Growing Role: Status of forecasting, scheduling and DSM regulations in India

India is rapidly expanding its renewable energy portfolio to achieve its ambitious goal of 500 GW of non-fossil-fuel-based energy by 2030 and net zero emissions by 2070. As the proportion of clean energy is increasing significantly in In­dia’s en­ergy mix, there is a need to develop and introduce regulations for forecasting and scheduling, as well as a deviation settlement mechanism (DSM) for renewable energy sour­c­es such as solar and wind. In recent yea­rs, the Central Electri­city Regulatory Co­mmission (CERC) and various state electricity regulatory commissions (SERCs) have issued guidelines for forecasting in the industry. These help regulate the am­ount of electricity injected into the grid and provide a system to penalise po­wer plants for deviating from scheduled generation beyond a specific limit.

Under these regulations, renewable en­ergy producers are required to predict and set a generation schedule to their respective load despatch centres, which can be modified as needed. This is particularly crucial in states that experience extreme weather conditions and have a high proportion of renewable energy de­ployment. As per a CEEW report, su­ch risks are particularly alarming in states such as Ta­mil Nadu and Rajas­than, whi­ch have ex­perienced wind energy curtailment of up to 50 per cent and 45 per cent respectively.

Moreover, there are several other factors that make forecasting and scheduling a key need in the clean energy sector. First, due to the inherently intermittent nature of renewable energy, forecasting and scheduling of power are essential for maintaining grid stability and, in turn, ensuring the safety of the electricity grid. If power producers generate mo­re energy than the grid can handle, the excess power must be curtailed to maintain grid stability. Fo­recasting and sche­duling can help in this regard by ensuring that all renewable energy produced is effectively utilised as per the grid’s demand. Accurate and real-time assessment can also help mitigate congestion issues in the grid. Moreover, grid outages can be avoided if errors in re­­newable en­ergy forecasting are minimi­sed. Many discoms can efficiently me­et their rene­wable purchase obligatio­ns with accurate forecasting. Forecas­ting and scheduling can also address several ope­ra­tional and managerial issues faced by power producers and discoms. It can he­lp in better revenue realisation as dynamic tariffs encourage the moveme­nt towar­ds cost-reflective tariffs.

CERC Regulations

The CERC introduced the Deviation Se­ttle­ment Mechanism Regulations in 2014, defining a market mechanism for holding generation companies accountable for their power supply commitme­nts. The re­gulations were implemented to encourage and maintain greater grid stability and discipline on the part of po­wer producers and ensure that they ad­here to their specified targets as much as possible. Since the release of the regulations, the CERC has introduced five am­en­d­ments. In October 2015, the For­um of Re­gu­lators (FoR) also published mo­del regulations regarding DSM to be adopted by states for renewable energy plants. The re­gulations recommend that all rene­w­able energy generators forecast and sub­mit th­eir generation schedule on a day-ahead ba­­sis, either independ­ently or th­rough a qua­lified coordinating agency (QCA), whi­ch will form the basis for commercial settlement.

On March 14, 2022 the CERC Deviation Se­­tt­lement Mechanism Regulations, 2022, were notified. The regulations ca­me into ef­f­ect in December 2022, which re­­pe­a­led the earlier DSM. As per the DSM, 2022, de­vi­ation charges are to be delin­k­ed from the sy­stem frequency. Re­cently, in Febru­ary 2023, the CERC issu­ed new guidelines to supplement the DSM Regu­lations, 2022 to maintain grid security. The commission added a new category of wind-solar generators and introduced ch­arges for DSM. It also hiked monetary incentives for both ge­nerators and procurers to maintain the grid frequency in the safe range of 49.95-50.05 Hz.

State regulations

Since 2016, over 20 SERCs of Andhra Pra­­­desh, Assam, Bihar, Chhattisgarh, Gu­­­ja­rat, Haryana, Jharkhand, Karna­ta­ka, Ma­­dh­ya Pradesh, Maharashtra, Ma­ni­pur, Meghalaya, Mizoram, Punjab, Ra­jasthan, Sikkim, Tamil Nadu, Telangana, Tripura and Uttar Pradesh – have issued the final forecasting and scheduling regulations. the SERCs of Delhi, Odisha, Ut­tarakhand and West Bengal have issued draft forecasting and scheduling regulations. The­se regulations set a permissible limit for de­viating from the decided generation. This mechanism is called DSM. A QCA is also a key player, which, on behalf of the de­veloper, forecasts and declares day-ahead and week-ahead renewable power generation for each generating station.

At present, there is ambiguity in the DSM regulations across states as there is no standardised permissible error band for deviation established across the country. Most states allow a permissible error of ± 15 per cent, within which pe­nalties for de­viation do not apply. How­ever, a few states such as Haryana, Tamil Nadu and Tripura have a narrower range for error of only ± 10 per cent, which poses a significant challenge for many green power producers.

Despite technological advancements and regulatory support, achieving this error band is not always possible. In con­trast, Madhya Pradesh has introduced a ± 10 per cent error band while also maintaining a separate range of ± 15 per cent for stations that were commissioned before the notification of regulations. Fu­r­the­r­mo­re, in August 2022, the Karnataka Elec­tricity Regulatory Com­mi­ssion (KERC) issued the draft KERC (Fore­ca­s­ting, Sc­he­duling, Deviation Set­tlement and Re­la­ted Matters for Wind and Solar Ge­ner­a­tion Sources) (First Am­endment) Regula­tions, 2022. The draft proposes a change in the permissible deviation for all wind and solar projects at ± 10 per cent, as compared to the present permissible deviation of ± 15 per cent.


The DSM regulations can be discouraging for renewable power producers as they po­se a risk of revenue loss, particularly in states where deviation settleme­nt charges are relatively high. These co­sts may be factored into the tariffs by producers in potential renewable energy au­ctions. On the de­mand side, India’s complex grid system often experiences load shedding, high frequency variation, low voltages and high line losses, making assessment of power demand a tremendous challenge. Some challenges continue to exist in terms of uncertainty in wea­ther forecasts for wind and solar generation. Moreover, building the capacity to transfer real-time information throug­h­out the power supply circuit remains a key challenge, as it is necessary for power producers to modify their earlier predicted ge­neration level in a timely fashion. Grid operators and technical workforces need to be trained and kept up to date with new technologies and developme­nts in the foreca­sting space. Trans­for­ming existing and up­coming electricity grids into smart girds would also play a pivotal role in enhancing data transmission, which would help in the timely initiation of solutions in case of possibilities of deviation.

Recently, the CERC also indicated irregularities with reference to adherence to DSM Regulations, 2022. Grid-connected entities show­ed a tendency to oversc­he­dule in order to avoid payment of deviation ch­ar­ges for overwithdrawal or un­derinjection. Conse­qu­ently, the system frequency has remain­ed high for a significant period of time, with generators showing a tendency for over-injection and discoms, under-drawing.

The way forward

Accurate forecasting and scheduling are increasingly important for ensuring grid stability in the expanding renewable en­ergy sector. Advanced methods are nee­d­ed to reduce the need for reserves, im­prove pri­ce discovery, and improve flexibility in el­ec­tricity generation and tra­nsmission. Tech­nological advancements across the chain of key elements regarding generation forecasting are important. These in­clude forecasting of weather, winds, sunli­ght, etc., as accura­tely as possible. It is also important to establish uniformity ac­ross states in ter­ms of penalty slabs under forecasting, sc­­he­duling and DSM regulations to ensure regulatory consistency. Fore­casting may be challenging for new projects due to a lack of historical data. Allo­wing the aggregation of forecasts and deviation settlement at the boundary could im­p­ro­ve day-ahead forecasting ac­­c­uracy and aid planning at the discom end. Currently, this is permitted only in Ka­r­nataka and Andhra Pradesh. To redu­ce the cost burden of DSM charges and ea­se pressure on renewable power generators, grid-scale battery energy storage sys­tems could be implemented in wind-rich states to prevent curtailment during congestion. Further, new business models could emerge that incorporate up­coming and advanced storage technologies such as green hydrogen.

By Kasvi Singh