India has launched a new market segment, Green Day Ahead Market (GDAM), which is expected to result in a progressive move away from power purchase agreement-based contracts towards market-based solutions, allowing India to fulfil its ambitious objective of 450 GW of renewable energy capacity by 2030. As the nodal agency, POSOCO’s National Load Despatch Centre (NLDC) has set up the latest technology and communication infrastructure to facilitate the GDAM.
The launch of GDAM will broaden the green energy market and give competitive pricing signals, as well as provide market players with the opportunity to trade green energy in the most transparent, flexible, competitive, and efficient manner possible. In addition, distribution utilities would be permitted to sell excess renewable energy generated in their territory. The renewable purchase obligation target might potentially be met by directly purchasing green electricity from the power exchange by the obligated entities (distribution utilities, open access customers, and captive power consumers). Non-obligated entities will be able to purchase power on a voluntary basis, assisting in the increase of green power uptake. Other advantages of joining the GDAM include reducing green power curtailment, releasing untapped renewable energy potential, and providing immediate payment to renewable energy generators, that is on the day of delivery.
The GDAM will work alongside the traditional day-ahead market. The exchanges will provide distinct bidding windows for conventional and renewable energy, allowing market participants to submit bids together. Renewable energy bids will be cleared first, based on the renewables’ must-run status, followed by the conventional section. Should their bids in the green market remain unclear, this technique will allow renewable energy suppliers to bid in the conventional segment. Both conventional and renewable energy will have their own price discovery. According to exchange reports, the Green Term Ahead Market (GTAM), which has been the precursor to the GDAM market so far, has been a success, with power exchange of 2,744 million units (MU) of trading in the first year.
REGlobal’s Views: Renewable power trading allows developers and consumers to sell and source clean power respectively at competitive prices without having to go through traditional power purchase agreement set up. Further, this helps create a more transparent market-based mechanism that is not biased towards any stakeholder.