Govt to implement Phase I of Market-Based Economic Dispatch (MBED) from April 1, 2022

• The ministry has released the framework for the Phase-I programme, which is expected to reduce consumers' power purchase costs by five percent
• A robust day-ahead market will form the basis for transitioning away from the country's over-dependence on long-term PPAs to sustainable market-based ops, said the ministry

New Delhi: The Ministry of Power said on Friday that it is looking to implement Phase-I of Market-Based Economic Dispatch (MBED) from April 1, 2022. The ministry has released the framework for the Phase-I programme, which is expected to reduce consumers' power purchase costs by five percent. "It is hence widely recognised that an essential next step in reforming the electricity market operations and in moving towards "One Nation, One Grid, One Frequency, One Price" framework is to implement Market Based Economic Despatch (MBED) in the day-ahead horizon initiated by the Central Electricity Regulatory Commission," said an official statement.

"MBED will ensure that the cheapest generating resources across the country are despatched to meet the overall system demand and will thus be a win-win for both the distribution companies and the generators and ultimately result in significant annual savings for the electricity consumers," the statement added.

Market-Based Economic Dispatch to reduce dependence on PPAs

Explaining the rationale behind bringing in a market-based economic dispatch programme, the ministry said, "With success in generation capacity additions over the past few years and a well-integrated national electricity grid, the time is right to move towards optimising the operation of generating plants in the country to deliver benefits of reduced operating costs to the distribution utilities and end consumers. A robust day-ahead market will also form the basis for transitioning away from the country's over-dependence on longer-term PPAs to sustainable market-based operations."

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Under the programme, the power demand by all states is proposed to be met through a central pool allocating power at the optimal price. As of now, discoms procure power from various power generators within the states, usually at higher pre-determined prices. 

CERC to conduct trial runs

The Central Electricity Regulatory Commission (CERC) will conduct trial runs to ensure the system runs smoothly. Interstate generation facilities will participate in the first phase, while other generation facilities can join voluntarily.

The ministry had issued a discussion paper on MBED in June this year for stakeholders to submit their feedback. In July, it also organised a consultation workshop with state governments and discoms, regulatory commissions, and state power generating companies in August. "Ministry of Power noticed substantial alignment amongst all key stakeholders on a phased approach and the process to be followed for implementing Phase 1 of MBED starting with the mandatory participation of the Inter State Generating Stations," said the statement.

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