CERC nod for hydropower contracts in GTAM for HPO Compliance

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In a recent ruling, the Central Electricity Regulatory Commission (CERC) has granted approval to the Indian Energy Exchange Limited (IEX) to introduce hydropower contracts in Green Term-Ahead Market (GTAM) on its platform to facilitate the compliance of Hydropower Purchase Obligation (HPO) by obligated entities. The Ministry of Power (MoP) has set a target of 30000 MW hydro capacity addition by 2030. On 8.03.2019, MoP has declared Large Hydro Power Plants (LHPs) with the installed capacity > 25 MW as a renewable energy source. The MoP has also notified Hydro Purchase Obligation (HPO) as a separate category to Non-Solar RPO.

IEX highlighted that the proposed contract will provide a market-based mechanism where hydro surplus and hydro deficit Indian states can trade hydro power and balance their HPO targets. The proposal will also incentivize hydro rich states to develop hydro capacity beyond their own HPO requirements, as otherwise it was even leading to curtailment of offtake.

Additionally, in the proposed hydro GTAM contracts, participants will be able to transact across all time periods, i.e., Intra-day, Day-ahead contingency, Daily and Weekly currently allowed for existing GTAM. With a minimum contract size of 1 MW, hydro GTAM Contracts will see  large hydropower projects (>25 MW) commissioned after 08.03.2019 will be eligible to participate. On the other hand, all the entities which are eligible to procure power through Open Access shall be eligible to participate as a buyer in Hydro GTAM Contracts. A certificate will be issued by the exchange, detailing various trades undertaken by the buyers, which shall be used for meeting their HPO compliance.

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The proposed contract will also enable obligated entities to procure hydro power at competitive prices at the power exchanges, thereby enabling the country to reach its hydro capacity addition targets in the long run, according to IEX.

In accordance with CERC’s directions, IEX carried out stakeholder’s consultation and submitted its point-wise reply to the comments/suggestions given by the stakeholders.

After analysing IEX’s submissions regarding 8 key points — (i) HPO fulfillment through Hydropower contracts in GTAM; (ii) Type of Contracts (iii) Price Discovery Methodology and Matching Rules; (iv) Portfolio Sale by Discoms; (v) Waiver of ISTS charges and losses; (vi) Buying power at RTM to manage variations; (vii) Hydro Energy Certificates; and (viii) Sequence of Curtailment — CERC ruled to approve the proposal of the Petitioner IEX)  to introduce Hydropower Contracts in GTAM subject to compliance of the directions given in this Order.”

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