India’s RTM for electricity trading is here & could be a game changer. But what is it?

• The RTM will make the power market dynamic as auctions will be conducted every 30 minutes

• There will be 48 auction sessions during the day and delivery of power will be done within one hour of the closure of the bid session

New Delhi: The two main power exchanges in the country — IEX (Indian Energy Exchange) and PXIL (Power Exchange India Limited) — have started RTM (Real Time Market) for electricity trading on Monday after a delay of two months in the wake of the Coronavirus outbreak. The RTM is an endeavour by electricity regulator CERC (Central Electricity Regulatory Commission) to allow buyers more flexibility in balancing supply and demand. 

Auctions on RTM will be conducted every 30 minutes; deliveries in an hour

In a regulatory filing released on Monday, IEX said that the RTM will make the power market dynamic as auctions will be conducted every 30 minutes. There will be 48 auction sessions during the day and the delivery of power will be done within one hour of the closure of the bid session. 

This means that if a discom or a power generator places an order for electricity between 10.30 am and 11 am, electricity will be ready to be drawn by 12 pm. Before the launch of RTM, discoms had to rely on the day-ahead market to plan their scheduling. The purchase used to be based on weather predictions and demand patterns. However, with auctions being held every half an hour now, discoms will be able to buy more power if they have scheduled for less and sell the surplus off. This will allow discoms room for flexibility and will allow them to manage electricity demand more efficiently.

First-time ever gencos with long-term PPAs can take part

The RTM would be the first exchange contract that would allow even power generators (both thermal and renewable) with long-term PPAs to participate on the exchange where they can sell their surpluses. 

"The market will greatly aid the distribution utilities to manage power demand-supply variation and meet 24×7 power supply aspirations in the most flexible, efficient, and dynamic way. The utilities presently manage unplanned changes in schedule through the Deviation Settlement Mechanism and in the process, end up paying penalties. RTM will facilitate utilities to reduce dependency on deviation framework and save on the huge penalties. It will also support the grid operators to enhance overall safety and security of the grid," said IEX.

RTM could help prevent a 2012-like grid collapse

The RTM will also help prevent an electricity grid collapse like the one that happened in 2012. The northern and eastern power grids had collapsed in 2012, making it the biggest power outage in the history of India, primarily because discoms overdrew power. The other alternative to overdrawing power would be load shedding. However, since the government is now set to penalise that too, it is not really going to be an option anymore. RTM will be able to address these concerns by allowing discoms to buy electricity if the demand for power on any given day becomes more than what they had scheduled for.

"With the launch of RTM, the Indian energy markets are moving towards global standards of electricity trading and establishing the new energy order in the country. It will support the utilities in reducing dependence on grid deviation framework, of the order of 20 BU in fiscal year 2020," said Rajiv Srivastava, CEO & Managing Director, IEX Ltd, said.