CERC Implements New Deviation Settlement Mechanism Regulations 2024 To Enhance Grid Stability

Posted On - 7 October, 2024 • By - King Stubb & Kasiva

Introduction

The Central Electricity Regulatory Commission (CERC) of India has introduced the Deviation Settlement Mechanism and Related Matters Regulations, 2024.[1] This new regulatory framework aims to bolster grid stability by establishing a commercial mechanism to discourage deviations from planned electricity drawl and injection schedules. The regulations are applicable to all entities connected to the interstate transmission system, including regional entities and those engaged in interstate electricity trading.

Explanation (Key Points)

  • Adherence to Schedule and Deviation: The regulations focus on the criticality of adhering to schedules as stipulated in the Grid Code for maintaining a secure and stable grid. Deviations are primarily addressed through the deployment of Ancillary Services, and the regulations provide a comprehensive regime for computing, charging, and managing such deviations.
  • Computation of Deviation: The regulations define distinct formulas for calculating deviations for various categories of sellers, including general sellers, wind and solar (WS) sellers, and buyers. These calculations take into account factors such as actual injection/drawl, scheduled generation/drawl, and available capacity, ensuring a precise assessment of deviations.
  • Normal Rate of Charges for Deviations: The Normal Rate (NR) of charges for deviation is determined for each time block based on the highest of three values: the weighted average Area Clearing Price (ACP) in the Integrated Day-Ahead Market, the weighted average ACP in the Real-Time Market, or a calculated sum incorporating ACPs and Ancillary Service Charges. This approach ensures that deviation charges reflect the prevailing market conditions and the cost of maintaining grid stability.
  • Charges for Deviation: The regulations provide a detailed breakdown of charges for deviation under various scenarios, including over-injection and under-injection by different types of sellers (general, Run-of-River (RoR), Municipal Solid Waste (MSW), WS) and over-drawal and under-drawal by buyers. These charges are influenced by factors such as the extent of deviation, grid frequency, and volume limits, creating a dynamic pricing mechanism that incentivizes adherence to schedules.
  • Deviation and Ancillary Service Pool Account: A dedicated account, the Deviation and Ancillary Service Pool Account, is maintained by the Regional Load Despatch Centre. This account receives credits from deviation charges and payments and is debited for payments to sellers/buyers and Ancillary Service costs. This mechanism ensures transparent financial management of deviation-related transactions.
  • Schedule of Payment and Power to Relax: The regulations define clear timelines for the payment of deviation charges, incorporating provisions for late payment surcharges and Letters of Credit to ensure timely settlement. Additionally, the Commission retains the authority to relax specific provisions or address any difficulties arising during the implementation of these regulations, providing flexibility in exceptional circumstances.
  • Additional Provisions: The regulations also include provisions for infirm power, start-up power, cross-border transactions, forced outages, and other specific scenarios, ensuring comprehensive coverage of deviation-related matters.

Conclusion

The CERC’s Deviation Settlement Mechanism and Related Matters Regulations, 2024, signify a proactive approach towards enhancing grid stability in India. By implementing a market-based mechanism that discourages deviations from planned schedules, these regulations aim to create a more reliable and secure power system. The detailed provisions for different seller and buyer categories, along with the flexibility for adjustments, demonstrate a balanced and adaptable framework that is expected to contribute significantly to the stability and efficiency of India’s electricity grid.

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