Govt finalises revised framework of Day-Ahead National level Merit Order Dispatch Mechanism in power sector

New Delhi: Ministry of Power on Wednesday said in a statement that the government has finalised a revised structure of Day-Ahead National level Merit Order Despatch Mechanism with a view to lower the overall cost of electricity generation. Further, it noted that this will translate into lower electricity prices for consumers.

The cheapest generating resources will be despatched first to meet system demand

"As per the revised mechanism, the cheapest generating resources across the country will be despatched first to meet the system demand," said the statement. Further, it added, "The gains out of the proposed Day-Ahead National Merit Order Dispatch Mechanism would be shared between generating stations and their consumers. This will result in increased annual savings for electricity consumers."

Revised mechanism to enlarge scope by including regional entity thermal power plants

"The revised mechanism will also enlarge the scope of the present mechanism by including all the regional entity thermal power plants and subsequently all the intra-state thermal generators," the statement added. It also noted that the revised mechanism will also help the states in maintaining resource adequacy in a cost-effective manner with fewer carbon footprints. "The Day-Ahead National Merit Order Dispatch Mechanism will be implemented by CERC through necessary regulatory process, and it will be operated by GRID –INDIA at the national level," it said.

Existing mechanism

"The existing mechanism of merit order dispatch at real-time was made operational in April 2019. This optimised the total variable cost of generation pan-India while meeting technical and grid security constraints. The existing mechanism resulted in the reduction of variable cost on the pan-India basis to the tune of Rs 2,300 crores," said the statement. Further, these benefits were being shared with generators and their beneficiaries ultimately reducing the cost of electricity to consumers, it added.

"Since, 2014, the government has added 184.6 GW of additional generation capacity and 1,78,000 ckt kms of transmission line to connect the whole country into one grid, which has transformed the whole country into one integrated electrical system," said the statement. Further, it noted that the Ministry of Power has taken several measures to enhance the competition in the sector with the objective of lowering the cost of electricity to consumers.

(PSU Watch– India's Business News centre that places the spotlight on PSUs, Bureaucracy, Defence and Public Policy is now on Google News. Click here to follow. Also, join PSU Watch Channel in your Telegram. You may also follow us on Twitter here and stay updated.)