Cross-border Electricity Trade

Context: In a boost to India’s efforts to create a regional power grid, cross border electricity trade has been taking place on the Indian Energy Exchange (IEX).

• Central Electricity Regulatory Commission has issued the notification of CBET (Cross-border electricity trade) Regulations in the year 2019.
• CBET Rules were notified in March 2021 by the Central Electricity Authority (CEA).
• Nepal is the first country to avail the benefit of buying day ahead power from power exchange.

About Central Electricity Regulatory Commission

• It is a statutory body functioning with quasi-judicial status under the Electricity Act 2003.
• CERC is a key regulator of the power sector in India and is headquartered in New Delhi.
• CERC is constituted for rationalization of electricity tariffs, transparent policies regarding subsidies, promotion of efficient and environmentally benign policies, and for matters connected Electricity Tariff regulation.

About Central Electricity Authority:

• It is a statutory organization constituted in 1951 and works as per the Electricity Act 2003.
• New Delhi is the headquarters of the Central Electrical Authority.
• The Central Electricity Authority of India (CEA) advises the government on policy matters and formulates plans for the development of electricity systems.
• The CEA is also responsible for concurrence of hydro power development schemes of central, state and private sectors.

About (Cross Border Trade of Electricity) Regulations, 2019:

• These regulations shall be applicable to the Participating Entities in India and the neighboring countries which are engaged in cross border trade of electricity with India.
• Cross border trade of electricity between India and the neighboring country shall be allowed through mutual agreements between Indian entities and entities of the neighboring country under the overall framework of agreements signed.
• The Designated Authority appointed by the Ministry of Power, Government of India shall be responsible for facilitating the process of approval and laying down the procedure for import and export of electricity.
• Transmission Planning Agency shall be responsible for planning of transmission systems for the purpose of facilitating cross border trade of electricity.
• For India, this function shall be discharged by the Designated Authority.
• Settlement Nodal Agency shall be responsible for settling all charges pertaining to grid operations including operating charges, charges for deviation and other charges related to transactions with a particular neighboring country.
• Central Transmission Utility shall be responsible for granting long-term access and medium-term open access with respect to cross border trade of electricity.
• The National Load Dispatch Centre shall be responsible for granting short-term open access.
• It shall act as the System Operator for cross border trade of electricity between India and the neighboring countries and
• Tariff for import of electricity by the Indian Entity shall be determined through a process of competitive bidding as per the Tariff Policy.
• Tariff for export of electricity to entities of a neighboring country by the Indian entities through long-term or medium-term or short-term agreements or discovered through competitive bidding.
• Where the tariff for import or export of electricity is mutually agreed the same shall be final.

India’s Power Exchange with Neighbouring Countries:

India-Nepal:

• Nepal started optimally meeting its dry season demand by trading in India’s day-ahead market since April 2021.
• Nepal Electricity Authority started selling surplus monsoon electricity through competition in the day-ahead market since June 2022.
• According to the NEA, between May and August, over 780 million of electricity have been sold in the Indian market, earning about ₹7.2 billion.

India-Bhutan:

• Bhutan started trading on the Indian Day ahead market in January 2022, importing power for a maximum of 400 megawatt (MW) for import during the lean season.

India-Bangladesh:

• Bangladesh stands to benefit from CBET with India when it participates in India’s power market.
• Through CBET, Bangladesh can import power from India, with the pricing of this energy being optimized through the country’s participation in spot markets.
• By importing green power from across the border, Bangladesh’s current reliance on fossil fuel-fired power plants can decrease, and in time may usher more investments and efforts into growing the contribution from RE in its own energy mix.

Benefits of Cross-border Electricity Trade: An integrated south as power market has many benefits including:

• Enhanced energy access and security
• Integrated Power Market
• Competitive power prices:
• Transparent and efficient power procurement
• Resource optimisation

Way Forward:

• As more of India’s neighboring countries begin to participate in CBET, a South Asian power market will emerge which will allow for a price discovery that will be unique for the region.
• CBET will prove to be mutually beneficial for all participating countries and usher in economic and sustainable development to the entire region.

India is moving towards its ambitious global electricity grid plans to roll out “One Sun, One World, One Grid” (OSOWOG).

Source: The Hindu