1. 1 FREQUENCY LINKED DISPATCH AND ELECTRICITY PRICING (An unconventional approach for tackling the peculiar problems existing in India) - Bhanu Bhushan - Director (Operations) Power Grid Corporation of India Ltd. (The Central Transmission Utility)

2. 2 BACKGROUND (situation upto early 2002) Deplorable state of regional grid operation Uncontrolled frequency fluctuations, from below 48.0 Hz to above 52.0 Hz. Uncontrolled frequency fluctuations, from below 48.0 Hz to above 52.0 Hz. Voltages beyond permissible limits Voltages beyond permissible limits Frequent grid disturbances Frequent grid disturbances Lack of optimization in generation Lack of optimization in generation (merit – order compromised) Unchecked deviations from schedules Unchecked deviations from schedules Perpetual operational and commercial disputes between utilities Perpetual operational and commercial disputes between utilities

3. 3 MAIN REASONS : Shortage and poor availability of generating capacity extensive (but inadequate) load curtailment, particularly during peak load hours. Shortage and poor availability of generating capacity extensive (but inadequate) load curtailment, particularly during peak load hours. Reluctance to back down generation during off-peak hours, due to faulty bulk power tariff structure (single-part, constant paise / kWh) Reluctance to back down generation during off-peak hours, due to faulty bulk power tariff structure (single-part, constant paise / kWh) Inadequate reactive compensation at load end Inadequate reactive compensation at load end Blocked governors Blocked governors Gaps in understanding of the subject, and a lack of consensus on how to tackle the problem. Gaps in understanding of the subject, and a lack of consensus on how to tackle the problem.

4. 4 Federal democracy : Tussle between Central Government organisations and State Government- owned vertically integrated utilities Federal democracy : Tussle between Central Government organisations and State Government- owned vertically integrated utilities Lack of load dispatch and communication facilities to apply conventional load-frequency control, tie-line bias, control area concepts, etc. Lack of load dispatch and communication facilities to apply conventional load-frequency control, tie-line bias, control area concepts, etc. A structured study in 1993-94 by M/s. ECC of USA, sponsored by World Bank/Asian Development Bank AVAILABILITY TARIFF AVAILABILITY TARIFF Implementation started in 2002

5. 5 Components of Availability Tariff (a)Capacity Charge : for payment of fixed cost (b)Energy Charge : for payment of variable cost (c)Unscheduled Interchange : adjustment for deviations (a) is a function of ex-bus MW capability of the power plant for the day declared in advance, paid by beneficiaries their respective % share in the plant (b)= MWh for the day as per ex-bus drawal schedule for the beneficiary finalized in advance x Energy charge rate for the Plant (c)= Σ [( Actual energy interchange in a 15- minutes time block scheduled interchange for the time block) x UI rate for the time block ] Total Payment for the day = (a) + (b) + (c)

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9. 9 Frequency Profile of SR

10. 10 Frequency Profile of ER FREQUENCY CURVE 6th June02 6th June03 47.00 48.00 49.00 50.00 51.00 52.00 53.00 000102030405060708091011121314151617181920212223 Time (Hrs.) Frqe (Hz.)

11. 11 IMPROVEMENTS BROUGHT ABOUT Generation being maximized during peak-load hours : Generation being maximized during peak-load hours : more consumer load being met. Generation being backed down during off-peak hours, and according to merit-order Generation being backed down during off-peak hours, and according to merit-order Overdrawals being curtailed by SEBs, on their own : Overdrawals being curtailed by SEBs, on their own : Karnataka has shifted about 1000 MW load from peak load hours to off-peak. load hours to off-peak. Dramatic improvement in frequency: Karnataka farmers can manage with fewer hours of supply. Dramatic improvement in frequency: Karnataka farmers can manage with fewer hours of supply. Voltages improved ; Transmission losses reduced; Voltages improved ; Transmission losses reduced; Transmission capacity increased. Transmission capacity increased.

12. 12 Automatic under-frequency load shedding restored : Automatic under-frequency load shedding restored : grid security improved. grid security improved. Power plants performance improved, trippings and Power plants performance improved, trippings and long-term damage reduced. long-term damage reduced. Commercial and operational disputes resolved. Commercial and operational disputes resolved. Autonomy to utilities (within the framework). Autonomy to utilities (within the framework). Shares/allocations now have a meaning. Shares/allocations now have a meaning. Framework for bilateral trading established at inter- State level Framework for bilateral trading established at inter- State level

13. 13 Formal scheduling process in place Formal scheduling process in place Optimized use of hydro resources, including pumped storage. Optimized use of hydro resources, including pumped storage. Common pricing signal through frequency : true free-market in electricity established. Common pricing signal through frequency : true free-market in electricity established. IPPs being scheduled according to their tariff. IPPs being scheduled according to their tariff. High demands met through UI mechanism, e.g. World Cup Final on 23.03.2003. High demands met through UI mechanism, e.g. World Cup Final on 23.03.2003.

14. 14 Drawal schedule = x Actual drawal = y UI = y – x x at normal price (y - x) at frequency - linked price linked price

15. 15 Frequency is low when total available generation in the grid is insufficient to meet the demand. High price of overdrawal encourages the States to curtail their drawal by Maximising own generation Maximising own generation Curtailing consumer load Curtailing consumer load Harnessing costlier generation Harnessing costlier generation Also, under-drawal pays.

16. 16 Frequency is high when total generation in the grid is more than the total consumer load. Low price of overdrawal encourages States to increase their drawal by Reducing own generation Reducing own generation Shifting consumer load to off-peak hours Shifting consumer load to off-peak hours Costlier energy replaced by cheaper energy

17. 17 UNDERLYING PHILOSOPHY Interchange schedules are to serve as operational and commercial datum, but deviations are allowed / encouraged Interchange schedules are to serve as operational and commercial datum, but deviations are allowed / encouraged Frequency allowed to float : no attempt to bring it back to 50.0 Hz. Frequency allowed to float : no attempt to bring it back to 50.0 Hz. Frequency-linked dispatch of generation Frequency-linked dispatch of generation

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19. 19 OTHER ADVANTAGES Autonomy and flexibility to utilities/partipants Autonomy and flexibility to utilities/partipants Framework for harnessing Captive and Co- generation, non-conventional, pumped hydro. Framework for harnessing Captive and Co- generation, non-conventional, pumped hydro. Telemetering, computing, telecontrol, communication and data transmission are no longer critical Telemetering, computing, telecontrol, communication and data transmission are no longer critical

20. 20 Thank You