The Central Electricity Regulatory Commission (CERC) has recently expanded the ambit of security constrained economic despatch (SCED), a mechanism that facilitates the supply of cheaper electricity based on merit order, and has extended the duration for its implementation. The SCED pilot project was first implemented by the Power System Operation Corporation (POSOCO) in April 2019, covering thermal interstate generating stations (ISGSs) across India. Based on feedback from POSOCO, the CERC extended its implementation until March 31, 2020 and subsequently to May 31, 2020. Now, after taking into account the benefits provided by SCED such as optimising the available resources in the power system and reducing system costs, the commission has decided to continue SCED implementation till March 2021 and expand its ambit by including more generators.
Benefits so far
About 52 coal- and lignite-based ISGSs, consisting of 135 generating units with a total installed capacity of 58,060 MW, participated in the pilot during April-December 2019 as per a feedback report submitted by POSOCO. The average system marginal price (SMP) during the period stood at 287 paise per unit. Notably, the declared capacity of generating stations participating in SCED was automatically tested based on the SMP without the need for commensurate requisition from the beneficiaries. SCED has significantly eased generators’ operations. There was a 29 per cent decrease in the number of instructions in the injection schedules of participating generators and a 42 per cent decrease in the cumulative megawatt schedule change. A total amount of Rs 17.15 billion was paid to generators for incremental generation on account of SCED, while
Rs 25.60 billion was paid by generators on account of decline in generation due to SCED. Therefore, a fuel cost reduction of about Rs 8.45 billion was achieved for the period April-December 2019, which translates into a reduction of about 3 paise per kWh in the average variable cost of generation during the period. In addition, SCED has helped in the optimisation of generation across the country as pithead generation with lower variable cost is being increased in the western region and eastern region, whereas generation with higher variable cost is being decreased in the southern region and northern region. Further, SCED has resulted in the consolidation of the available spinning reserves of higher variable cost generators.
SCED’s next phase
As per the latest order passed on April 18, 2020, the commission has decided to extend the SCED pilot beyond June 1, 2020, for a further period up to March 31, 2021. During the extended period, the SCED pilot will be open to all generating stations that are willing to participate. These include generating stations owned by the state entities with capabilities to communicate with the regional load despatchcentre (RLDC)/National Load Despatch Centre (NLDC); generating stations with scheduling done by RLDCs; and state generating stations with scheduling, metering, accounting and settlement in place and their scheduling-related information exchange can be enabled through the state load despatchcentre (SLDC) interface with the concerned RLDC/NLDC. The SLDCs will continue to do scheduling for generators while increment/decrement instructions under the SCED will be communicated from NLDC/RLDCs to the respective SLDCs.
Further, generators already participating in the SCED pilot will continue to be a part of it for the extended period. Other generators willing to participate in the extended period will be required to provide a one-time consent for participation in the SCED pilot. Once the consent is communicated to POSOCO, it will be mandatory for the generator to participate in the pilot for a minimum period of one month. Such generators are required to declare their variable charge upfront, similar to the existing SCED generators participating in the pilot. Also, the net savings after adjusting the compensation for part-load operation to generators will be shared among the beneficiaries and participating generators as per the mechanism prescribed by the CERC.
POSOCO has also highlighted the need for further streamlining the scheduling process, especially with the introduction of the real-time market (RTM). As per the CERC, the half-hourly RTM will bring the required flexibility in the system and the introduction of gate closure will provide more certainty in despatch, especially in terms of reserve requirement. The commission expects the stakeholders to use the RTM platform – the buyers for meeting their real-time energy needs and the sellers, including generators having unrequisitioned surplus, for selling their schedulable surplus. SCED is another window of optimisation after the RTM for a particular time block has closed. POSOCO will, therefore, run SCED after gate closure.
Net, net, SCED implementation has shown positive results in the recent past with the utilisation of available cheaper generation, within and across regions, and similar results are expected in the future.
Neha Bhatnagar