Workshop on Sustainable Development off Power Sector and Enhancement - PowerPoint PPT Presentation

SARI/EI Workshop on Sustainable Development off Power Sector and Enhancement of Electricity Trade in the South Asian Region 15 th January ,2015 Theme International Experience in Power Market Development and Cross Border Electricity Trade

TABLE OF CONTENT • EXISTING CROSS BORDER CONNECTIVITY AND TRADE IN SOUTH ASIAN REGION • CERTAIN CHARACTERISTICS OF THE POWER SECTOR IN THE COUNTRIES OF THE SOUTH ASIAN REGION. • IMPORTANT CLAUSES OF CROSS BORDER PPAS AND INTER GOVERNMENTAL FRAMEWORK AGREEMENT (IGFA) • A FEW EXAMPLES FROM OTHER CROSS BORDER POWER EXCHNAGES. • EXPECTED LEARNINGS FROM TODAYS SESSION. THE VARIOUS ISSUES INVOLVED IN CBET

EXISTING CROSS BORDER CONNECTIVITY BHUTAN BANGLADESH NEPAL Mahendranagar Tanakpur Tripura 400kV 132kV Gandak Baharampur Bheramara Tala Dagachhu Comilla Siliguri Kusaha Ramnagar • 400kV AC Baharampur - • Connectivity via multiple AC links at Kataiya Bheramara transmission line along 400kV, 220kV and 132kV levels with HVDC Back-to-Back station at Bheramara • Tala evacuation: Powerlinks • Connectivity via three 132kV lines Transmission Limited (JV: and eight 33kV lines on radial mode • 100 MW flow from Tripura ,India POWERGRID 49% & Tata Power side to Comilla, Bangladesh • 400kV Muzaffarpur (India) - 51%) Dhalkebar (Nepal), is being • Agreement between POWERGRID • Agreement between Powerlinks and developed by two separate JVs, one and BPDB POWERGRID each on either side • Agreement signed by NEA with both JVs

EXISTING CBET IN SA REGION Bhutan  India • Contract with PTC for Chukka, Kurichhu (336 MW; 60 MW) • Contract with PTC for Tala (1020 MW) • Contract with TPTCL for Dagachhu (126 MW) India  Bangladesh • Long-term contract with NVVNL for 250 MW • Short-term contract with PTC for 250 MW India  Nepal • Bilateral contracts / Treaties to the tune of 237 MW • Past contracts with PTC (2011-2014) during December- April months for ~20-30 MW

UTILITIES OF SOUTH ASIAN REGION Vertically Partially Un-bundled Integrated un-bundled Bangladesh Afghanistan (Separate (DABS) India (Separate Trans. Utility ) G,T,D utilities ) Maldives (FENAKA) Bhutan (Separate Gen. Nepal (NEA) Pakistan utility) (Separate G,T,D Sri Lanka (CEB) utilities)

CERTAIN KEY CLAUSES OF CBET PPA • Based on the country government negotiation/treaty majorly on the cost plus basis. 1. Pricing • India-Bangladesh trade pricing determined based on CERC regulation (Long term NVVNL trade) and by competitive bidding route (Short term with PTC) • Old power treaty doesn’t attract the deviation settlement. New power trade 2. Deviation Settlement agreements in the region are covered under ABT/DSM and deviation has finally Mechanism settled by the power taker. • All new power trade agreements in the region provide the option to go to Singapore 3. Dispute resolution International Arbitration Centre (SIAC) in case of any dispute which may not be amicably settled. 4. Payment Security • Letter of credit is commonly used payment security mechanism in the region except the old treaty. Mechanism • SAC are having an different timeline for scheduling and dispatch due to having an 5. Scheduling and Dispatch different institutional structure and market complexity.

CERTAIN RELEVANT ARTICLES IN IMPLEMENTATION OF THE RECENT INTER GOVERNMENTAL FRAMEWORK AGREEMENT (IGFA) • Develop the Transmission Service Agreement for Bilateral and Multilateral trade (covering Article-9: Short/Medium/Long-term) Transmission Service Agreement • Develop transmission pricing framework • Suggest power scheduling and dispatch procedures Article-11: System Operation and Settlement • Suggest energy accounting system, treatment of unscheduled deviations and associated financial Mechanism settlement systems • Transmission corridor allocation mechanism Article-12: • Transmission congestion management Transmission Access • Institutional arrangement for granting an OA, system operation, license for trading etc. Article-13: Facilitating Buying and Selling • Models/options for a regional power exchange Entities Article-16: • Develop dispute settlement mechanism Dispute Settlement Mechanism

The Evolutionary path of various Cross Border Exchanges. 1. Nord Pool Spot – Started as joint power exchange for Sweden and Norway in 1996. Joined by Finland and Denamrk in 1998-2000. Expanded to Germany in 2005 and UK in 2010. The Baltic countries joined between 2010 and 2013. 2. OMIE – Spain’s power exchange is in existence since 1998. In 2007 it entered the Portuguese market and OMEL was changed to OMIE. 3. EPEX Spot – Created in 2008 through merger of spot markets run by Powernext SA and EEX AG. While Powernext SA was established in France in 2001, EEX AG was formed by Leipzig Power Exchange and EEX Frankfurt in Germany in 2002. 4. SAPP- Created in 1995 by 12 members. Presently a 15 Nation pool for electricity. 5. APX – APX was launched in 1999 in Amsterdam. APEX acquired/ bought shares in the national exchanges of UK and Belgium Observation – The Cross Border Power exchanges were created and evolved in various manners. We have examples of exchange created by two Nations and other joining it and also of up to 12 member creating the exchange. We also have examples of merger and acquisition of domestic power markets to form Cross Border Exchanges.

The ownership pattern of various Cross Border Exchanges. 1. Transmission system operators as owner in case of most of the cross border power exchanges . for example A) Nord Pool Spot – owners are the TSOs of Norway, Sweden, Finland, Denmark, Estonia, Latvia and Lithuania. B) APX - owners are the TSOs of Netherlands and Belgium 2. National market operators as owner in case of OMIE, manages the spot market of the Iberian peninsula , half of OMIE’s stock is owned by the Spanish company OMEL, with the other half held by the Portuguese company OMIP SGPS, S.A. who are the market operators of Spain and Portugal. 3. Mixed holding as in case of EPEX Spot . Ownership is with Powernext which is a regulated investment firm based in Paris and HGRT which is a holding of TSOs(Holding de Gestionnaires de Réseaux de transport) composed of the TSOs - Amprion Germany) , APG (Austria), Elia (Belgium) , RTE( France), Swissgrid(Switzerland) and Tennet (Netherlands and in Germany). Observation – We find ownership by TSOs very common in case of the cross border exchanges. While most of the TSOs are Government owned, we also find examples of Investment firms as owners.

The Governance Pattern of various Cross Border Exchanges. 1. Nord Pool Spot – The BoD has eight members including four representatives of the major stake holders. The Customer Advisory Board is a high level advisory board for all activities related to the operation of NPS and reports to the NPS BoD. The members are power traders and industry representatives. 2. OMIE – Spain’s operator takes care of the physical Market Operations and the Portuguese market handles the Iberian Future Market. The Board of directors of both the market operators are elected for a three year mandate. It presently has twelve members of different backgrounds and excellent reputation and experience. 3. EPEX Spot – It has a two tier governance system. A Supervisory Board appointed by the shareholders and is composed of persons of European Energy Sector. The Supervisory Board appoints the Management Board and approves the strategy and budget of the company. The exchange council is the official body of the exchange and has members from various sector. It approves the exchange rules, contracts, market areas and approves the appointment of the Head of Market Surveillance office . 4. APX – It has a multi layer governance system. There exists a A Supervisory Board, A management Team and A Market Development Advisory Board . Observation – The Governance pattern of Cross Border Power exchanges are different for different Regional Power markets. The commonality lies in the selection of competent and reputed people to be in the various Boards. Also there is an inclusion of all sections of the stakeholders ( Also other than equity holders) in the Various Board. There is also some body which is entrusted with the work of Market Surveillance without any outside influence.

EXPECTED LEARNINGS FROM OTHER CROSS BORDER POWER MARKETS Process of evolution • The manner in which other Cross Border Power Markets developed. Ownership • The ownership pattern of various Cross Border Power Exchanges. Organisational, Governance and Institutional Structures • Cross Border Power Exchanges should have robust Organizational, Governance and Institutional Structures. The examples from other Cross Border Power Exchanges shall be a studied. Products • Day-ahead Market (DAM) and Intra-day Market (IDM), a variant of Term-ahead Market (TAM), are the main products offered on all national and CBPXs around the world. The reasons behind selection of these products will be helpful deciding on the product selection for in the South Asia Regional Exchange. Settlement • Popular practices of commercial settlement in various Cross Border Power Exchanges PX concerned