Green Day Ahead Market

(Petition no. 187/MP/2016)

CERC Hearing I December 1, 2016

Brief Introduction

• IEX since last 8 years has been successfully operating markets in:

– Day Ahead Market (DAM) [based on collective transactions]

– Term Ahead Market (TAM) [based on bilateral transactions]

– Renewable Energy Certificate Market [REC]

• IEX Proposes a new product ‘Green Day Ahead Market’ (G-DAM) on its platformthrough present Petition.

• Regulation 6 of PMR allows Exchanges to introduce new contracts after permissionfrom Hon’ble Commission

Part - 3 Approval / Suspension of the Contracts by the Commission

6. The Commission may, on an application made in this behalf, permit any Exchange to introduce such contracts as

specified in Part 2 of these Regulations for transacting on the Exchange.

…………………………

7. (1) An Exchange seeking permission under Regulation 6 shall submit to the Commission the complete and detailed

contract specifications.

…………………………….”

Background

• GoI has set an ambitious target of 175GW of installed RE capacity by the year 2022

– Target comprises: 100 GW solar capacity & 60 GW wind capacity

– 130GW will be installed within a period of 6 years

– capacity will potentially be installed in RE rich States

– States may not be able to absorb all RE generation by themselves due tovarious factors (cost/technical issues etc.)

• RE deficient States/ Obligated Entities are potential buyers for such power whohave to fulfill their RPOs.

• Presently RE transactions are executed through preferential tariff route or RECroute or third party route which are mostly confined within the State.

National Level Exchange based market exclusive for renewable energy willprovide competitive avenue to RE buyers/sellers.

Background

• Hon’ble Commission has already notified amendments to DSM Regulations tofacilitate integration of renewable energy which is infirm in nature, with the grid.

• As per new CERC DSM Regulations, Aug2015:

Settlement of RE power as per schedule (not on actual)

Deviation settlement of grey energy deviation through a pool (UI)

Deviation in green attribute settled through RECs

Revision in Schedule allowed subject to maximum 16 in a day

Revisions of collective transactions not allowed as per Hon’ble CommissionIEGC Regulations, 2010 and amendments thereof.

Enabling regulatory framework has made it possible for Exchangeto launch contracts for Renewable Energy transactions.

Proposed GDAM

• IEX Petition seeks approval for introducing Green Day AheadMarket (G-DAM) exclusive for trading of Renewable Energy(power + green attributes) comprising:– Solar Contracts

– Non-Solar Contracts

• Functioning of G-DAM will be on similar lines with existing DAM

• Buyers in this market will be eligible for respective RPOcompliance.

Green Day Ahead Market (G-DAM)

Proposed Framework• Green Day-ahead Market (G-DAM) to be similar to DAM

• Based on principle of Collective Transaction – Solar & Non Solar Contracts

• Must run status of RE to be adhered to. In order to facilitate evacuation of entire power ofRE Sellers, the Exchange proposes to provide a window to RE Sellers/buyers to bidunsuccessful quantum from G-DAM in DAM .

• For quantum sold in DAM market, RE Seller to get Area Clearing Price (ACP) of DAM +equivalent amount of RECs

• Deviation Settlement as per Applicable Regulatory Framework

• No revisions in the collective schedule as per IEGC Regulations

GDAM

0800-0900 HrsGreen Power Cleared Green electricity at bundled

price to meet RPO

DAM

1200-1400 HrsCleared

Electricity at DAM MCP +

Tradable RECs

If unsold

G-DAM – Eligibility

Sellers

– RE sellers connected at CTU

– Embedded RE sellers situated in State where SERC has adopted framework on theline of CERC framework

– Merchant green power capacity

– Eligibility of RE sellers shall be ascertained at the time of registration at theExchange based on NOC/Standing clearance issued by RLDC/SLDC, as applicable.

Buyers

– Entities eligible to procure power through open access

– Buyers will be eligible to participate in the G-DAM based on the same NoC issuedfor DAM/Intra-Day market by SLDC.

G-DAM – Broad Features

• Price Discovery methodology:

– Uniform market clearing price for all buyers and sellers who are cleared.

• Delivery:

– Next day (T+1) from 0000 Hrs to 2400 Hrs in 96 separate 15 min time blocks.

• Delivery Point:

– At Regional Periphery.

• Transmission Congestion management:

• As per existing practice of market splitting in Electricity Day Ahead Market.

• Deviation Settlement Mechanism:

– As per applicable Regulations notified by Appropriate Commission.

• Risk Management:

• As per existing practice of Electricity Day Ahead Market.

• Allocation of Available Transmission Capability (ATC) by NLDC:

– As per availability of ATC at the time of Request.

– Pro-rata basis between the two Exchanges.

– Solar to be given priority followed by Non-Solar or as may be decided by the Hon’bleCommission.

G-DAM: Potential Benefits

• Another avenue for green generators to sell power

• Encourage new green capacity without relying on Discoms to sign PPAs

• Competitive prices

• Buyers can purchase as and when they need obviating the need to tie up capacity inadvance

• Easy settlement of deviations

• High certainty of being cleared as liquid DAM is available as fallback if volume notcleared in G-DAM.

• Discoms preference of buying green power over REC is addressed.

• RE rich States can sell RE power to RE deficit States.

• RE generators under preferential tariff in States having excess wind/solar power arebeing curtailed due to Discoms’ inability to pay and also many RE generators arefinancially stressed due to abnormal delay in payments. Such generators will now beable to sell power in the market.

• Small participants (Open Access Consumers & Captive Generators) can buy green powerto meet their RPO.

Proposed GDAM and DAM timelines

• Final clearing of GDAM is proposed to be completed by 11.30 AM

• To accommodate unsuccessful bids of G-DAM, it is proposed toshift existing DAM trading window by 2 hour i.e. from 10 -12 AMto 12-2 PM to allow unsuccessful G-DAM participants to placetheir bids in DAM.

• Consequently, DAM timelines will be stretched by 2.5 hrs.

PROPOSED G-DAM & DAM TIMELINES

Amendments required in existing Regulations and Procedures

• CERC REC Regulations 2010:– Exception required for GDAM market regarding issuance of RECs to

participants on Exchange.• As per CERC REC Regulations, a RE Generator shall be eligible for issuance of RECs

if it sells the electricity through power exchange at market determined price.

• Procedure of scheduling of Collective Transactions:– Timelines of various activities related to scheduling of power traded in

Day Ahead Market of Power Exchanges need to be revisited.

• Hon’ble Commission is urged to specifically hold that the RE power

bought under G-DAM shall be eligible for RPO compliance of

obligated entities.

Hon’ble Commission may modify/amend any other Regulations/Procedure as it may deem fit to enable introduction of Green Contracts on Exchange platform

Amendments in IEX Rules, Business Rules & Bye Laws

• Hon’ble Commission may grant in-principle approval

• IEX shall submit amended Rules, Business Rules andBye Laws of the Exchange and contract specificationsfor approval in due course of time as may be directedby the Hon’ble Commission

Best Power Exchange in India – Enertia Awards ’14, ’13 &’12 – India Power Award 2014 – Power Business View 2014

Inc India Innovative 100 Award for ‘Innovation in Product and Technology’

Best Performing Power Exchange –Power Line Awards ’13 & ‘12

Best E-enabled consumer platform –India Power Awards ‘09

Thank You for your attentionwww.iexindia.com

PROPOSED G-DAM & DAM TIMELINES

S. No. SESSIONS G-DAM EXISTING DAM PROPOSED DAM

1. Bid - Call session 08.00 AM -09.00 AM 10.00AM-12.00 PM 12.00 PM – 02.00 PM

2. Determination of MCP/MCV By 09.30 AM By 12:20 PM By 02:30 PM

3 Publish of Provisional Obligation By 09.45 AM By 1.00 PM By 02:45 PM

4. Request of ATC to NLDC, Request for

confirmation from bank on availability

of funds

By 10.00 AM By 1.00 PM By 3.00 PM

5. NLDC Exception for scheduling, Receipt

of confirmation from bank on

availability of funds

By 10.45 AM By 2.00 PM By 4.00 PM

6. Determination of ACP/ACV By 11.15 AM By 2.30 PM By 4.30 PM

7. Publish of Final Obligation By 11.30 AM By 2.45 PM By 5.00 PM

8. Submission of Application for

scheduling to NLDCBy 12.00 PM By 3.00 PM By 05.30 PM

9. NLDC sends scheduling request to

RLDCsBy 1.00 PM By 4.00 PM By 06.30 PM

10. RLDC acceptance of scheduling to NLDC By 1.30 PM By 5.00 PM By 07.00 PM

11. NLDC conveys acceptance of scheduling

to ExchangeBy 2.00 PM By 5.30 PM By 07.15 PM

12 Funds and Margin Pay In By 5.30 PM By 3.00 PM By 05.30 PM

Proposed timelines are indicative and flexible to revision based on NLDC feedback and advice of the Hon’ble Commission Back

Proposed GDAM and DAM interface

GDAM8.00 – 9.00 AM

RE Seller(Solar/Non-Solar)

Bid submission

Scheduled as RE Power @11.30AM

(Power + green attributes)

Successful Bid

DAM12.00 – 2.00 PM

Un-Successful Bid of G-DAM submission in

DAM

Scheduled as Conventional

Power @5.30PM

Clear Bid

Issuance of RECs equivalent to

scheduled power by Central Agency