India’s electricity markets to transform facilitating energy transition with energy security

The Indian Electricity Market is Reforming to create a greener future. the optimisation of electricity producing resources along with modifications to India’s electrical markets that permit the grid integration of renewable energy.

The transition to renewable energy will result in significant changes to India’s electricity markets. With representation from the Ministries of Power, New & Renewable Energy, Central Electricity Authority, Central Electricity Regulatory Commission, Grid Controller of India (Grid-India), and State Governments of Maharashtra, Madhya Pradesh, and Tamil Nadu, the Ministry of Power established a Group for “Development of Electricity Market in India” under the chairmanship of Alok Kumar, Secretary, Ministry of Power.

The group presented the report to the Union Minister of Power and New & Renewable Energy. It included comprehensive solutions to address key issues, such as the dominance of rigid long-term contracts, the need for resource adequacy planning in the federal government and the states, the need to harness the inherent diversity of a large, synchronous grid, the need to reduce system inefficiencies by reducing reliance on self-scheduling, and the growing share of renewable energy sources in the overall energy mix, among others. The solutions are intended to establish an effective, ideal, and reliable market structure to facilitate the energy transition and the grid integration of renewable energy.

Demand response and aggregation are other modifications that are being considered, and they may help to cut reserve needs and electricity costs. In order to track participation and reduce price volatility, market monitoring and surveillance efforts will be strengthened. By implementing a regional balancing framework for deviation management, the ISTS level deviation fines for the states will be reduced, which will reduce the need for reserves.

R. K. Singh, the Union Minister for Power & NRE, emphasised the necessity of finding solutions rather than relying on international norms. As a result, India has been at the forefront of prompt interventions and was able to keep electricity prices in check during the recent energy crisis, although electricity prices skyrocketed in many wealthy countries’ electrical markets. While designing the capacity contracts, it is also necessary to ensure that the most efficient power generation capacity is purchased. It is also recommended that long-term PPAs (power purchase agreements) with a length of 12 to 15 years be used going forward. To ensure competition and transparency, we must start developing new RE capacity immediately using the Contract for Difference (CfD) mechanism. He instructed CERC to certify the power exchange clearing engine. Together with the interventions proposed by the Group for Development of the Electricity Market in India, the Ministry of Power’s measures to reform the electricity market will revolutionise India’s power markets and assist the nation in achieving its energy objectives sustainably.