1. Health of Distribution Sector
November 27th, 2018

2. Agenda IEX Introduction Recent Market Trends
SMART procurement/sell options
Way Forward

3. Company Snapshot Market Share: 97% Average daily trade: 6000 MW+
High Participation: 6200+
4000+ Industries I 55 Discoms (All) I 100+ ESCert Entities
400+ Generators I RE Generators & Obligated entities
Transparency
Liquidity
Competition
Market Share-FY 18 (DAM & TAM) | Average Daily Trade- FY18
Market Share-FY 18 (DAM & TAM) | Average Daily Trade- FY18

4. IEX Market Segments Day-Ahead Market Delivery for next day
since June,08
Delivery for next day
Price discovery: Closed , Double-sided Auction
Intraday Market & Day-Ahead Contingency
Round the clock since Jul’15
Intraday: For Delivery within the same day
Day Ahead Contingency: Another window for next day
Gate closure : 3 hours
Term-Ahead Contracts since Sep’09
For delivery up to 11 days
Daily Contracts, Weekly Contracts
Renewable Energy Certificates
since Feb’11
Green Attributes as Certificates
Sellers : RE generators not under feed in tariffs
Buyers: Obligated entities; 1MWh equivalent to 1 REC
Energy Saving Certificates
since 27th Sept’17
1 ESCert = 1 mtoe (metric Tonne of Oil Equivalent)
Trading Session on every Tuesday of the Week
Trading time 1300 hrs to 1500 hrs
Auction
Continuous

5. DAM Market Snapshot 28 Sep 2018

6. Demand Supply Curve Date: 03-Oct-2018 | 03:45-04:00 | MCP: Rs 4349
Demand Supply Curve Date: 03-Oct-2018 | 03:45-04:00 | MCP: Rs /MWh

7. Demand Supply Curve Date: 03-Oct-2018 | 19:15-19:30 | MCP: Rs 18000
Demand Supply Curve Date: 03-Oct-2018 | 19:15-19:30 | MCP: Rs /MWh

8. Day Ahead Market Volume trend for October 2018

9. Day Ahead Market Volume trend (April –November’ 18)
* Up till 25th November, 2018

10. IEX Monthly Average Price (Rs./kWh) Trend for UP
FY Avg. RTC Price: Rs 2.58/kWh
FY Avg. RTC Price: Rs 3.26/kWh
FY18-19 Avg. RTC Price: Rs 4.27/kWh
Data as on 19th Nov 2018

11. High prices/volume in Recent months – Sept/Oct
Major Buyer:
85% buy volume from Discom. Almost all discoms from West (except MP), South (except Karnataka) & East (except Jharkhand & Sikkim).
Maharashtra (upto 65 MUs)   I  Gujarat (Upto 60 MUs)  I  Bihar : (32 MUs) 
I West Bengal ( upto 31 MUs)  I  DVC (upto 12 MUs)  I  AP (upto 12 MUs)
I Tamil Nadu (upto 35 MUs)   I  Telangana (Upto 16 MUs)
State-Wise Energy Met Comparison-October Y-O-Y
State
% Change
Telangana
46%
Karnataka
31%
Andhra Pradesh
27%
Maharashtra
26%
Odisha
16%
Gujarat
Source: CEA
*Data for October has been taken from NLDC

12. Increase in Price in FY 2018-19
Overall increase in peak demand by 7.9% during Apr-Oct 2018 over last year. Highest ever peak demand of 177 GW recorded in September’18.
Overall energy met increased by 7% in H over same period last year. Demand increase in October 18 by 10.3% over last year.
Traditionally buying at Power Exchange increases in Sep & Oct months due less availability with state Discoms.
Demand increase in IEX is around 20-30%, which means Discoms are relying more on exchange because of flexibility and competitive price discovery.
Wind generation in Oct 18 dropped by 57% as compared to Sep 18.
Buy bids from all Major Discoms like Tamil Nadu, Gujarat, Maharashtra, Bihar, West Bengal, J&K, Telangana, & AP have significantly increased.
Coal shortage continues and E-Auction prices are very high (100% increase over notified price). Steep Increase in USD and high imported coal cost has also adversely impacted generation cost.

13. Coal Dispatch Details Overall Coal Off take (MT) Apr-Oct'16 Apr-Oct'17
Growth (‘17-’18)
CIL
292.15
317.31
340.8
7.40%
SCCL
31.21
35.05
36.93
5.36%
Total
323.36
352.36
377.73
7.2%
CIL E-auction (MT) (Spot and Special Froward)
Apr-Sep'16
Apr-Sep'17
Apr-Sep’18
24.96
43.4
38.1
-12.35%
Increase over notified price (Spot)
19.82%
49%
88%
E-Auction quantity has come down resulting into high Auction prices

14. ‘SMART’ Options with Distribution Companies14
‘SMART’ Options with Distribution Companies
SMART
CONTRACTING
SMART
PROCUREMENT
Ensuring ideal mix of long term and short term power purchase arrangements to manage fixed cost and manage availability of supply
On a day to day basis- managing demand of the area by utilizing cheaper short term sources by replacing power from high variable cost plants and ensuring MERIT order based dispatch

15. Option with the Discoms: Utilising Exchange Market
Two ways in which short term market can assist Discoms:
Meeting demand shortfalls or selling surplus at the Exchange
Discoms should tie-up PPA only to manage their base demand
Many Discoms have tied PPAs to meet their peak demand as well. The Discoms have to pay the capacity charge for this quantum even in the off peak time.
So for optimum utilisation, Long Term PPA should be only for base demand and remaining energy (for peak and variations in forecast) should be bought through other available market options.
Optimising the available energy by scheduling based on merit order including Exchange prices
Scheduling of power to be done on merit order basis after including the prices available at the Exchange

16. Way Forward: Mitigating Threats16
Way Forward: Mitigating Threats
BASE LOAD THROUGH LONG TERM AND VARIATION THROUGH POWER EXCHANGE
Discoms should sign PPA for the base demand only
Discoms in past contracted long term power on the basis of peak demand, as a result, many of the states landed up having surplus capacity during 6-7 months in a year, paying capacity charge without utilizing the power.
Seasonal variations and peak should be arranged through the Power Exchange to save on capacity charges and improve portfolio management.
Month

17. Smart Contracting- Ideal mix LT17
Smart Contracting- Ideal mix LT
Methodology -Long term PPA for 80% of total energy demand
Draw load curve for a state (indicating demand met in MW for each hour of the year),
Estimate the demand met in MW that corresponds to meeting 80% of total energy demand over the year
Estimate total capacity required to meet baseload demand by applying an average Plant Load Factor (PLF) to the baseload demand met (in MW).
Key considerations – long-term
Demand projections for next few years (say 3)
Extent of Renewable growth
Solar Rooftop potential
Hydro potential in the State

18. SMART Procurement Under long term & medium term PPA : two part tariff18
SMART Procurement
Under long term & medium term PPA : two part tariff
Capacity charges (commitment charges): paid irrespective of whether discom purchase power from these plants or not
Energy charges : Paid corresponding to the number of units of power purchased from that particular plant
Discoms can replace costlier long term power by procurement from IEX, if,
Energy charge of power plant is greater than IEX rates
During night hours prices at IEX are further low and savings can be enhanced
Discoms can replace ISGS first, keeping import constraint in consideration
Discoms can continue paying fixed charge to Long Term PPAs and substitute where energy charge is higher than IEX price
IEX has provided a tool for Smart Power procurement to Discoms in the following states:-
Andhra Pradesh
Telangana
Haryana
Rajasthan
Madhya Pradesh

19. Capacity Tied up by Discom
Merit order dispatch schedule to be prepared based on Variable cost and considering Exchange Prices
Capacity Tied up by Discom
Long Term Contracts
Bilateral
Contracts
Exchange
PPA I Variable Cost
PPA 1 I 3.70
Contract 1 I 4.70
IEX Price I 2.45
PPA 2 I 4.06
PPA 3 I 3.00
Contract 2 I 3.50
PPA 4 I 1.99
Must Run Plants
(includes all hydro, nuclear or other ‘take or pay’ type contractual plants)
PPA 5 I 2.00
Contract 3 I 2.10
Merit Order Baseline

20. Increasing Variable Cost
Merit order dispatch schedule to be prepared based on Variable cost and considering Exchange Prices
Contract 1 I 4.70
Increasing Variable Cost
PPA 2 I 4.06
PPA 1 I 3.70
Contract 2 I 3.50
PPA 3 I 3.00
IEX Price I 2.45
To be dispatched in this Order based on Energy Demand of the Discom
Contract 3 I 2.10
PPA 5 I 2.00
PPA 4 I 1.99
Must Run Plants
(includes all hydro, nuclear or other ‘take or pay’ type contractual plants)
Merit Order Baseline

21. Contract for differences to optimise power procurement costs
Discoms to mutually agree with the (more expensive) generators to enter into Contract for differences and schedule their power via the Exchange
PPA 7 I 5.10
PPA 2 I 4.06
Discom
Generator
PPA 1 I 3.70
DC : 4,000 MU
Schedule given based on state merit order
PPA 3 I 3.50
PPA 4 I 3.00
Discom
Generator
CFD Through Exchange
Rs 4.00
PPA 5 I 2.00
Pays Rs 4.00
to PX
Receives Rs 4.00
from PX
PPA 6 I 1.99
Pays back 0.30/unit to Discom
Must Run Plants
Schedule will automatically consider the merit order of all the quantum traded on the exchange, therefore expensive plants will automatically get lesser schedule and lead to savings for the Discoms
Benefits:
Seller and Buyer can still deliver and get ALL their power;
Seller and Buyer also get the same financial result or even better
The arrangement opens more optimization possibilities
The contract volume and prices get optimized in the spot market

22. Saving potential through optimization
Back down potential of 228 Million Units on 25th November for expensive power plants (>=3.50/unit) (Data as per GOI Merit Website)
Station
Plant Capacity (MW)
Variable Cost (Rs/Unit)
DC (MWh)
State Generating Station
PTPS UNIT-8
250
3.50
5,400
PTPS UNIT-7
BEPL, UTRAULA 82
1,949
PARALI UNIT - 06 & 07
500
4,816
SURATGARH TPS
1500
3.51
32,760
RGTPP (KHEDAR) (IPP)
1200
3.52
27,360
TAQA (STCMS)
3.56
4,080
NEYVELI TS 1
475
3.58
4,408
SAGARDIGHI (SGTPP)-I
600
3.59
2,532
BATHINDA
410
3.60 -
AMGEN DEF
362
5,285
GURU HARGOBIND SINGH TPS (GHTPS)
920
3.61
19,570
RAYALASEEMA TPS-I,II&III
1050
3.64
18,336
RTPS 1 TO 7
1470
3.66
15,796
WTPS_1_6
1260
23,303
PTPS UNIT-5
210
3.67
4,560
PTPS UNIT-6
MTPS STAGE 1&2
840
13,250
BEPL, MAQSOODPUR
3.68
BEPL, KHAMBHARKHERA 80
3.69
KOLAGHAT (KTPS)
11,323
BTPS-2
3.70 8
BEPL, BARKHERA
3.71
KOVILKALAPPAL GTPS
108
BANDEL (BTPS)
3.72
2,957
RTPS
1153
3.78
18,528
GTPS 5 (Gandhinagar)
3.80
4,656
Station
Plant Capacity (MW)
Variable Cost (Rs/Unit)
Declared C (MWh)
KUDGI
800
3.80
2,677
UTPS (Ukai)
850
3.86
12,588
STPS 3&4 (Suratgarh)
500
4.07
5,400
MTPS STAGE 3 (Mejia)
600
10,410
GTPS34
420
4.13
9,192
UPCL
1200
4.44
24,248
Central Generating Station
DADRI TPS
840
3.60
12,451
3.63
1,383
KUDGI STPS
3.67
896
10,858
3,191
3.91
2,196
NTPC SOLAPUR
660
4.73
258
1,797
TOTAL
TOTAL Declared Capacity
MWh
334,229
Total Scheduled
228,095

23. Flexibility in Power Procurement23
Flexibility in Power Procurement

24. Flexibility in Power Procurement24
Flexibility in Power Procurement
Gujarat Buy Volume on a typical day in November

25. Flexibility in Power Procurement25
Flexibility in Power Procurement
Telangana Buy Volume on a typical day in November

26. Way Forward
Power procurement from IEX is at more competitive prices than bilateral transactions
Power Exchange also provide flexibility in purchase of power
There is enough liquidity in power exchanges which should provide comfort to Discom regarding availability of power
Discoms should utilize this platform for optimizing its power portfolio by
Meeting Deficit
Replacing high variable cost power
Meeting future demand increase through exchange

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