Coming soon: Countrywide uniform power grid with one price

There’s yet another one-India mega-project coming soon: one nation, one grid, one frequency and one price in power supply. Since the NDA government came to power in 2014, it has implemented one nation and one tax (GST), one nation, one ration card. The latest aims at a single source of power supply.

The Union Power Ministry circulated a discussion paper on June 1. The last date for providing comments is June 30. The Union government wants to implement the first phase of the Market-based Economic Dispatch of Electricity (MBED) from April 1, 2022.

“The discussion paper covers the proposed mechanism for implementation, estimation of the indicative benefits of the mechanism, key issues and suggested mitigation mechanisms and the proposed way forward,” said a Union Power Ministry release.

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The ministry intends to hold wider consultation with all stakeholders to arrive at a consensus on implementing Phase 1 of MBED from April next year.

“The MBED will ensure that the cheapest generating resources across the country are dispatched to meet the overall system demand and will thus be a win-win for both the distribution companies and the generators. It will ultimately result in estimated annual savings in excess of ₹12,000 crore for the consumers,” said the ministry.

MBED will also facilitate larger integration of variable renewable energy by enlarging the balancing area to the national level and is also expected to optimize the need for reserves and ancillary services, the ministry said.

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It has been suggested to implement MBED in phases. Phase-1 would involve only the thermal fleet of Central generating stations to test the efficacy of the MBED mechanism, identify deficiencies or potential issues that need to be addressed prior to a nationwide rollout, and familiarize all key stakeholders with the framework. It will help in allowing necessary infrastructure and systems to be built and tested before the scale-up.

The full benefit of physical integration would be realizable when India transits to an optimization at the national level and a country-wide balancing area instead of the siloed self-scheduling and balancing mechanisms currently followed within state or regional boundaries.

The next step in reforming electricity market operations is to implement MBED in moving towards a “one nation, one grid, one frequency, one price” framework.