Power exchanges fail on delivery due to grid congestion

Indian Energy Exchange (IEX) and Power Exchange of India (PXIL) is unable to deliver a considerable amount of its traded volume due to grid congestion. MK Dey, chairman, West Bengal State Electricity Distribution, told that there was frequent clogging in the flow of traded power, due to which distribution companies buying power from exchanges had to lose money.

While IEX's traded power costs between Rs 1 and Rs 13.90 per unit, PXIL's traded power costs between Rs 2.50 and Rs 12.50 per unit.

Although the Central Electricity Regulatory Commission (CERC) has been estimating the loss in units, it has not made any value wise assessment of the loss. There is also no mechanism to compensate the utilities of the loss being made for failure in delivery of the traded power, Dey said.

According to CERC estimates, an average of 18 million units of the average 615 million units traded every month by the two exchanges .In June, IEX failed to deliver 11.26 million units and PXIL 6.80 million units till date, comprising 6% of the total electricity traded by IEX and 8% of the total electricity traded by PXIL till June 21.

The demand for transmission has exceeded transfer capacity and the two power exchanges' hourly time blocks are not proving sufficient to transmit the volume of power being traded everyday. For power transmission, long term purchases gets the first preference followed by medium term purchases, whose contract period vary between a week and three months. Then day ahead buyers get preference only after which power exchanges can make hourly time blocks of corridors.

According to CERC estimates, an average 34.5% of IEX's and PXIL's hourly time block is subject to congestion, for which there is failure in transmitting the sanctioned power.

According to Dey, for trading only 2-3% of the total power currently transacted in India, a single power exchange would have been enough. “All the countries except India has a single power exchange and the Nord Pool power exchange at Oslo in Norway serves seven countries – Norway, Sweden, Denmark, Finland, Germany, Poland and the Netherlands. So India could have done with one power exchange, which could have been provided with better support infrastructure," Dey said.