18%
2017-18 16.77 127.62 13%

Figure-10: Volume of Electricity Transacted Directly between
DISCOMs
30.00
25.00
Volume (BU)
20.00
15.00
10.00
5.00
0.00
3. Monthly Trends in Short-term Transactions of Electricity (April

2017-March 2018)
During 2017-18, the share of the total short-term transactions in volume terms,
including DSM, as a percentage of total electricity generation in the country was
about 11% (Figure-11 and Table-14).
Figure-11: Share of Market Segments in Total Electricity

Generation, 2017-18
3.2% Bilateral Transactions

1.4% through traders
4.0%
2.0% Bilateral Transactions
between DISCOMS
Power Exchange
Transactions
89.4%
Transactions through
DSM
Long Term Transactions
The share of different market segments within the total short-term transaction
for the year 2017-18 has been shown in the Figure-12 below.

Figure-12: Share of Market Segments in Short Term
Transactions, 2017-18
Bilateral Transactions
19.0% through Traders
30.5%
Bilateral Transactions
between DISCOMS
Power Exchange
Transactions
37.4% 13.1%
Transactions through
DSM
3.1 Volume of Short-term Transactions of Electricity
The volume of short-term transactions of electricity during different months of

2017-18 with break-up for different segments is shown in Table-14 and Figure-13.
Table-14: Volume of Short-term Transactions of Electricity (BU), 2017-18
Period Bilateral Bilateral Total Power Transac- Total Total

through between Bilateral Exchange tions Short- Electricity
Traders DISCO transac- transac-tions through term Generation
MS tions (DAM+TAM) DSM transac
-tions
Apr-17 2.50 1.75 4.25 3.81 2.76 10.82 103.24
May-17 3.25 1.43 4.68 4.21 2.75 11.64 106.97
Jun-17 3.52 1.28 4.80 3.99 2.05 10.83 97.21
Jul-17 3.95 1.59 5.53 3.75 1.97 11.25 97.91
Aug-17 3.95 1.43 5.38 4.17 2.52 12.07 102.72
Sep-17 3.43 1.07 4.49 4.62 1.81 10.92 102.51
Oct-17 2.40 0.68 3.07 4.83 1.90 9.80 102.71
Nov-17 2.97 1.26 4.24 3.97 1.75 9.95 95.12
Dec-17 3.21 1.40 4.61 3.22 1.73 9.56 96.60
Jan-18 2.84 1.68 4.52 3.46 1.70 9.69 101.20
Feb-18 3.20 1.19 4.39 3.49 1.54 9.41 91.62
Mar-18 3.73 2.02 5.75 4.18 1.73 11.65 105.16
Total 38.94 16.77 55.71 47.70 24.21 127.62 1202.97

It is observed from Figure-13 that there is a cyclical trend in the monthly
volume of short-term transactions of electricity. A similar trend is also observed in the
volume of bilateral transations. It is also observed from the figure that the volume of
all other segments of the short-term transactions of electricity reflect irregular trend.
Figure-13: Volume of Short-term Transactions of Electricity,

2017-18
14.00
12.00
10.00
Volume (BU)
8.00
6.00
4.00
2.00
0.00
Bilateral Transactions (Traders+Discoms) Power Exchange Transactions (DAM+TAM)
Transactions through DSM Total Short-term Transactions
The volume of short-term transactions of electricity as percentage of total

electricity generation varied between 9.55% and 11.75% during the months from
April 2017 to March 2018 (Table-15).
Table-15: Volume of Short-term Transactions of Electricity as % of Total

Electricity Generation, 2017-18
Period Short-term Transactions as % of Total
Apr-17 10.48%
May-17 10.89%
Jun-17 11.15%
Jul-17 11.49%
Aug-17 11.75%
Sep-17 10.66%
Oct-17 9.55%
Nov-17 10.46%
Dec-17 9.89%

Jan-18 9.57%
Feb-18 10.28%
Mar-18 11.08%
There were 36 inter-state trading licensees as on 31.3.2018. Of the total, 28

trading licensees actively undertook trading during the year 2017-18 (Table-16).
The volume of electricity transacted through traders (inter-state bilateral

transactions and transactions through Power Exchanges) has been analysed using the
Herfindahl-Hirschman Index (HHI) for measuring competition among the traders
(Table-16). Increase in the HHI generally indicates a decrease in competition and an
increase of market power, whereas decrease indicates the opposite. HHI value below
0.15 indicates unconcentration of market power, the value between 0.15 to 0.25
indicates moderate concentration, the value above 0.25 indicates high concentration of
market power. The HHI, based on the volume of electricity transacted through traders
during 2017-18 was 0.1841, which indicates moderate concentration of market power
among the traders.
Table-16: Share of Electricity Transacted by Traders and HHI, 2017-18
Share of
Herfindahl-
Electricity
Sr Hirschman
Name of the Trading Licensee Transacted
No Index
by Traders
(HHI)
in 2017-18
1 PTC India Ltd 37.60% 0.1414
2 NTPC Vidyut Vyapar Nigam Ltd 10.27% 0.0105
3 Manikaran Power Ltd 9.55% 0.0091
4 Mittal Processors (P) Ltd 9.11% 0.0083
5 Tata Power Trading Company (P) Ltd 7.30% 0.0053
6 GMR Energy Trading Ltd 5.47% 0.0030
7 Arunachal Pradesh Power Corporation (P) Ltd 5.29% 0.0028
8 JSW Power Trading Company Ltd 4.25% 0.0018
9 Adani Enterprises Ltd 2.71% 0.0007
10 Jaiprakash Associates Ltd 2.45% 0.0006
11 Knowledge Infrastructure Systems (P) Ltd 1.16% 0.0001
12 National Energy Trading & Services Ltd 1.05% 0.0001
13 Essar Electric Power Development Corp. Ltd 0.92% 0.0001
14 Statkraft Markets Pvt. Ltd. 0.75% 0.0001

15 RPG Power Trading Company Ltd. 0.58% 0.0000
16 Instinct Infra & Power Ltd. 0.38% 0.0000
17 Customized Energy Solutions India (P) Ltd 0.31% 0.0000
18 Shree Cement Ltd. 0.26% 0.0000
19 My Home Power Private Ltd. 0.15% 0.0000
20 Shyam Indus Power Solutions (P) Ltd 0.15% 0.0000
21 Gita Power & Infrastructure (P) Ltd 0.10% 0.0000
22 Parshavanath Power Projects (P) Ltd 0.09% 0.0000
23 Jindal Poly Films Ltd 0.04% 0.0000
24 IPCL Power Trading (P) Ltd 0.02% 0.0000
25 Phillip Commodities India (P) Ltd 0.02% 0.0000
26 Ambitious Power Trading Company Ltd 0.01% 0.0000
27 Greenko Energies (P) Ltd 0.001% 0.0000
28 Atria Energy Services (P) Ltd 0.0001% 0.0000
Total Volume 100.00% 0.1841
Share of the Top 5 Traders 73.84%
Note: Percentage share in total volume traded by Licensees in 2017-18 computed
based on the volume which includes the volume traded by inter-state trading
licensees through bilateral and power exchanges.
Source: Information submitted by Trading Licensees.
The percentage share of electricity transacted by major traders in the total

volume of electricity transacted by all the traders is shown in Figure-14.
Figure-14: Share of Electricity Transacted by Traders, 2017-18
PTC India Ltd

26.16%
37.60% NTPC Vidyut
Vyapar Nigam Ltd
Manikaran Power Ltd
7.30%
Mittal Processors (P)
Ltd
9.11%
10.27% Tata Power Trading
9.55% Company (P) Ltd
Others

Competition among the traders (HHI based on volume of trade undertaken by
the traders) during 2008-09 to 2017-18 is shown in Figure-15. Number of traders,
who were undertaking trading bilaterally or through power exchanges or through
both, increased from 14 in 2009-10 to 28 in 2017-18. It can be observed from the
figure that there is an inverse relationship between the number of traders and the HHI.
The concentration of market power declined from HHI of 0.24 in 2009-10 to HHI of
0.18 in 2017-18. The competition among the traders resulted an increase in volume
and decrease in prices in the short-term bilateral market (Table-11).
Figure-15: Concentration of Market Power in Volume of Trade

undertaken through Traders, 2008-09 to 2017-18
30 0.50
27 0.45
24 0.40
No. of Traders
21 0.35
HHI
18 0.30
15 0.25
12 0.20
9 0.15
6 0.10
3 0.05
0 0.00
Number of Traders undertaking trading Herfindahl Hirschman Index (HHI)
3.2 Price of Short-term Transactions of Electricity
The monthly trends in price of short-term transactions of electricity are shown

in Table-17 and Figure-16 & 17. The price analysis is mainly based on the average
price of DSM and the weighted average price of other short-term transactions of
electricity. The price of bilateral trader transactions represents the price of electricity
transacted through traders. The trends in price of electricity transacted through traders
(bilateral trader transactions) were studied separately for total transactions as well as
for the transactions undertaken during Round the Clock (RTC), Peak and Off-peak
periods.

Table-17: Price of Short-term Transactions of Electricity (`/KWh), 2017-18
Period Bilateral through Traders Power Exchange DSM
RTC Peak Off-peak Total IEX PXIL All India
Grid
Apr-17 3.57 3.21 2.98 3.46 2.83 2.79 1.90

May-17 3.64 3.47 3.16 3.53 2.98 2.99 1.85
Jun-17 3.25 3.88 3.32 3.31 2.73 3.36 1.75
Jul-17 3.26 4.30 3.38 3.30 2.65 3.52 1.79
Aug-17 3.31 3.77 3.39 3.35 3.24 3.21 1.85
Sep-17 3.70 3.97 3.14 3.57 4.25 4.01 2.20
Oct-17 4.03 4.20 3.93 4.00 4.26 3.94 2.30
Nov-17 3.48 5.54 3.77 3.55 3.76 4.04 2.37
Dec-17 3.65 - 3.37 3.60 3.25 3.38 2.08
Jan-18 4.18 - 3.38 3.92 3.44 - 2.12
Feb-18 4.24 - 4.02 4.13 3.42 2.12 2.18
Mar-18 4.09 5.25 4.58 3.59 4.10 3.90 2.33
Figure-16: Comparison of Prices of Bilateral, Power Exchange

and DSM Transactions in 2017-18
4.50
4.00
3.50
Price (`/kWh)
3.00
2.50
2.00
1.50
1.00
Price of Bilateral Transactions through Traders

Price of Power Exchange Transactions (DAM+TAM)
Price of Deviation Settlement Transactions
It can be observed from the above figure that the price of electricity transacted
through traders was relatively high when compared with the price of electricity
transacted through power exchanges in most of the months in 2017-186 The price of
6
The comparison between the price of power exchanges and the price of bilateral
transactions should also be seen in the light that the delivery point for transactions of
electricity transacted through power exchanges was relatively high when compared
with the price of electricity transacted through DSM.
The trends in price of electricity transacted by traders during RTC, Peak and
Off-peak periods are shown in Table-17 & Figure-17. It can be observed from the
figure that the price of electricity during peak period was higher in all the months in
2017-18 except in April and May 2017 when compared with the price during RTC
and off peak periods. There is no price for electricity transacted during peak in
December 2017, January 2018 and February 2018, which shows that there is no
volume of electricity transacted exclusively during peak period in these months.
Figure-17: Price of Electricity Transacted through Traders

during Round the Clock, Peak and Off Peak periods
6.00
5.50
5.00
Price `/(kWh)
4.50
4.00
3.50
3.00
2.50
2.00
1.50
RTC Peak Off-peak
3.3 Volume of Electricity Transacted in Various Price Slabs
Volume of electricity transacted in various price slabs is shown for bilateral

trader segment and power exchange segment separately. In the case of power
exchanges, Day Ahead Market sub-segment has been considered.
power exchanges is the periphery of regional transmission system in which the grid
connected entity is located whereas the delivery point for bilateral transactions may
vary from transaction to transaction. The delivery point may be state or regional
periphery or any other point as per the contract executed.
Volume of bilateral transactions at different price slabs in 2017-18 is depicted
in Figure-18. The figure shows that 66% of the volume of electricity was transacted
through traders at less than `4/kWh and 99.95% of the volume was transacted through
traders at less than `6/kWh.
Figure-18: Volume of Bilateral Transaction at different Price Slabs, 2017-18
120% 50%
45%
Volume in Price Range (%)

Cumulative Volume (%)
100% 40%
80% 35%
30%
60% 25%
20%
40% 15%
20% 10%
5%
0% 0%
0-2 2-3 3-4 4-5 5-6 6-7 7-8
Cumulative Volume (%) 0% 22% 66% 99% 100% 100% 100%
Volume in Price Range (%) 0% 22% 44% 33% 1% 0.01% 0.04%
Volume of IEX transactions at different price slabs in 2017-18 is depicted in

Figure-19. The figure shows that 73% of the volume of electricity was transacted
through IEX at less than `4/kWh and 96% of the volume was transacted through IEX
at less than `6/kWh.
Figure-19: Volume of IEX Transactions at different Price Slabs, 2017-18
120% 40%
35%
100%
30%
80%
25%
60% 20%
15%
40%
10%
20%
5%
0% 0%
10
0- 2- 3- 4- 5- 6- 7- 8- 9-
-
2 3 4 5 6 7 8 9 10
20
Cumulative Volume (%) 6% 42% 73% 91% 96% 99% 100% 100% 100% 100%
Volume in Price Range (%) 6% 36% 31% 17% 6% 3% 1% 0.1% 0.1% 0.1%

Volume of PXIL transactions at different price slabs in 2017-18 is depicted in
Figure-20. The figure shows that 61% of the volume of electricity was transacted
through PXIL at less than `4/kWh and 98% of the volume was transacted through
PXIL at less than `6/kWh.
Figure-20: Volume of PXIL Transactions at different Price Slabs, 2017-18

120% 60%

100% 50%
80% 40%
60% 30%
40% 20%
20% 10%
0% 0%
9-
0-2 2-3 3-4 4-5 5-6 6-7 7-8 8-9
10
Cumulative Volume (%) 0% 11% 61% 94% 98% 100% 100% 100% 100%
Volume in Price Range (%) 0% 10% 50% 33% 4% 2% 0.2% 0.1% 0.0%
4. Daily Trends in Short-term Transactions of Electricity (1stApril

2017 to 31stMarch 2018)
4.1 Volume of Short-term Transactions of Electricity
Trends in daily volume of short-term transactions are shown in Figure-21. It

can be observed from the figure that there was a cyclical trend in the volume of
electricity transacted through bilateral transactions during 2017-18. It can also be
observed that there was irregular trend in the volume of electricity transacted through
power exchanges during the year. The trend in volume of electricity transacted
through DSM was irregular between April 2017 and August 2017 and it was almost
constant between September 2017 and March 2018.
In addition to observing the trends in price of electricity transacted through

traders, power exchanges and DSM, volatility in the price of electricity transacted
through power exchanges and DSM has been provided in Figure-22, 23 & 24.

Figure-21: Volume of Short-term Transactions of Electricity,
2017-18
300.00
250.00
200.00
Volume (MU)
150.00
100.00
50.00
0.00
Bilateral Transactions (Traders+Direct) PX Transactions (IEX+PXIL)

Transactions through DSM
4.2 Price of Short-term Transactions of Electricity
Trends in daily price of short-term transactions have been illustrated in this

section for power exchanges and DSM.
4.2.1 Price and its volatility in Power Exchanges
The weighted average price of electricity transacted through IEX and its
volatility is shown in Figure-22. Volatility in the Price of electricity transacted
through IEX has been computed using daily data for 2017-18 and it works out to
11.10%. (See Annexure-II for historic volatility formula).
Figure-22: Price and its Volatility in IEX during 2017-18

14.00 40.0%
12.00 20.0%
10.00
0.0%
Volatility (%)
Price (`/kwh)
8.00
-20.0%
6.00
-40.0%
4.00
2.00 -60.0%
0.00 -80.0%
Price Volatility

The weighted average price of electricity transacted through PXIL and its
volatility is shown in Figure-23. Volatility in the price of electricity transacted
through PXIL has been computed using daily data for 2017-18 and it works out to
12.58%.
Figure-23: Price and its Volatility in PXIL during 2017-18

14.00 60%
12.00 40%
10.00
20%
Volatility (%)
Price (`/kwh)
8.00
0%
6.00
-20%
4.00
2.00 -40%
0.00 -60%
Price Volatility
4.2.2 Price and its volatility in DSM
The average price of electricity transacted through DSM and its volatility is
shown in Figure-24. Volatility in the price of electricity transacted through DSM has
been computed using daily data for 2017-18 and it works out to 20.52%.
Figure-24: Price and its Volatility in DSM during 2017-18

8.00
80%
7.00
60%
6.00
40%
UI Price (`/Kwh)
5.00
Volatility
20%
4.00
0%
3.00 -20%
2.00 -40%
1.00 -60%
0.00 -80%
Price Volatility

5. Time of the Day Variation in Volume and Price of Electricity
Transacted through Traders and Power Exchanges
In this section, time of the day variation in volume and price of electricity
transacted through traders has been illustrated for RTC (Round the Clock), Peak
period and other than RTC & Peak period. Time of the day variation in volume and
price of electricity transacted through power exchanges is shown block-wise. Price of
electricity transacted through power exchanges is also shown region-wise and block-
wise.
5.1 Time of the Day Variation in Volume and Price of Electricity Transacted
through Traders
Time of the day variation in volume and price of electricity transacted through
bilateral traders‟ transactions during 2017-18 is shown in Figure-25. The volume of
electricity transacted through traders represent inter-state transactions i.e. excluding
banking transactions. Time of the day variation in volume is shown during RTC
(Round the Clock), Peak period and OTP (other than RTC & Peak period). Of the
total volume, 79% was transacted during RTC followed by 19% during OTP, and 2%
during peak period. It can be observed from the figure that there is hardly any volume
transacted during peak period. It can also be observed that the weighted average price
during Peak period is high (`3.84/kWh), when compared with the price during RTC
(`3.61/kWh) and OTP (`3.44/kWh).
Figure-25: Volume and Price of Electricity Transacted through Traders

during RTC, Peak and OTP, 2017-18
20000 5.00
3.84
3.61 3.44
16000 4.00
12442
Price in `/kWh
Volume (MU)
12000 3.00
8000 2.00
4000 3019 1.00

267
0 0.00
RTC Peak OTP
Type of Transaction

5.2 Time of the Day Variation in Volume and Price of Electricity Transacted
through Power Exchanges
Time of the day variation in volume and price of electricity transacted through
IEX and PXIL (Day ahead market) during 2017-18 are shown block-wise in Figure-
26 and Figure-27. It can be observed from the figure that the weighted average price
in both the power exchanges was higher during peak period (between hours 18:00 to
23:00), when compared to the weighted average price in rest of the hours.
Figure-26: Block-wise Market Clearing Volume and Price in

IEX during 2017-18
700.00 5.00
600.00
4.00
Volume (MU)
Price(`/kWh)
500.00
400.00 3.00
300.00 2.00
200.00
1.00
100.00
0.00 0.00
25
65
13
17
21
29
33
37
41
45
49
53
57
61
69
73
77
81
85
89
93
1
5
9
15 Minute Blocks
Market Clearing Volume Market Clearing Price
Figure-27: Block-wise Market Clearing Volume and Price in

PXIL during 2017-18
10.00 5.00
8.00 4.00
Volume (MU)
Price (`/kWh)
6.00 3.00
4.00 2.00
2.00 1.00
0.00 0.00
53
81
13
17
21
25
29
33
37
41
45
49
57
61
65
69
73
77
85
89
93
1
5
9
15 Minute Blocks
Market Clearing Volume Market Clearing Price
Region-wise and hour-wise prices of electricity transacted through power

exchanges are shown in Figure-28 and Figure-29. It can be observed from the figures
that during 2017-18, the price of electricity in Southern region (S1, S2 and S3

regions) was marginally high when compared with the price in other regions in IEX.
This is mainly due to high demand for electricity in the southern region. The prices
were high due to congestion between southern region and rest of the regions,
accompanied by market splitting on the power exchanges.
Figure-28: Region-wise and Block-wise Price of Electricity

Transacted through IEX, 2017-18
5.00
4.00
Price (`/kwh)
3.00
2.00
1.00
0.00
1
5
9
69
13
17
21
25
29
33
37
41
45
49
53
57
61
65
73
77
81
85
89
93
MCP S1+S2 S3 NR WR ER NER
Figure-29: Region-wise and Block-wise Price of

Electricity Transacted through PXIL, 2017-18
5.00
4.00
Price (`/kwh)
3.00
2.00
1.00
0.00
1
5
9
17
77
13
21
25
29
33
37
41
45
49
53
57
61
65
69
73
81
85
89
93
MCP S1+S2 S3 NR WR ER NER
6. Trading Margin Charged by Trading Licensees
During the year 2004-05 (when trading started through licensees), the
licensees voluntarily charged 5 paise/kWh or less as the trading margin for bilateral
transactions. However, trading margin increased in 2005 and the weighted average

trading margin charged by the licensees went up to 10 paise/kWh during April to
September 2005 period. This has lead to regulate the margin and the trading margin
was fixed at 4 paise/kWh vide "CERC (Fixation of Trading Margin) Regulations"
notification dated 26.1.2006. As a result of these trading margin regulations, the
licensees charged trading margin of 4 paise or less from 26.1.2006 onwards until
revised Trading Margin Regulations, 2010 came into existence on 11.1.2010 (Table-
18 & Figure-30).
Based on feedback and experience gained from 2006 Regulations and

considering various risks associated with the electricity trading business, CERC
revised the trading margin in 2010. As per the CERC (Fixation of Trading Margin)
Regulations, 2010, the trading licensees are allowed to charge trading margin up to 7
paise/kWh in case the sale price exceeds `3/kWh, and 4 paise/kWh where the sale
price is less than or equal to `3/kWh. The trading licensees have been charging the
trading margin as per the regulations. Due to stiff competition among the trading
licensees, the trading margin charged by the trading licensees was always less than the
ceiling margin allowed in the trading margin regulations. The weighted average
trading margin charged by the trading licensees for bilateral transactions during 2008-
09 to 2017-18 is given in Table-18.
Table -18: Trading Margin Charged by Trading Licensees,

2008-09 to 2017-18
Period Trading Margin (`/kWh)
2008-09 0.040
2009-10 0.040
2010-11 0.050
2011-12 0.050
2012-13 0.041
2013-14 0.035
2014-15 0.038
2015-16 0.032
2016-17 0.032
2017-18 0.031
Note 1: Weighted Average Trading Margin is computed based on volume and
margin of all Inter-state Trading Transactions excluding Banking Transactions.

Figure-30: Trading Margin Charged by Trading Licensees,
2008-09 to 2017-18
0.060
0.055 0.050 0.050
Trading Margin (`/kWh)
0.050
0.045 0.040 0.040 0.041
0.038
0.040 0.035
0.035 0.032 0.032 0.031
0.030
0.025
0.020
Weighted average trading margin charged by the trading licensees for bilateral
transactions for different sale prices (as specified in the trading margin regulations)
during 2017-18 is provided in Table-19 below.
Table -19: Trading Margin Charged by Trading Licensees, 2017-18
Sale Price of Electricity Transacted by Trading Weighted Average Trading

Licensees(`/kWh) Margin Charged by Trading
Licensees (`/kWh)
When Sale Price is less than or Equal to `3/kWh 0.025
When Sale Price is greater than `3/kWh 0.032
Note 1: Weighted Average Trading Margin is computed based on volume and margin
of all Inter-state Trading Transactions excluding Banking Transactions.
7. Open Access Consumers on Power Exchanges
This section contains analysis of various types of participants and analysis of

open access consumers in day ahead market of power exchanges.
7.1 Types of Participants in Power Exchanges
There are five types of participants in IEX, as shown in Figure-31. It can be

observed from the figure that major sellers of electricity through IEX were

independent power producers followed by state utilities, and captive power plants. It
can also be observed that major buyers of electricity through IEX were state utilities
followed by open access consumers, and private distribution licensees.
Figure-31: Sell and Buy Volume of Various Types of Participants

in IEX, 2017-18
27000
24000
21000
Volume (MU)
18000
15000
12000
9000
6000
3000
0
Independent Power ISGS/CGS Open Access Private Distibution State Utilities
Producers Consumers Licensees
Sell volume (MU) Buy volume (MU)
There are 3 types of participants in PXIL, as shown in Figure-32. It can be

observed from the figure that major sellers of electricity through PXIL were
Independent Power Producers and major buyers of electricity through PXIL were
state utilities.
Figure-32: Sell and Buy Volume of Various Types of

Participants in PXIL, 2017-18
800
700
600
Volume (MU)
500
400
300
200
100
0
Independent Power Producers Industrial consumers State Utilities
Sell Volume (MU) Buy Volume (MU)

7.2 Analysis of Open Access Consumers on Power Exchanges
The year 2010-11 witnessed collective open access transactions, a significant

development in procurement of power by the industrial consumers through power
exchanges. The number of Open Access (OA) Consumers in both IEX and PXIL
increased from 825 and 170 respectively in 2010-11 to 4248 and 559 respectively in
2017-18 (Table-20). During the period, the percentage of open access consumers in
total portfolios varied between 90% to 96% in IEX whereas the percentage varied
between 16% to 89% in PXIL. The number of OA consumers in IEX increased at an
annual growth of 26%, whereas it was 19% in PXIL. Though there is an increasing
trend in the number of OA consumers in PXIL, the percentage of open access
consumers in total portfolio of PXIL declined from 89% in 2012-13 to 16% in
2017-18.
Table-20: Number of Open Access Consumers in Power Exchanges,

2010-11 to 2017-18
Year IEX PXIL
No. of Total No. % of No. of Total No. % of

Open of Open Open of Open
Access Portfolios Access Access Portfolios Access
Consu- Consu- Consu- Consu-
mers mers mers mers
2010-11 825 863 96% 170 190 89%
2011-12 968 1073 90% 231 465 50%
2012-13 2110 2227 95% 336 379 89%
2013-14 2958 3083 96% 473 1399 34%
2014-15 3269 3407 96% 517 1779 29%
2015-16 3650 3796 96% 527 2924 18%
2016-17 4071 4281 95% 542 3277 17%
2017-18 4248 4502 94% 559 3422 16%
In 2017-18, about 4248 OA consumers procured 14728 MU of electricity (a

part of their power requirements) through IEX. These OA consumers were mostly
located in Tamil Nadu, Andhra Pradesh, Gujarat, Haryana, Punjab, Rajasthan,
Karnataka and Uttarakhand (Figure-33). The weighted average price of electricity
bought by OA consumers at IEX was lower (`2.92/kWh) when compared to the
weighted average price of total electricity transacted through IEX (`3.42/kWh).

Figure-33: State-wise Number of Open Access Consumers in
IEX as on March 2018
1000
845
800 721
600 550
483
440
364
400 306
200 123
70 57 55 45 35 35
33 27 23 22 14
0
About 559 OA consumers procured 6 MU of electricity (a part of their power

requirements) through PXIL in 2017-18. These consumers were mostly located in
Tamil Nadu, Gujarat, Punjab, Chhattisgarh, Karnataka, Rajasthan, Uttarakhand and
Haryana (Figure-34). The weighted average price of electricity bought by open access
consumers at PXIL was lower (`2.79/kWh) when compared to the weighted average
price of total electricity transacted through PXIL (`3.80/kWh).
Figure-34: State-wise Number of Open Access Consumers in

PXIL as on March 2018
200 176
180
160
140
120 98
100
80
60 45 41
36 33
40 23 21 20 17 17 12 10 10
20
0
Annual comparison between purchase volume of OA consumers and total

volume in both IEX and PXIL during 2010-11 to 2017-18 is shown in Table-21. The

volume of electricity procured by OA consumers as a percentage of total volume
transacted in IEX varied between 33% and 61% in IEX. The volume of electricity
procured by OA consumers as a percentage of total volume transacted in PXIL varied
between 1% and 58%. During the latest 3 years i.e. from 2015-16 to 2017-18, though
total volume increased, the volume of electricity procured by OA consumers as a
percentage of total volume transacted in PXIL declined sharply from 58% to 1 %.
Table-21: Volume of Purchase by Open Access Consumers in Day Ahead

Market of Power Exchanges, 2010-11 to 2017-18
Year IEX PXIL
OAC Total % OAC OAC Total % OAC
Purchase Volume Purchase Purchase Volume Purchase
Volume (MU) Partici- Volume (MU) Partici-
(MU) pation (MU) pation
2010-11 4057 11801 34% 93 1740 5%
2011-12 6275 13799 45% 307 2058 15%
2012-13 10410 22375 47% 263 688 38%
2013-14 17575 28925 61% 503 1106 45%
2014-15 12084 28141 43% 103 341 30%
2015-16 20284 34067 60% 79 137 58%
2016-17 24000 39831 60% 44 249 18%
2017-18 14728 44925 33% 6 730 1%
8. Major Sellers and Buyers of Electricity in the Short-term market
Table-22 and Table-23 show top 10 sellers and buyers of electricity through
traders (bilateral trader segment transactions). The same data for IEX is shown in
Table-24 and Table-25, and for PXIL in Table-26 and Table-27. It can be seen that
the dominant sellers, both at the power exchanges and traders, are a mixed group
comprising of independent power producers, distribution companies, and state
government agencies. The major buyers from traders and at the power exchanges are
mostly state distribution companies and industrial consumers. The volume of
electricity transacted by these major sellers and buyers, their share in total volume and
the price at which they have sold or purchased is also provided in the tables.

Table 22: Major Sellers of Electricity through Traders, 2017-18
S.No. Seller State Volume Approximate Weighted
(MU) Percentage of Average
total volume Sale Price
transacted (`/kWh)
through
Traders
1 Jaypee Nigrie Madhya 2552.06 15.99% 3.12
STPP Pradesh
2 Jindal Power Ltd Chattisgarh 2087.39 13.08% 3.42
3 GOHP Himachal 1264.35 7.92% 3.58
Pradesh
4 APPCC Andhra 1106.63 6.93% 4.58
Pradesh
5 IL&FS Power Tamil Nadu 942.86 5.91% 4.23
Company Ltd
6 DVC West Bengal 696.46 4.36% 3.91
7 GMR Energy Ltd Chhattisgarh 656.35 4.11% 3.26
8 Sembcorp Gayatri Andhra 609.86 3.82% 3.93
Power Ltd Pradesh
9 Karcham Wangtoo Himachal 572.22 3.58% 3.24
HEP Pradesh
10 M B POWER Madhya 511.02 3.20% 3.25
(Madhya Pradesh) Pradesh
Ltd
Note : Volume sold by major sellers and total volume transacted through traders
does not include the volume through banking arrangement.
Table 23: Major Buyers of Electricity through Traders, 2017-18

S.No. Buyer State Volume Approximate Weighted
(MU) percentage of Avearage
total volume Purchase
transacted Price
through (`/kWh)
traders
1 Punjab State Power Punjab 2229.53 13.97% 3.14
Corporation Ltd
2 TSPCC Telangana 1747.62 10.95% 4.26
3 BSPHCL Bihar 1452.56 9.10% 3.91
4 MSEDCL Maharashtra 1445.20 9.05% 3.65
5 CSPDCL Chattisgarh 1226.39 7.68% 3.45
6 UPPCL Uttar Pradesh 967.21 6.06% 3.54

7 Nepal Electricity Nepal 953.51 5.97% 3.42
Authority
8 TANGEDCO Tamil Nadu 632.00 3.96% 3.80
9 Bangalore Electricity Karnataka 601.13 3.77% 4.09
Supply Company Ltd
10 Kerala SEB Kerala 530.65 3.32% 3.07
Note : Volume Bought by major buyers and total volume transacted through traders
does not include the volume through banking arrangements.
From Table-23, it can be seen that the weighted average purchase prices of
electricity of major buyers such as TSPCC, BSPHCL, MSEDCL, TANGEDCO and
Bangalore Electricity Supply Company Ltd from traders (bilateral transactions) were
higher than the weighted average price for the entire bilateral trader segment
(`3.59/kWh).
Table-24: Major Sellers of Electricity in the Day Ahead Market of IEX,

2017-18
S.No. Name of Seller State/Regional Sell Percentage Weighted
Entity Volume of the Total Average
(MU) Volume Sell Price
Transacted (`/KWh)
in IEX
1 Teesta Urja Ltd Sikkim 4131.76 9.21% 3.39
2 MPPGCL Madhya 2999.24 6.69% 3.25
Pradesh
3 APCPDCL Telangana 1693.73 3.78% 3.59
4 GOHP Himachal 1395.05 3.11% 3.36
Pradesh
5 DVC DVC 1379.84 3.08% 3.40
6 Karcham Himachal 1268.58 2.83% 3.18
Wangtoo HEP Pradesh
7 SGPL Andhra Pradesh 1199.37 2.67% 3.57
8 Jindal Power Ltd Regional Entity 1168.88 2.61% 3.07
WR
9 DB Power WR Regional Entity 1156.89 2.58% 3.68
10 Jaypee Bina TPS Madhya 1125.64 2.51% 2.65
Pradesh
Note: Total Volume transacted through Day Ahead Market in IEX was about
44841.86 MU.

Table-25: Major Buyers of Electricity in the Day Ahead Market of IEX,
2017-18
S.No. Name of Buyer State/Regional Buy Percentage Weighted
Entity Volume of the Total Average
(MU) Volume Buy Price
Transacted (`/kWh)
in IEX
1 GUVNL Gujrat 5017.93 11.28% 3.82
2 BSPHCL Bihar 3577.79 8.04% 3.81
3 WBSEDCL West Bengal 2767.19 6.22% 3.77
4 UPPCL Uttar Pradesh 2332.11 5.24% 3.81
5 APCPDCL Telangana 1840.74 4.14% 3.59
6 MSEDCL Maharashtra 1811.76 4.07% 3.38
7 Reliance Infra Ltd Maharashtra 1652.59 3.72% 3.44
8 Torrent Power Ltd Gujrat 1592.69 3.58% 3.69
9 APSPDCL Andhra Pradesh 1415.11 3.18% 3.57
10 Essar Steel India Regional Entity 1049.03 2.36% 3.34
Ltd
Note: Total Volume transacted through Day Ahead Market in IEX was about
44841.86 MU.
From Table-25, it can be seen that the weighted average prices of electricity
for major buyers such as GUVNL, BSPHCL, WBSEDCL, UPPCL, APCPDCL,
Reliance Infra Ltd, Torrent Power Ltd and APSPDCL in the day ahead market of IEX
were higher than the weighted average price for the entire day ahead market of IEX
(`3.42/kWh).
Table-26: Major Sellers of Electricity in the Day Ahead Market of PXIL,

2017-18
S. Name of the State/Regional Sell Percentage Weighted
No Seller Entity Volume of total Average
(MU) volume Sell Price
transacted (`/kWh)
in PXIL
1 IL&FS Power Tamil Nadu 517.68 70.87% 3.98
Company Ltd
2 DB Power Ltd Chhattisgarh 99.35 13.60% 3.49
3 SGPL Andhra Pradesh 27.86 3.81% 3.77
4 DVC West Bengal 27.60 3.78% 3.47
5 Adani Power Ltd 1 Gujarat 11.19 1.53% 3.85
6 Adani Power Ltd 3 Gujarat 10.11 1.38% 3.76

7 JITPL Orissa 8.42 1.15% 3.24
8 HPSEB Himachal 6.30 0.86% 3.28
Pradesh
9 GUVNL Gujarat 5.28 0.72% 3.64
10 TPCIL Andhra Pradesh 5.09 0.70% 3.32
Note: Total Volume transacted in the Day Ahead Market in PXIL was about
730.49 MU.
From Table-27, it can be seen that the weighted average prices of electricity
for major buyers such as TNEB and HPPC in the PXIL Day Ahead Market were
higher than the weighted average price for the entire day ahead market of PXIL
(`3.80/kWh).
Table-27: Major Buyers of Electricity in Day Ahead Market of PXIL, 2017-18
Sr. Name of the Buyer State/Regional Buy Percentage Weighted

No Entity Volume of the Total Average
(MU) Volume Buy Price
Transacted (`/kWh)
1 TNEB Tamil Nadu 583.87 79.93% 3.96
2 KSEB Kerela 70.82 9.70% 3.13
3 GUVNL Gujarat 57.00 7.80% 3.74
4 WBSEDCL West Bengal 12.18 1.67% 3.40
5 IFFCO Plant Gujarat 5.70 0.78% 2.79
6 HPPC Haryana 0.75 0.10% 4.43
7 GRIDCO Ltd Orissa 0.09 0.01% 3.25
8 TSSPDCL/TSPCC Telangana 0.07 0.01% 2.75
Note: Total Volume transacted through PXIL was about 730.49 MU.
9. Effect of Congestion on Volume of Electricity Transacted through

Power Exchanges
The volume of electricity transacted through power exchanges is sometimes

constrained due to transmission congestion. The details of congestion in both the
power exchanges are shown in Table-28 and Table-29.

The effect of congestion on volume of electricity transacted through power
exchanges during 2009-10 to 2017-18 is shown in Table-28. It can be observed from
the table that there is an increasing trend in the unconstrained cleared volume and
actual volume transacted. Unconstrained cleared volume and actual volume
transacted increased from 8.10BU and 7.09BU respectively in 2009-10 to 45.86BU
and 45.65BU respectively in 2017-18. There is an increasing trend in the volume of
electricity that could not be cleared (i.e. the difference of unconstrained cleared
volume and actual volume transacted) as % to unconstrained cleared volume from
2010-11 to 2012-13 and a declining trend from 2012-13 to 2017-18. Congestion in
power exchanges has been reduced since grid integration (integration of NEW Grid
and SR Grid) in December 2013, leading to a declining trend in the volume of
electricity that could not be cleared as percentage to unconstrained cleared volume in
both the power exchanges from 2013-14 onwards. In 2017-18, the volume of
electricity that could not be cleared as % to uncontrained cleared volume was 0.5%,
which shows that the transmission contraints were almost nil.
Table-28: Effect of Congestion on the Volume of Electricicity Transacted

through Power Exchanges, 2009-10 to 2017-18
Year Unconstraine Actual Cleared Volume of Volume of
d Cleared Volume and electricity that electricity that
Volume* hence could not be could not be
(BU) scheduled cleared due to cleared as % to
(BU) congestion (BU) Unconstrained
Cleared Volume
1 2 3 4 (2-3) 5 (4/2)
2009-10 8.10 7.09 1.01 12%
2010-11 14.26 13.54 0.72 5%
2011-12 17.08 14.83 2.26 13%
2012-13 27.67 23.02 4.65 17%
2013-14 35.62 30.03 5.59 16%
2014-15 31.61 28.46 3.14 10%
2015-16 36.36 34.20 2.16 6%
2016-17 41.60 40.08 1.52 4%
2017-18 45.86 45.65 0.21 0.5%
* This power would have been scheduled had there been no congestion.
Source: IEX & PXIL

During 2017-18, in IEX, the unconstrained cleared volume and the actual
volume transacted were 45.12BU and 44.92BU respectively (Table-29). The actual
transacted volume was 0.45% lesser than unconstrained volume. During the same
year, in PXIL, the unconstrained cleared volume and the actual volume transacted
were 0.74BU and 0.73BU respectively. The actual transacted volume was 0.82%
lesser than unconstrained volume.
Table-29: Details of Congestion in Power Exchanges, 2017-18

Items IEX PXIL Total
A Unconstrained Cleared Volume* (BU) 45.12 0.74 45.86

B Actual Cleared Volume and hence 44.92 0.73 45.65
scheduled (BU)
C Volume of electricity that could not be 0.20 0.01 0.21
cleared and hence not scheduled because
of congestion (BU) (A-B)
D Volume of electricity that could not be 0.45% 0.82% 0.5%
cleared as % to Unconstrained Cleared
Volume
* This power would have been scheduled had there been no congestion.
Source: IEX, PXIL & NLDC
Congestion, consequent market splitting, and the resultant difference in market

prices in different regions give rise to congestion charges. The annual congestion
charges of both power exchanges for the period from 2008-09 to 2017-18 is provided
in Table-30. The congestion charges of both power exchanges were least during the
year 2017-18 compared to all the previous years (2008-09 can be excluded from the
analysis since it is not a normal year as far as exchanges is concerned)
Table-30: Congestion Charges of Power Exchanges, 2008-09 to 2017-18
Year Congestion Charges Congestion Charges Total (` Crore)

in IEX (` Crore) in PXIL (` Crore)
2008-09 5.27 0.00 5.27
2009-10 255.40 22.39 277.79
2010-11 273.14 86.61 359.75
2011-12 419.13 65.62 484.76
2012-13 417.37 35.93 453.30

2013-14 387.23 5.10 392.33
2014-15 502.41 1.64 504.05
2015-16 214.08 0.14 214.22
2016-17 305.99 0.09 306.08
2017-18 56.56 0.00 56.56
Source: NLDC
10. Ancillary Services Operations
10.1 Background
Ancillary Services is one of the four essential pillars of Electricity Market

design viz., Scheduling and Despatch, Imbalance Settlement, Congestion
Management and Ancillary Services. Ancillary Services are support services to
maintain power system reliability and support its primary function of delivering
energy to customers. These are deployed by the system operator over various time
frames to maintain the required instantaneous and continuous balance between
aggregate generation and load. Ancillary Services consist of services required for (a)
maintaining load-generation balance (frequency control); (b) maintaining voltage and
reactive power support; (c) maintaining generation and transmission reserves.
Historically, ancillary services were provided by the vertically integrated utilities
along with the energy supply services. With the unbundling of vertically integrated
utilities, increasing private sector participation and competition introduced in energy
markets, there is an increasing need for administering such services, so as to ensure
reliable and secure grid operation. Ancillary Services are broadly classified as
follows:
(i) Frequency Control Ancillary Services (FCAS): Three levels of Frequency

Control are generally used to maintain the balance between generation and load i.e.
Primary Frequency Control, Secondary Frequency Control, Tertiary Frequency
Control. Three levels differ as per their time of response to a fluctuation and the
methodology adopted to realize the fundamental operating philosophy of maintaining
reliability and economy.

(ii) Network Control Ancillary Services (NCAS): This can be further subdivided
into Voltage Control Ancillary Service and Power Flow Control Ancillary Services.
(iii) System Restart Ancillary Services (SRAS): It is used to restore the system after
a full or partial blackout. Black start is vital and inexpensive service. Its costs are
primarily the capital cost of the equipment used to start the unit, the cost of the
operators, the routine maintenance and testing of equipment and the cost of fuel when
the service is required. At present this is a mandatory service.
10.2 Regulatory Framework of Ancillary Services
Ancillary Services are defined, under Regulation (2)(1)(b) of the CERC

(Indian Electricity Grid Code), Regulations, 2010 (IEGC), as follows: “…in relation
to power system (or grid) operation, the services necessary to support the power
system (or grid) operation in maintaining power quality, reliability and security of the
grid, e.g. active power support for load following, reactive power support, black start,
etc;…”
The Commission notified the CERC (Ancillary Services Operations)

Regulationsons on 13th August, 2015. The objective of Reserves Regulation Ancillary
Services (RRAS) is to restore the frequency level at desired level and to relieve the
congestion in the transmission network. Specifically, these regulations are the first
step towards introducing Ancillary Services in the country that will enable the grid
operator to ensure reliability and stability in the grid. The RRAS shall support both
“Regulation Up” service (that provides capacity by responding to signals or
instruction of the Nodal Agency to increase generation) and “Regulation Down”
service (that provides capacity by responding to signals or instruction of the Nodal
Agency to decrease generation).
CERC, vide order dated 29th February 2016, specified the mark-up for
participation in Regulation „Up‟ as 50 paisa/kWh. The detailed procedures were laid

out on the 08th March 2016 and Ancillary Services were implemented by the Nodal
Agency i.e. NLDC in coordination with RLDCs from 12th April, 2016.
Regulation Up Service shall utilize “un-requisitioned surplus” of inter-State

generating stations, whose tariff is determined or adopted by the Commission for their
full capacity. Un-requisitioned surplus means the reserve capacity in a generating
station that has not been requisitioned and is available for dispatch, and is computed
as the difference between the declared capacity of the generating station and its total
schedule under long-terms, medium-term and short-term transactions, as per the
relevant regulations of the Commission. On the other hand, Regulation Down service
may be provided by any eligible generator. Incentives for both the generators and
their beneficiaries have been built into the framework.
As per the regulation, all the generators, that are regional entities, and whose
tariff for the full capacity is determined or adopted by the CERC have been mandated
to provide Ancillary Services as RRAS Providers. NLDC, through the RLDCs, has
been designated as the Nodal Agency for Ancillary Services Operations. The Nodal
Agency prepares the Merit Order Stack based on the variable cost of generation.
Separate stacks are prepared for Up and Down.
Ancillary Services may be triggered because of extreme weather forecast,

generating unit or transmission line outages, trend of load met, trend of frequency,
any abnormal event such as outage of hydro generating units due to silt, coal supply
blockade, etc., excessive loop flows leading to congestion, trend of computed Area
Control Error (ACE) at regional level, recall by the original beneficiary, grid voltage
profile at important nodes, „N-1‟ criteria not being satisfied in a transmission corridor,
loading of transmission lines beyond limits specified in CEA Manual on Transmission
Planning Criteria.
A virtual regional entity called “Virtual Ancillary Entity (VAE)” has been
created in the respective Regional Pool for scheduling and accounting. The quantum
of RRAS instruction is incorporated in the schedule of RRAS providers. RRAS
instruction may be scheduled to the VAE in any one or more regional grids. The

deviation in schedule of the RRAS providers, beyond the revised schedule, is being
settled as per the CERC Deviation Settlement Mechanism (DSM) Regulations. The
energy dispatched under RRAS is deemed delivered ex-bus.
Nodal agency directs the RRAS provider to withdraw RRAS, on being

satisfied, that the circumstances leading to triggering of RRAS services have ceased
to exist. The RRAS energy accounting is being done by the respective Regional
Power Committee (RPC) on weekly basis along with DSM account, based on
interface meters data and schedule. A separate RRAS statement is being issued by
RPC along with Regional DSM account. Any post-facto revision in rates/charges by
RRAS providers is not permitted. In case of Regulation Up, fixed charges and
variable charges along with pre-specified mark-up are payable to the RRAS providers
from the pool. In case of Regulation Down, 75 per cent of the variable charges are
payable by RRAS providers to the pool. No commitment charges are payable to the
RRAS provider.
10.3 RRAS Instructions issued by Nodal Agency
During 2017-18, the Nodal Agency has issued 3690 RRAS Up/Down
instructions on account of various triggering criteria (Table-31). Of the total, there
were 3326 RRAS Up instructions and 364 RRAS Down instructions. Majority of the
Regulation Up instructions were on account of multiple reasons followed by trend of
load met, and low frequency while majority of the Regulation Down instructions were
on account of multiple reasons followed by high frequency and trend of load met.
Table-31: Number of times RRAS triggered based on Triggering Criteria,

2017-18
Sr. Triggering Criteria Regulation Regulation Total
No. Up (Nos.) Down (Nos.)
1 Multiple reasons 1850 195 2045
2 Trend of load met 1118 44 1162
3 Low Frequency 334 0 334
4 High Frequency 0 123 123

5 Generating unit or 15 0 15
Transmission line outages
6 One or more transmission 6 2 8
lines in the corridor are
loaded beyond the normal
limit
7 Trend of Net-load met 3 0 3
8 Others 300 0 300
Total 3326 364 3690
Source: POSOCO Website
At times, the dispatch under Ancillary is not attributable to any single

triggering criteria, and the operator has to specify “Others” as triggering criteria.
There is a need to enhance the number of triggering criteria to provide more clarity
and to encompass the dynamic behavior of the power system.
Table-32 provides month-wise details on maximum power despatched and

maximum power regulated in a time block based on the instructions issued. It can be
observed from the table that during the year 2017-18 in a time block, maximum
power despatched was 3688 MW in September 2017 while the maximum power
regulated was 2389 MW in May 2017.
Table-32: Maximum Ancillary Despatched in a Time Block (MW), 2017-18
Month Max regulation "UP" Max regulation "DOWN"
Apr-17 2105 841

May-17 3083 2389
Jun-17 2371 2139
Jul-17 2999 2117
Aug-17 3267 1221
Sep-17 3688 1556
Oct-17 3077 227
Nov-17 2410 468
Dec-17 2016 1426
Jan-18 2222 858
Feb-18 1579 1191
Mar-18 2091 1274

10.4 RRAS Accounting and Settlement
As per Regulation 12 of the CERC (Ancillary Services Operations)

Regulations 2015, the Regional Power Committees (RPCs) are required to issue the
weekly accounts for RRAS along with the weekly DSM accounts. The RRAS
accounts include fixed charges, variable charges, markup, amount of fixed charges to
be refunded to the beneficiaries and the payments made from/to the DSM pool.
Energy scheduled to/from Virtual Ancillary Entity (VAE) under RRAS and
the payments made for ancillary services during 2016-17 and 2017-18 has been
provided in Table-33.
Table-33: Energy Scheduled and Payments made for Ancillary Services,

2016-17 to 2017-18
Month Energy scheduled to/from Payments made for Ancillary Services
Virtual Ancillary Entity (`/Crore)
under RRAS (MU)
Regulation Regulation To RRAS By RRAS
UP DOWN provider(s) from provider(s) to
DSM Pool for DSM Pool for
Regulation UP Regulation DOWN
2016-17 2212.28 286.00 939.78 42.39
2017-18 4149.25 243.72 2011.47 43.60
The energy scheduled under Regulation UP of RRAS was increased from

2212.28MU in 2016-17 to 4149.25 MU in 2017-18 and the increase was 88%.
However, the energy scheduled under Regulation DOWN of RRAS was declined
from 286.00MU in 2016-17 to 243.72MU in 2017-18 and the decline was 15%.
Month-wise energy scheduled to/from VAE under RRAS during 2017-18 can
be seen in Figure-35. It can be observed from the figure that ancillary despatch under
Regulation UP was relatively high when compared with the ancillary despatch under
Regulation DOWN.

Figure-35: Energy Scheduled to/from Virtual Ancillary Entity
under RRAS (MU), 2017-18
1000
900
800 752
700
Energy (MU)
600 541
500 415
400 309 308 321
300 255 270 262 237 219 261
200 98
100 7 31 22 14 12 0.3 1 25 18 7 9
0
Regulation UP Regulation DOWN
Presently, the Ancillary Services implementation is load-following and for

congestion management. There are other forms of ancillary services which also need
to be considered as we move ahead.

Chapter-III
Tariff of Long-term Sources of Power
1. Background
Section 61 & 62 of the Electricity Act, 2003 provide for tariff regulation and
determination of tariff of generation, transmission, wheeling and retail sale of
electricity by the Appropriate Commission. The CERC has the responsibility to
regulate the tariff of generating companies owned or controlled by the Central
Government. The CERC specifies the terms and conditions for the determination of
tariff for the generating companies guided by the principles and methodologies
specified. The principles of the tariff are based on (a) the factors which would
encourage competition, efficiency, economical use of the resources, good
performance and optimum investments; (b) safeguarding of consumers' interest and at
the same time, recovery of the cost of electricity in a reasonable manner; (c)
rewarding efficiency in performance; (d) the tariff progressively reflects the cost of
supply of electricity and also, reduces and eliminates cross-subsidies; (e) the
promotion of co-generation and generation of electricity from renewable sources of
energy; etc.
Section 63 of the Act states that “Notwithstanding anything contained in

section 62, the Appropriate Commission shall adopt the tariff if such tariff has been
determined through transparent process of bidding in accordance with the guidelines
issued by the Central Government” in line with the Ministry of Power notified
competitive bidding guidelines in 2005. The guidelines are being issued for
procurement of electricity by distribution licensees for (a) long-term procurement of
electricity for a period of 7 years and above; and (b) medium-term procurement for a
period of upto 7 years but exceeding 1year. The guidelines shall apply for
procurement of base-load, peak load and seasonal power requirements through
competitive bidding, through the mechanisms: (i) where location, technology, or fuel
is not specified by the procurer (Case-1); and (ii) for hydro-power projects, load
center projects or other location specific projects with specific fuel allocation such as

captive mines available, which the procurer intends to set up under tariff based
bidding process (Case-2).
The power procurement through competitive bidding resulted in significant

capacity addition in private sector. The details on tariff of inter-state power generating
companies, mainly the tariff of central public sector power generating companies,
have been provided below.
2. Tariff of Central Public Sector power generating companies
In 2017-18, the central public sector power generating companies (NTPC,

NHPC, NLC, NEEPCO, etc.)/central government owned generating companies
accounted for about 37.26% of the total power generation in the country. The entire
generation of these central government owned generating companies is being
procured by various distribution companies through long-term Power Purchase
Agreements.
The price paid by distribution companies to procure power from central

government owned generating companies in 2017-18 is shown in Table-34 and 35. It
can be seen that, on an average, the distribution companies paid between `1.92 and
`5.69 per kWh for procuring power from coal based stations, between `2.99 and
`4.99 per kWh from gas based power stations, (Table-34), and between `1.11 per
kWh and `8.55 per kWh from hydro stations (Table-35).
Table-34: Tariff of Central Thermal Power Stations, 2017-18

Sl. Name of the Generating Installed Fixed Energy Total
No. Station Capacity charges Charges Tariff (`/
(MW) as on (`/kWh) (`/kWh) kWh)
March, 2018
I: Coal Based thermal generating Stations of NTPC
A. Pit head Generating Stations
1 Rihand STPS (St-I) 1000 0.83 1.29 2.12
2 Rihand STPS (St-II) 1000 0.85 1.29 2.14
3 Rihand STPS (St-III) 1000 1.47 1.30 2.77
4 Singrauli STPS 2000 0.63 1.38 2.01

5 Vindhyachal STPS (St-I) 1260 0.83 1.56 2.39
6 Vindhyachal STPS (St-II) 1000 0.68 1.46 2.14
7 Vindhyachal STPS (St-III) 1000 1.06 1.46 2.52
8 Vindhyachal STPS (St-IV) 1000 1.58 1.46 3.04
9 Vindhyachal STPS (St-V) 500 1.64 1.47 3.11
10 Korba STPS (St-I & II) 2100 0.66 1.26 1.92
11 Korba STPS (St-III) 500 1.42 1.23 2.65
12 Ramagundam STPS (St-
2100 0.70 2.39 3.09
I&II)
13 Ramagundam STPS (St-
500 0.76 2.34 3.10
III)
14 Talcher TPS 460 1.40 1.66 3.06
15 Talcher STPS (St-I) 1000 0.93 1.55 2.48
16 Talcher STPS (St-II) 2000 0.69 1.56 2.25
17 Sipat STPS (St-I) 1980 1.32 1.24 2.56
18 Sipat STPS (St-II) 1000 1.26 1.27 2.53
Sub-Total (A) 21400
B. Non-Pit head Generating Stations
19 FGUTPP TPS (St-I) 420 1.06 2.71 3.77
20 FGUTPP (St-II) 420 0.98 2.70 3.68
21 FGUTPP (St-III) 210 1.36 2.69 4.05
22 FGUTPP (St-IV) 500 1.50 2.41 3.91
23 NCTP Dadri (St-I) 840 0.93 3.13 4.06
24 NCTP Dadri (St-II) 980 1.47 2.93 4.40
25 Farrakka STPS (St-I&II) 1600 0.85 2.49 3.34
26 Farrakka STPS (St-III) 500 1.53 2.52 4.05
27 Tanda TPS 440 1.24 2.84 4.08
28 Badarpur TPS 705 0.80 3.65 4.45
29 Kahalgaon STPS (St-I) 840 1.03 2.40 3.43
30 Kahalgaon STPS (St-II) 1500 1.10 2.33 3.43
31 Simhadri (St-I) 1000 0.93 2.84 3.77
32 Simhadri (St-II) 1000 1.55 2.84 4.39
33 Mauda STPS (St-I) 1000 1.91 2.75 4.66
34 Mauda STPS (St-II) 1320 1.42 2.56 3.98
35 Barh STPS (St-II) 1320 1.86 2.24 4.10
36 Bongaigaon TPS 500 2.71 2.98 5.69
37 Solapur STPS 660 2.16 3.30 5.46
38 Kudgi STPS 1600 1.52 3.68 5.20
Sub-Total (B) 17355
Total Coal (A+B) 38755
II: Gas based Power Generating Stations of NTPC
1 Anta CCGT 419 0.70 3.98 4.68

2 Auraiya GPS 663 0.63 4.36 4.99
3 Dadri CCGT 830 0.56 3.24 3.80
4 Faridabad GPS 432 0.74 2.95 3.69
5 Gandhar GPS 657 1.05 2.32 3.37
6 Kawas GPS 656 0.84 2.49 3.33
Total 3657
III: Gas based Power Generating Stations of NEEPCO
1 Agartala GPS 84 1.49 2.58 4.08
2 Assam GPS 291 1.49 1.99 3.48
Total NEEPCO 375
IV: Lignite Based thermal generating Stations of NLC
1 TPS-I 600 0.88 2.58 3.46
2 TPS-II Stage-I 630 0.69 2.33 3.02
3 TPS-II Stage-II 840 0.66 2.33 2.99
4 TPS-I (Expansion) 420 0.93 1.95 2.88
5 TPS-II (Expansion) 500 2.25 2.91 5.16
6 Barsingsar TPS 250 2.03 1.21 3.25
Total NLC 3240
V: Other Inter-state Coal based Power Generating Stations
Indira Gandhi STPP,
1500 1.55 2.32 3.87
1 Stage-I
2 Vallur TPP 1500 1.66 1.90 3.57
3 NTPL TPS 1000 1.48 2.10 3.58
4 Maithon Right Bank TPP 1050 1.33 2.41 3.74
5 Kamalanga Power Plant 1050 1.80 1.17 2.98
Total 6100
VI: Other Inter-state Gas based Power Generating Stations
1 OTPC Ltd 727 1.80 1.19 2.99
2 Pragati Power Plant-III 1371 1.45 2.97 4.42
Total 2098
Table-35: Composite Tariff of Central Hydro Power Stations, 2017-18

Sr.No. Name of the Type Installed Design Annual Composite
Generating Capacity Energy Fixed Tariff
Company/ Station (MW) (MU) Charges (`/kWh)
(`/Crore)
NHPC
1 Baira siul Pondage 180 779 131 1.92
2 Loktak Storage 105 448 150 3.84
3 Salal ROR 690 3082 313 1.17
4 Tanakpur ROR 123 452 124 3.14

5 Chamera-I Pondage 540 1665 321 2.22
6 Uri-I ROR 480 2587 364 1.62
7 Rangit Pondage 60 339 108 3.66
8 Chamera-II Pondage 300 1500 259 1.98
9 Dhauliganga-I Pondage 280 1135 298 3.02
10 Dulhasti ROR 390 1907 924 5.57
11 Teesta-V Pondage 510 2572 519 2.31
12 Sewa-II* Pondage 120 534 199 4.33
13 Chamera-III* Pondage 231 1086 405 4.25
14 Chutak ROR 44 213 146 7.86
15 Uri-II ROR 240 1124 469 4.86
16 Nimoo Bazgo Pondage 45 239 178 8.55
17 Teesta-LDP-III* Pondage 132 594 361 6.20
18 Teesta-LDP-IV* Pondage 160 581 162 2.56
19 Parbati-III* ROR 520 1977 330 5.48
Total 5150 22814
NHDC
1 Indira Sagar Storage 1000 2247 607 3.10
2 Omkareshwar Storage 520 957 404 4.84
Total 1520 3205
THDC
1 Tehri HPP Stage-I Storage 1000 2767 1313 5.45
2 Koteshwar HEP* RoR with 400 1155 393 3.86

Pondage
Total 1400 3922
SJVNL
1 Naptha Jhakri* RoR 1500 6924 1657 2.88
2 Rampur HPP* RoR 412 1878 522 3.23
Total 1912 8802
NEEPCO
1 Kopili HEP Stage- Storage 200 1186 115 1.11
I
2 Kopili HEP Stage- Storage 25 86 12 1.54
II
3 Khandong Storage 50 278 44 1.81
4 Doyang Storage 75 227 105 5.30
5 Ranganadi HEP Pondage 420 1874 266 1.63
Total 770 3651
*Tariff is not determined yet for the year 2017-18, therefore, tariff allowed for billing is
provided.

Chapter-IV
Transactions of Renewable Energy Certificates
1. Background of Renewble Energy Certificate Mechanism
The Renewble Energy Certificate (REC) mechanism is a market based

instrument, to promote renewable sources of energy and development of market in
electricity. The REC mechanism provides an alternative voluntary route to a generator
to sell his electricity from renewable sources just like conventional electricity and sell
the green attribute separately to obligated entities to fulfill their Renewable Purchase
Obligation (RPO). Such a generator can either opt to enter into a Power Purchase
Agreement for sale at preferential full cost tariff to a distribution licensee or can opt to
take the REC route for such untied capacity. If he opts for the REC route, he can sell
his electricity to a distribution licensee such as a conventional source based generation
at an average power purchase cost. Or, he can sell to a third party, that is, to an open
access consumer at mutually settled prices, or even on power exchanges. On every
one megawatt hour of such electricity generated, he is entitled to get one REC from
the central registry (which is regulated by the CERC) after getting registered once
with this registry. Such registration requires prior accreditation with the state nodal
agency for verifying the source of generation, capacity, and grid metering.
There are two categories of RECs, solar and non-solar, to meet the RPO of the
corresponding category. This is because the cost of solar-based generation is very
high compared to all other sources. An REC can be issued within three months of
generation and is valid for one year thereafter. It is to be sold on power exchanges
regulated by CERC, which also fixes a price band for exchange of REC (the band of
forbearance price and floor price) to protect the interests of obligated entities and
generators, respectively. Obligated entities can fulfill RPO by purchasing renewable
electricity at full cost preferential tariff or by purchasing REC equivalent to their
RPO. Voluntary buyers can also purchase REC. Regulatory charge for shortfall of
RPO compliance is at the rate of forbearance price.

The Central Electricity Regulatory Commission (Terms and Conditions for
recognition and issuance of Renewable Energy Certificate for Renewable Energy
Generation) Regulations, 2010 were issued on 14th January, 2010 for the
development of market in power from Non Conventional Energy Sources by issuance
of transferable and saleable credit certificates. These Regulations shall apply
throughout India except the State of Jammu and Kashmir. The CERC has nominated
NLDC as the Implementing Agency (for the Central Registry), which prepares
procedures and a web-based platform for the REC mechanism. The REC mechanism
was formally launched on 18 November 2010.
2. Trading of Renewble Energy Certificates on Power Exchanges
Trading of RECs is being undertaken on Power Exchanges on the last

Wednesday of every month. In the event of a bank holiday on the last Wednesday of
any month, trading shall take place on the next bank working day. If there are other
exigencies warranting change in the day for trading, the Central Agency can make
such change as considered necessary under intimation to all concerned. The bidding
window is open on the Power Exchanges designated for dealing in the RECs from
13:00 Hrs to 15:00 Hrs on the day of trading.
One REC is equivalent to 1 MWh of electricity injected into the grid from
renewable energy sources. The REC is exchanged only in the power exchanges
approved by CERC within the band of a floor price and forbearance (ceiling) price as
notified by CERC from time to time (Table-36).
Table-36: Floor and Forbearance Price applicable for REC Transactions
Forbearance Price
Floor Price (`/MWh)
Applicable Period (`/MWh)
Solar Non-Solar Solar Non-Solar
w.e.f 1st June 2010 12000 1500 17000 3900
w.e.f 1st April 2012 9300 1500 13400 3300
w.e.f 1st March 2015 3500 1500 5800 3300
w.e.f 1st April 2017 1000 1000 2500 2900

The first REC trading session was held on power exchanges in March 2011.
The growth of RECs transacted on power exchanges has been provided in Table-37.
The number of RECs increased significantly from 10.15 lakh in 2011-12 to 161.84
lakh in 2017-18 and the annual growth was registerd at the rate of 59%. The number
of buyers and sellers also increased from 397 and 197 respectively in 2011-12 to 1172
and 1600 in 2017-18.
Table-37: Growth of Renewable Energy Certificates transacted on Power

Exchanges, 2011-12 to 2017-18
Number of % increase in
Financial Number of Number of RECs Number of
Year buyers sellers transacted RECs
(Lakhs) Transacted
2011-12 397 197 10.15 -
2012-13 802 683 25.90 155%
2013-14 1083 1044 27.49 6%
2014-15 821 1378 30.62 11%
2015-16 1332 1512 49.55 62%
2016-17 1760 1588 64.88 31%
2017-18 1172 1600 161.84 149%
Source:NLDC
Table-38 shows the demand and supply of RECs (i.e. the gap between the
volume of buy and sell bids of RECs) on power exchanges during 2012-13 to 2017-
18. In case of Solar RECs, the volume of buy bid as percentage of volume of sell bid
varied between 1% and 10% whereas in case of Non-solar RECs the volume of buy
bid as percentage of volume of sell bid varied between 3% and 21% in both power
exchanges during the period. It can be inferred from the data that the demand for both
solar and non-solar RECs was very low. The demand for non-solar RECs is relatively
better when compared with the demand for solar REC and this is mainly for the
reason that the floor and Forbearance Price was relatively low for non-solar RECs
when compared with the solar RECs.

Table-38: Demand and Supply of RECs on Power Exchanges,
2012-13 to 2017-18
Year IEX PXIL
Volume Volume Volume of Volume Volume Volume of
of Buy of Sell Buy Bid as of Buy of Sell Buy Bid
Bid of Bid of % of Bid of Bid of as % of
RECs RECs volume of RECs RECs volume of
(Lakhs) (Lakhs) Sell Bid (Lakhs) (Lakhs) Sell Bid
Solar
2012-13 0.77 0.14 549% 0.12 0.05 265%
2013-14 0.54 5.86 9% 0.14 1.35 10%
2014-15 1.01 37.00 3% 0.63 33.46 2%
2015-16 4.65 227.67 2% 1.83 93.80 2%
2016-17 4.04 323.70 1% 1.53 147.66 1%
2017-18 0.89 34.99 3% 1.20 13.68 9%
Non Solar
2012-13 24.35 91.85 27% 6.55 24.90 26%
2013-14 12.71 251.65 5% 14.11 172.33 8%
2014-15 14.47 553.25 3% 14.51 550.88 3%
2015-16 26.73 889.92 3% 16.34 644.01 3%
2016-17 42.15 981.50 4% 17.16 596.37 3%
2017-18 94.17 635.09 15% 67.89 324.13 21%
The volume and price of RECs transacted on both power exchanges during
2012-13 to 2017-18 has been provided in Table-39. It can be observed from the table
that there is an increasing trend in the volume of RECs (both solar and non-solar)
transacted on both power exchanges and there is a declining trend in the weighted
average of market clearing price of the RECs. The increase in the volume of RECs
transacted on power exchanges can be attributed to the increase in the RPO
compliance. Decline in the price of RECs can be attributed to the demand and supply
of RECs and the REC regulations issued by CERC from time to time i.e. by reducing
the floor and forbearance price.
The market clearing volume of Solar RECs transacted on both power

exchanges increased from 0.14 lakhs in 2012-13 to 2.08 lakhs in 2017-18, whereas the
weighted average of market clearing price of these RECs declined from `12740/MWh
in 2012-13 to `1000/MWh in 2017-18. The market clearing volume of Non-Solar

RECs transacted on both power exchanges increased from 25.76 lakhs in 2012-13 to
159.76 lakhs in 2017-18, whereas the weighted average of market clearing price of
these RECs declined from `1692/MWh in 2012-13 to `1483/MWh in 2017-18.
Table-39: Volume and Price of RECs Transacted on Power Exchanges,

2012-13 to 2017-18
Month IEX PXIL Total
Volume Weighted Volume Weighted Volume Weighted
of RECs Average of RECs Average of RECs Average
(MWh) Price of (MWh) Price of (MWh) Price of
in RECs in Lakhs RECs in Lakhs RECs
Lakhs (`/MWh) (`/MWh) (`/MWh)
Solar
2012-13 0.10 12782 0.04 12615 0.14 12740
2013-14 0.53 9383 0.14 9668 0.67 9441
2014-15 1.01 3725 0.63 4756 1.64 4121
2015-16 4.65 3500 1.83 3500 6.48 3500
2016-17 4.04 3500 1.53 3500 5.57 3500
2017-18 0.89 1000 1.20 1000 2.08 1000
Non-Solar
2012-13 19.81 1731 5.95 1564 25.76 1692
2013-14 12.71 1500 14.11 1500 26.82 1500
2014-15 14.47 1500 14.51 1500 28.98 1500
2015-16 26.73 1500 16.34 1500 43.07 1500
2016-17 42.15 1500 17.16 1500 59.31 1500
2017-18 92.41 1480 67.35 1487 159.76 1483
The price of RECs in 2017-18 was influenced by the CERC regulations on

floor and forbearing price of RECs applicable w.e.f. 1st April 2017 (vide order dated
28th February 2017 in Petition No.02/SM/2017). Consequent to these regulations, the
trading of RECs which was stayed by the Supreme Court in May 2017. In July 2017,
the Supreme Court allowed the trading of non-solar RECs on the condition to comply
with the earlier prices. These developments lead to trading of solar RECs only in the
month of April 2017 (on the CERC notified price i.e.`1000) and trading of Non-solar
RECs in the month of April 2017 (on the CERC notified price i.e. `1000) and from
July 2017 to March 2018 (on the price notified earlier i.e. `1500).

Annexure-I
List of Transmission Licensees as on 31.03.2018
Date of grant
S.No. Name of the Licensee
of license
1 Powerlinks Transmission Ltd. 13.11.2003
2 Torrent Power Grid Ltd 16.05.2007
3 Jaypee Powergrid Ltd 01.10.2007
4 Essar Power Transmission Company Ltd. 10.04.2008
5 Parbati Koldam Transmission Company Ltd 15.09.2008
6 Western Region Transmission (Maharashtra) (P) Ltd 30.12.2008
7 Western Region Transmission (Gujrat) (P) Ltd 30.12.2008
8 Teestavalley Power Transmission Ltd 14.05.2009
9 North East Transmission Company Ltd 16.06.2009
10 East - North Inter - Connection Company Ltd. 28.10.2010
11 Talcher - II Transmission Company Ltd. 08.11.2010
12 Cross Border Power Transmission Company Ltd 01.12.2010
13 North Karanpura Transmission Company Ltd. 16.12.2010
14 Jindal Power Ltd 09.05.2011
15 Raichur Sholapur Transmission Company Ltd 24.08.2011
16 Jabalpur Transmission Company Ltd 12.10.2011
17 Bhopal Dhule Transmission Company Ltd 12.10.2011
18 Powergrid NM Transmission Ltd 20.06.2013
19 Torrent Energy Ltd 16.07.2013
20 Adani Transmission (India) Ltd 29.07.2013
21 Aravali Power Co. Ltd. 07.11.2013
22 Kudgi Transmission Ltd 07.01.2014
23 Powergrid Vizag Transmission Ltd 08.01.2014
24 Darbhanga - Motihari Transmission Company Ltd 30.05.2014
25 Purulia & Kharagpur Transmission Company Ltd 30.05.2014
26 Patran Transmission Company Ltd 14.07.2014
27 Powergrid Unchahar Transmission Ltd 21.07.2014
28 RAPP Transmission Company Ltd 31.07.2014
29 NRSS XXXI (B) Transmission Ltd 25.08.2014
30 Powergrid Kala Amb Transmission Ltd (NRSS XXXI (A) 04.09.2014
Transmission Ltd)
31 NRSS XXIX Transmission Ltd (Sterlite) 14.11.2014
32 Powergrid Jabalpur Transmission Ltd 15.06.2015
33 DGEN Transmission Company Ltd 24.06.2015

34 Powergrid Parli Transmission Ltd (Gadarwara (B) 10.07.2015
Transmission Ltd)
35 POWERGRID Warora Transmission Ltd 05.08.2015
36 Maheshwaram Transmission Ltd 23.11.2015
37 Raipur-Rajandgaon-Warora Transmission Ltd 29.02.2016
38 Chhattisgarh-WR Transmission Ltd 29.02.2016
39 Sipat Transmission Ltd 07.03.2016
40 POWERGRID Southern Interconnector Transmission 14.03.2016
System Ltd
41 Alipurduar Transmission Ltd 21.03.2016
42 Odisha Generation Phase-II Transmission Ltd 30.06.2016
43 Gurgaon Palwal Transmission Ltd 29.09.2016
44 Warora-Kurnool Transmission Ltd 29.09.2016
45 North Karanpura Transco Ltd 29.09.2016
46 Khargone Transmission Ltd 17.11.2016
47 NRSS XXXVI Transmission Ltd 07.12.2016
48 NER-II Transmission Ltd 20.06.2017
49 Powergrid Medinipur Jeerat Transmission Ltd 20.06.2017
50 Kohima-Mariani Transmission Ltd 10.07.2017

Annexure-II
List of Trading Licensees as on 31.3.2018
Date of Present
Sr.
Name of Trading Licensee Grant of Category of
No.
License License
1 Tata Power Trading Company Ltd 09.06.2004 I
2 Adani Enterprises Ltd 09.06.2004 I
3 PTC India Ltd 30.06.2004 I
4 NTPC Vidyut Vyapar Nigam Ltd 23.07.2004 I
5 National Energy Trading & Services Ltd 23.07.2004 I
6 JSW Power Trading Company Ltd. 25.04.2006 I
7 GMR Energy Trading Ltd 14.10.2008 I
8 Global Energy (P) Ltd. 28.11.2008 I
9 Knowledge Infrastructure Systems (P) Ltd 18.12.2008 I
10 Shree Cement Ltd 16.03.2010 I
11 Jai Prakash Associates Ltd 23.03.2011 I
12 Statkraft Markets (P) Ltd 21.06.2012 I
13 IL&FS Energy Development Company Ltd 04.09.2014 I
14 Jindal Poly Films Limited 20.09.2017 I
Essar Electric Power Development Corporation
15 14.12.2005 II
Ltd
16 RPG Power Trading Company Ltd 23.09.2008 II
17 Mittal Processors (P) Ltd 12.02.2009 II
18 My Home Power (P) Ltd 26.04.2011 II
19 Manikaran Power Ltd 29.06.2012 II
20 Arunachal Pradesh Power Corporation (P) Ltd 11.09.2012 II
21 Solar Energy Corporation of India 01.04.2014 II
22 Instinct Infra & Power Ltd 07.09.2005 III
23 Greenko Energies (P) Ltd 22.01.2008 III
24 Shyam Indus Power Solutions (P) Ltd 11.11.2008 III
25 Customised Energy Solutions India (P) Ltd 08.06.2011 III
26 IPCL Power Trading (P) Ltd 10.02.2015 III
27 Gita Power & Infrastructure (P) Ltd 20.10.2015 III
28 Reliance Energy Trading (P) Ltd 30.06.2004 IV
29 Audhunic Alloys & Power Ltd 26.06.2008 IV
30 Ambitious Power Trading Company Ltd 16.09.2008 IV
31 Vedprakash Power (P) Ltd 19.08.2013 IV

32 Parshavnath Power Projects (P) Ltd 19.05.2014 IV
33 Phillip Commodities India (P) Ltd 21.01.2016 IV
34 Renew Solar Services (P) Ltd 27.01.2017 IV
35 Amplus Energy Solutions (P) Ltd 17.04.2017 IV
36 Atria Energy Services (P) Ltd 20.06.2017 IV

Annexure-III
1. Daily prices returns = Ln (y i / yi-1).
2. yi is price for today; y i-1 is price on previous day.
3. Ln is natural logarithm
4. n is the number of observations
5. u is the average daily returns

Annexure-IV
Herfindahl-Hirschman Index (HHI)
Formula for computing the HHI is as under:
N
HHI = ∑ si2
i =1
wheresi is the market share of firm i in the market, and N is the number of firms.
The Herfindahl-Hirschman Index (HHI) ranges from 1 / N to one, where N is

the number of firms in the market. Equivalently, if percents are used as whole
numbers, as in 75 instead of 0.75, the index can range up to 1002 or 10,000.
 A HHI index below 0.01 (or 100) indicates a highly competitive index.
 A HHI index below 0.15 (or 1,500) indicates an unconcentrated index.
 A HHI index between 0.15 to 0.25 (or 1,500 to 2,500) indicates moderate
concentration.
 A HHI index above 0.25 (above 2,500) indicates high concentration.
There is also a normalized Herfindahl index. Whereas the Herfindahl index

ranges from 1/N to one, the normalized Herfindahl index ranges from 0 to 1.

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Report on

Short-term Power Market

Chapter-I: Overview of Power Sector

Chapter-II: Short-term Power Market in India

2.1 Total Short-term Transactions of Electricity with Respect to Total 14

2.1.1 Electricity Transacted through Traders & Power Exchanges 15

3.1 Volume of Short-term Transactions of Electricity 22

4.1 Volume of Short-term Transactions of Electricity 30

Report on Short-term Power Market in India, 2017-18 i

6 Trading Margin Charged by Trading Licensees 35

7 Open Access Consumers on Power Exchanges 37

8 Major Sellers and Buyers of Electricity in the Short term market 41

9 Effect of Congestion on Volume of Electricity Transacted through 45

Chapter-III: Tariff of Long-term Sources of Power

Chapter-IV:Transactions of Renewable Energy

Annexure-I: List of Transmission Licensees as on 31.03.2018 65

Report on Short-term Power Market in India, 2017-18 ii

Report on Short-term Power Market in India, 2017-18 iii

Report on Short-term Power Market in India, 2017-18 iv

Report on Short-term Power Market in India, 2017-18 v

Report on Short-term Power Market in India, 2017-18 vi

The Electricity Act, 2003 consolidated the laws relating to generation,

The Central Electricity Regulatory Commission sets the regulatory process in

Report on Short-term Power Market in India, 2017-18 vii

Report on Short-term Power Market in India, 2017-18 viii

Report on Short-term Power Market in India, 2017-18 ix

HPP Hydroelectric Power Plant

Report on Short-term Power Market in India, 2017-18 x

Report on Short-term Power Market in India, 2017-18 xi

Report on Short-term Power Market in India, 2017-18 xii

1. Thermal energy (mainly from Coal) is an important source of electricity generation in

4. Gross electricity generation in India increased from 747.06 BU in 2008-09 to 1308.15

Report on Short-term Power Market in India, 2017-18 xiii

8. The total electricity consumption increased from 611.29BU in 2008-09 to 1066.27BU

„Short-term transactions of electricity‟ refers to contracts of less than one year

Report on Short-term Power Market in India, 2017-18 xiv

5. The volume of electricity transacted through power exchanges increased at an annual

7. In terms of volume, the direct bilateral transactions between DISCOMs witnessed a

Report on Short-term Power Market in India, 2017-18 xvi

Report on Short-term Power Market in India, 2017-18 xvii

Report on Short-term Power Market in India, 2017-18 xviii

India‟s power sector is well diversified with market dynamics. Power

Table-1: Installed Electricity Generation Capacity in India (GW),

Report on Short-term Power Market in India, 2017-18 Page 1

Thermal Hydro Nuclear RES

As can be seen in Figure-1, thermal is the most important source of electricity

The Electricity Act of 2003 liberalised the electricity generation through a

Report on Short-term Power Market in India, 2017-18 Page 2

Table-2: Sector-wise Growth of Installed Electricity Generation Capacity,

Figure-2: Sector-wise Growth of Installed Electricity

State Central Private

Report on Short-term Power Market in India, 2017-18 Page 3

Table-3: Gross Electricity Generation in India (BU), 2008-09 to 2017-18

Figure-3: Gross Electricity Generation in India (%), 2008-09

Thermal Hydro Nuclear RES Bhutan Import

Report on Short-term Power Market in India, 2017-18 Page 4

Table-4: Power Supply Position in India, 2008-09 to 2017-18

Energy (BU) Peak (GW)

Electricity demand is defined in the narrowest sense because it is counted as