CERC Announces Deviation Settlement Mechanism Regulations 2024

Posted On - 2 September, 2024 • By - King Stubb & Kasiva

Introduction

The Central Electricity Regulatory Commission (CERC) has introduced a new regulation, titled the “Central Electricity Regulatory Commission (Deviation Settlement Mechanism and Related Matters) Regulations, 2024,” aimed at ensuring the reliability, security, and stability of India’s power grid.[1] This regulation is designed to manage deviations from the scheduled drawal or injection of electricity by grid-connected entities, which is crucial for maintaining grid discipline. The regulation applies to all grid users, including regional entities and those involved in inter-state electricity transactions, mandating strict adherence to scheduled electricity usage.

Explanation

Key Points of the Regulation

The Deviation Settlement Mechanism (DSM) Regulations, 2024, provide a comprehensive framework for computing and managing deviations, defined as the difference between the actual and scheduled drawal or injection of electricity in a given time block.

  1. Deviation Computation:
    • For electricity sellers, deviation is calculated as the difference between actual injection and scheduled generation.
    • For electricity buyers, it is the difference between actual and scheduled drawal.
    • The regulation recognizes various types of electricity sellers, including those generating from wind, solar, or hybrid sources, as well as municipal solid waste.
  2. Deviation Charges:
    • The regulation introduces a “Normal Rate of Charges for Deviation” (NR), which is determined by the highest value among the weighted average Area Clearing Price (ACP) of the Integrated-Day Ahead Market, the Real-Time Market, or a combination of these markets along with Ancillary Service Charges.
    • The NR reflects the cost incurred in balancing the grid when deviations occur, incentivizing participants to adhere to their schedules.
    • Charges vary based on the extent of deviation and grid frequency. If a deviation is within specified limits and the grid frequency remains within a certain band, the NR is applied. However, higher charges are imposed for deviations beyond these limits or when the grid frequency falls outside the acceptable range.
  3. Special Provisions:
    • The regulation provides special provisions for Run-of-River (RoR) generating stations and municipal solid waste-based stations. In these cases, deviation charges are not directly linked to grid frequency but are based on a percentage of the normal rate or the contract rate.
  4. Ancillary Services:
    • The regulation encourages the use of Ancillary Services, which are additional services deployed by Load Despatch Centres at the national, regional, or state levels to maintain grid stability. These services play a crucial role in managing deviations and ensuring real-time balance between electricity supply and demand.

Implications and Impact

The DSM Regulations, 2024, emphasize the importance of grid discipline by holding participants accountable for deviations from their scheduled electricity usage. The introduction of a robust commercial mechanism for settling deviations is expected to enhance the security and stability of the power grid, thereby reducing the risk of disturbances and blackouts caused by unscheduled power flows. Additionally, by aligning deviation charges with market rates and grid conditions, the regulation promotes efficient market operations, encouraging participants to optimize their electricity usage.

Conclusion

The CERC’s Deviation Settlement Mechanism Regulations, 2024, mark a significant step toward ensuring the stability and reliability of India’s power grid. By establishing clear rules for managing and settling deviations, the regulation aims to promote grid discipline and accountability among all grid-connected entities. The focus on real-time balancing, incentivized through deviation charges and supported by ancillary services, is expected to contribute to the efficient operation of the electricity market. As a result, these regulations will play a vital role in safeguarding the grid against disturbances and ensuring a reliable supply of electricity across the country.

[1] https://www.cercind.gov.in/regulations/192-Noti.pdf