Breakthrough Regulatory Measures Propel Energy Sector into a Sustainable Future

By Mr. Rohit Bajaj, Executive Director- Business Development, Strategy & Regulatory Affairs, IEX

The recent implementation of the General Network Access (GNA) Regulations and Indian Electricity Grid Code (IEGC) which came into effect on October 1, 2023, have ushered in a new era of efficiency and resilience within the energy sector. This milestone represents a significant step toward facilitating seamless access to the transmission system, irrespective of the type of Power Purchase Agreement.

The GNA Regulations have promptly tackled issues related to transmission charge anomalies between collective and bilateral transactions. This rectification guarantees a broader range of options available with buyers for optimum utilization of available transmission capacity. This will help in cultivating an environment of equitable competition in the market. Further, IEGC also came into effect simultaneously. This will facilitate flexibility for the beneficiaries. Surplus power can now be sold in the Day-Ahead Market (DAM) with ease and without the complexities of buyer consent. As it no longer needs to be requisitioned by Distribution Companies (DISCOMs), it means efficient utilization of resources and encourages sustainability in the longer run. The regulations create a level playing field, not just as a rule, but as a strategic move which encourages fair competition on the exchange and supports market efficiency and equal participation.

The Central Electricity Regulatory Commission (CERC) has introduced these regulations, bringing about several salient features:

I. Correction of the long-standing anomaly in transmission charges between collective and bilateral transactions, facilitating the movement of volumes from the DAC market back to the DAM segment.

II. Under IEGC, generators with long-term Power Purchase Agreements (PPAs) can now sell surplus power in the Day-Ahead Market without buyer consent, enhancing market availability.

III. Generators are permitted to meet their commitment in case of unit shutdown or forced outage by securing power through exchanges.

IV. Buyers can optimize their GNA as transmission charges in collective transactions apply only for the buy quantum exceeding their GNA, reducing working capital requirements.

V. Interstate transmission charges and losses apply only to buyers, providing a level playing field for all generators and encouraging competition on the exchange and reduction in overall cost of procurement.

VI. The overall philosophy of transmission planning has evolved which is aimed at adequate capacity addition to ensure a congestion-free system for optimum utilization of resources and reduce volume loss due to congestion.

VII. The regulations facilitate energy transition, allowing thermal generators to replace brown power with green power, introducing Renewable Energy (RE) aggregators, and connecting up to 50MW RE capacity.

Since implementing Transmission General Network Access (T-GNA) and IEGC, we have witnessed a positive transformation in market dynamics. Daily average volumes for the Day-Ahead Market (DAM) on the IEX platform have witnessed an impressive YoY increase. In October '23, the DAM volume surged to 4,742 MU, reflecting an 8.3% YoY growth. Simultaneously, the Real-Time Electricity Market (RTM) volume increased to 2,402 MU, showcasing a 6.1% YoY growth. These numbers indicate the effectiveness of these regulatory measures. The real-time balancing capabilities of the RTM segment empower distribution utilities and industries to optimize their portfolios efficiently.

The impact of these initiatives is tangible, as evidenced by the positive transformation in market dynamics. Ushered in by the Central Electricity Regulatory Commission (CERC), these initiatives set the stage for ongoing progress, promoting new ideas, healthy competition, and the smooth integration of renewable energy sources. The energy sector is on track for more improvements, backed by rules that prioritize efficiency, competition, and eco-friendly practices.