Trade in South Asia Region Workshop on Sustainable Development of - - PowerPoint PPT Presentation
Regional Regulatory Guidelines for promoting Cross Border Electricity Trade in South Asia Region Workshop on Sustainable Development of Power Sector and Enhancement of Electricity Trade in the South Asian Region: Policy, Regulatory
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RRGs and RRIM /SARI/EI/RAJIV/IRADe/15th January,2016/Delhi/SAFIR Workshop
Workshop on Sustainable Development of Power Sector and Enhancement of Electricity Trade in the South Asian Region: Policy, Regulatory Issues/Challenges and the way forward
15th January, 2016, Hotel Shangri-La’s – Eros (Connaught Place) New Delhi, India
Overview of SARI/EI Program 1 Overall CBET Framework 4
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Key Challenges & Risks for CBET 3 Brief of Regional Regulatory Guidelines( RRGs) 5
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Background and Approach--Regional Regulatory Guidelines 2
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energy security in South Asia by focusing 1) Cross Border Energy Trade 2) Energy Market Formation and 3) Regional Clean Energy Development.
Three Key Development Outcomes:
First Three Year of the Program is Completed.
Demand Driven ‘Bottom Up’ Approach IRADe, a regional organization, is implementing partner
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Maldives Sri Lanka India Nepal Bangladesh Bhutan Pakistan Afghanistan 8 SAARC COUNTRIES
Regulatory issues
system interconnection
Market
Project Steering Committee TF-1-Coordination of Policy, Legal and Regulatory Issues TF-2-Advancement of transmission system interconnection TF-3-South Asian Regional Electricity Market
Highly Consultative and Participative Approach
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the apex body of the program and provides overall strategic directions.
nominated Senior level officials from the country governments, SAARC, ADB, Independent Energy Experts/Diplomats.
by government nominated members from Regulatory Technical , market related institution of each SA countries.
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Review of Existing Studies/ Literature/ Reports Review & Analysis of EL&R&P in SAC and identification
ingredients of CBET
Development
Regulatory Guidelines for CBET
Steps for the Study
Review of International Power Pools and Identification
practices wr.t CBET
6 Recommend changes/ amendments in the EL&R&P of SAC to promote CBET
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Current status in member countries w.r.t identified ingredients Recommendations for SAC based on best practices identified & Risk Analysis
TF-1 study on Review of Electricity Laws, Policies and Regulatory framework of SAC to identify critical requirements of CBET and recommend changes/amendments therein for consideration of the SA countries
Roadmap for development
harmonized framework for CBET
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Europe, Nord Pool,SAAP, West Africa, GCC, Georgia-Turkey, SEIPAC,GMS, Central Asia- South Asia( CASA)
Key Challenges
International Review : Key Challenges and risk for CBET
and Recognition of CBET/Trade in the National Policy, Law
Coordination
Viability
Contractual Aspects
10.Commercial Mechanisms to Settle Imbalances
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Motivation behind these challenge is to address the typical Risks in Cross- Border Projects. What are the Risk?
Funding Risk Financial Risk Exchange Rate Risk Financing Risk Legal & Regulatory Risk Security Risk Currency Transfer Restriction Risk Dispute Resolution Risk
Political and Regulatory Risk
Expropriation and Breach of Contract Planning & Construction Risk Commercial Risk Pricing and Payment Risk Supply Risk
Cross Border Electricity Trade
Regional Power System/ at Initial Stages Regional Power System at in Transition and Mature Stages
Country Risks
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CBET facilitation through
Harmonization
Standard Contracts (Bankable PPAs/TSAs) Regional Regulatory Guidelines
Coordinated Transmission Planning eventually regional Master Plan
Transmission Pricing rules & methodology
Inter-Governmental Framework Agreement (IGFA)
Overall Framework for development of CBET in South Asia
Changes in EL&R&P Framework Undertaken as part of the TF-1 study
Institutional Mechanism
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Investment Framework and Investment Policy Guidelines
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Preamble to the Guidelines
These regulatory guidelines apply to CBET among the South Asian countries. These guidelines are non-binding in nature and are aimed to provide national regulators of SAC with a consistent set of guidelines applicable to CBET The guidelines deal only with limited areas where need for such common guidelines has been felt by the SAC and are not meant to be comprehensively dealing with all matters related to CBET. For all other purpose, respective national regulations, rules and guidelines shall apply. Appropriate Institutional Mechanism is required for facilitating and working towards enabling the guidelines and facilitating the required changes to be made in the national regulatory framework. Such entity shall work in close coordination with the National Energy/Electricity Regulators and SAARC for the
the Coordination, and facilitate the implementation of the RRGs. In countries where regulators do not exist, the responsibilities shall rest with relevant ministry and/or empowered entity .
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Context of the guidelines
bilateral basis and is limited
new transmission interconnections being proposed that will enable greater integration of power systems in member countries
EL&R&P framework is a critical requirement
recognize the diversity in countries
compatible with respective country’s EL&P&R framework It is important to provide actionability to the Articles by defining them into operating rules and common guidelines w.r.t CBET transactions
The SAARC Inter-Governmental Framework Agreement (IGFA) for Energy Cooperation, signed by Foreign Ministers of the eight member states provides a strong basis for ensuring consistency in certain identified areas of trade as follows
Mechanism)
The guidelines are based on the review of the existing CBET transactions and the existing laws, policies and regulations and review of international experience of various power pools
Existence of political will and consensus is evident from the IGFA
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Establish clear regulatory environment for cross-border trading
Regional Regulatory Guidelines
Provide roadmap for action and decision making in respective country
Purpose of the guidelines
The flexible nature of the guidelines and focus
both the guidelines and the national regulatory framework to co-exist for a reasonable period
trading
5. Imbalance settlement mechanism
Specific aspects requiring consensus through common operating principles
Provides consistency in CBET transactions and certainty to stakeholders
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Licensing for CBET: (Important Regulatory Tool for Trading)
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Open access to transmission system: (Competitive Market)
binding provisions
agency for OA
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Transmission Pricing: (cost reflective & efficient)
acceptability
up principles and mechanism for determination
economically efficient transmission pricing regime and gradually adopting methods based on the concept of location specific pricing
through enabling regulations
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Imbalance Settlement: (transparent common procedure)
Imbalance Settlement for CBET transactions
will include preparation
scheduling, dispatch, energy accounting and settlement procedures for both AC-AC & AC-DC interconnections in the region
4 Regional Regulatory Guidelines
Brief Summary of guidelines
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interconnection of power systems on aspects related to voltage standards, frequency tolerance, thermal limits etc.
member countries
metering standards, communication technologies, Protection Schemes etc.
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Taxes & Duties: (for fostering investment and removing trade barriers)
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Regional Regulatory Guidelines
Transmission Planning: (coordinated Regional Planning)
coordinate between Member Countries on transmission planning aspects
towards transmission planning
(specifically for CBET) & associated infrastructure
developing a regional level master plan
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Dispute Resolution: (transparent and fair legal framework)
through amicable settlement
countries are unable to resolve disputes through amicable settlement
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Brief Summary of guidelines
Regional Regulatory Guidelines
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RERA in Southern Africa ( SAAP) Responsible for Cooperation on regulatory & contractual aspects through common set
regulatory guidelines ACER in European Union Issues non-binding
recommendations to national energy regulators, transmission system
Ensure the regulation of interstate electricity exchanges and to give appropriate support to national regulatory bodies or entities of the Member States. RPTCC in Greater Mekong Subregion High level body responsible for coordinating and guiding the market development
RPTCC
(Regional Power Trade Coordination Committee)
ECOWAS Regional Electricity Regulatory Authority (ERERA) in West Africa.
among European energy regulators,
integration and harmonisation of regulatory frameworks.
Framework Guidelines related to regulation on System operation, connection and capacity allocation etc. leads to network codes.
Transmission tariff Structures
basic rules and guidelines for power trading among Parties
recommendation for the
policy and day-to-day management
regional power trade;
Border Electricity trade.
coordination and harmonization
regulations.
regulation and guidelines related to the system
transmission tariff etc.
Guidelines for regulating cross- border power trading.
Compatible regulatory decisions
cross- border agreements in transit countries
transparency in the regulation
cross- border trading
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term success in South Asia.
building competitive power market in south Asia.
mechanism for coordinating the regulation with respect to CBET.
Regulators or any other appropriate institution is critical for electricity regulatory Coordination and facilitating the implementation of the Regional Regulatory Guidelines (RRGs).
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For more Information Mr.V.K.Kharband (vkkharbanda@irade.org) Mr.Rajiv Ratna Panda (rajivpanda@irade.org)
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Guideline 1: Licensing Cross-border Electricity Trade Activities, Imports And Exports
Rationale Since countries have different licensing rules and procedures, a harmonized licensing framework ensures that licensing does not restrict entry. It provides regulatory tools that helps regulators to keep an oversight of the market National regulators to define the process of obtaining and issuing licenses for CBET subject to their national Legal & Policy requirements 1 Member countries shall aim to recognize CBET as a distinct licensing activity through amendments in existing laws or regulations or through enactment of enabling regulations 2 3 Provisions to include
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Guideline 1: Licensing Cross-border Electricity Trade Activities, Imports And Exports
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The license shall impose conditions to comply with prescribed planning and technical standards and may also require the licensee to provide specific information as deemed necessary by the regulator/designated entity 4 In the absence of the regulator, grant of license shall rest with relevant Ministry/ Government body. Summary to be made public 5
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Guideline 2: Provision of Non-discriminatory Open Access to Transmission Network
The enactment of various provisions/regulations inter alia shall include
Nominating nodal agency for grant open access- Responsible for undertaking scheduling and dispatch operation as well as processing of applications filed by the applicants
Procedure for filing applications, application fee- Customers shall have to apply to seek access on a format to be prescribed by nodal agency giving necessary details such as capacity required, point of injection, point of drawal, duration, type of service required, average load, peak load etc.
Explicitly defined through amendment of regulations or enactment of separate regulations/orders and eventually, in the long-term legislative enablement of
1 Member countries shall coordinate setting of fair rules and procedures for non- discriminatory open access. Notification of enabling regulations in respective SAC, by working along with the national regulators and/or other empowered entities 2 3 Rationale Open Access makes it possible to sell or buy electricity, irrespective of location of buyer/seller in the grid; subject to transparently formulated system-security constraints without discrimination and against payment of adequate fees for accessing the system.
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Enabling provisions for the system operators in respective countries to coordinate scheduling and dispatching of cross border flows 4
Guideline 2: Provision of Non-discriminatory Open Access to Transmission Network
Eventually, in the long-term legislative enablement of open access may be considered through inclusion of non-discriminatory open access provisions in the relevant laws. 5 The enactment of various provisions/regulations inter alia shall include
Processing of applications, priority order and criteria for grant of access- The request for transmission access shall be processed by the nodal agency in a time bound manner taking into account line loading, voltage profile, system stability etc. and ensuring that the existing loads continued to be serviced with reasonable reliability. Subject to Available Transmission Capacity (ATC), the long-term customers shall have priority over short-term customers
Principles with regard to non-discriminatory and transparent charges for network use- The objective in the design of the open access charges should be to recover the sunk cost of the transmission system. Further, open access customers to compensate the nodal agency for scheduling, system control and dispatch services rendered by them.
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Guideline 3: Transmission Pricing
Rationale For CBET, it is essential to have a pricing mechanism that separates pricing of “carriage” and “content”. Pricing must be cost-reflective, efficient, and transparent.
Note: The preference and feasibility of a transmission pricing mechanism is entirely a country’s prerogative and depends on whether the power system in that particular country has reached the stage wherein it is ready to adopt a particular pricing mechanism. In most of the above cases, the PoC charges prevalent in India currently can either be directly used and/or further adapted to arrive at approach for transmission pricing
1 SAFER shall work along with national regulator/ empowered entities to formulate principles and mechanisms for transmission pricing that are economically efficient and transparent The tariff framework shall be sensitive to distance, direction, and related to quantum of power flow. 2
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Guideline 3: Transmission Pricing
Gradually, the member countries shall move towards a pricing framework based
the principle that transmission system users must share the total transmission cost in proportion to their respective utilization
the transmission system, while at the same time covering the revenues of the transmission licensee. The Regulators (or other empowered entities) in SAC shall gradually adopt such tariff framework in their respective system through enabling regulations. 3 4 Single point charges in the form of injection charges and withdrawal charges shall be determined for each cross border interconnector/national boundary. 5 A typical multilateral trade scenario between Nepal-India- Bhutan
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Guideline 4: Transmission Planning
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timelines for commissioning, sources of funding etc.
Forum shall facilitate coordination between member countries to develop common guidelines for development and augmentation of the national transmission plans to support existing bilateral CBET 2 3 Rationale It is important for member countries to have their individual and comprehensive national transmission plans with identified cross border interconnections. Further, development
1 SAFER shall facilitate the development of a regional coordination forum of National Transmission Utilities for purpose of transmission planning
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Guideline 4: Transmission Planning
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Member countries shall develop database
regional transmission projects. Transmission plans shall be shared with the regional coordination forum to facilitate coordinated development 4 Countries shall work towards evolving a coordinated regional level master plan based on pre-specified guidelines, utilizing information from databases shared at the regional level 5
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Guideline 5: Provision Of Imbalance Settlement
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The Imbalance Settlement mechanism shall be explicitly defined by member countries through modification/amendment
applicable regulations
through enactment of separate regulations applicable to CBET Common set of procedures shall be evolved by empowered entities (designated system
central transmission agencies), comprising scheduling, dispatch, energy accounting and settlement procedures for both AC-AC and AC-DC interconnections in the region 1 Member Countries shall develop a common set of procedures for Imbalance Settlement of CBET transactions 2 3 Rationale Imbalance Settlement refers to financial settlement for deviations in schedules of injection/withdrawal of electricity. It addresses the issue of mismatch between scheduled and actual delivery of power in the grid through penalty mechanism in case of default.
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Guideline 5: Provision Of Imbalance Settlement
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All participants involved in CBET shall submit their schedules to their respective designated system operators who in turn will coordinate with their counterparts in other countries basis the common set of procedures 4 The enactment of various provisions/regulations inter alia shall include (i) Charges for deviation (ii) Limits on deviation volume and consequences of violating limits (iii) Accounting of Charges for Deviation (iv) Schedule of Payment of Charges for Deviation 5
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Guideline 6: Harmonization Of Codes
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SAFER shall facilitate harmonization through formulation of guidelines on technical standards
interconnection. The guidelines shall be framed in consultation with empowered technical bodies in member countries. 1 SAFER shall coordinate and facilitate sharing/exchange
technical characteristics and system specific data among the owners/operators of power systems in member countries
2 3 4 Rationale The scale of harmonization of codes across countries varies depending upon the type of interconnection and the scale of transactions undertaken. In case of high volumes being transferred through AC interconnection the risks of deviation and grid security is significant and necessitate harmonization of standards and codes.
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Guideline 7: Dispute Resolution
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If unresolved, the Member Countries may choose to refer the dispute to the SAARC Arbitration Council. The SAARC Arbitration Rules shall govern the arbitration procedure Any dispute arising
interpretation and /or implementation
the Agreements/contracts entered into shall be resolved amicably among the Member States. 1 Transparent, fair, commonly accepted legal framework and clearly defined dispute resolution procedures are an absolute necessity since they govern and effect the existing and future trade relations between two countries. 2 3 Rationale Dispute Resolution procedures provide for settlement of disputes through conciliation and
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Guideline 8: Taxes & Duties
National Governments to facilitate implementation of a zero tax regime through modification/amendment of extant notifications/Regulations 1 Member Countries to move towards exempting export/import duty/levies/fees/taxes, etc. for CBET. . 2 Rationale Taxes and Duties have commercial implications on end consumers and uncertain tax regimes deter investor confidence. To promote CBET in the SA region, countries should adopt a zero tax regime
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