What is Green-Day-Ahead Market? – All you need to know
Union Power Minister RK Singh launched the Green-Day-Ahead Market in a bid to further strengthen the electricity trade in India. What is Green-Day-Ahead Market? Significance, benefits, how will it work? How will it boost India’s renewable energy capacity?
Union Power Minister RK Singh on October 24, 2021, launched the Green-Day-Ahead Market (GDAM) in a bid to further strengthen the electricity trade in India. The launch of GDAM is a step towards opening doors for renewable energy wherein any renewable energy generating company can set up and sell renewable energy on the exchange, said the Power Ministry.
GDAM is a step by the government to make business simpler and enable big industries to go green. The country needs to decrease its dependence on imported sources of fossil fuel for which the Centre is working to implement the Green Hydrogen Mission, added Power Minister RK Singh.
What is Green-Day-Ahead Market?
Green Day Ahead market (GDAM) is a marketplace for trading renewable power on a day-ahead basis. National Load Despatch Center (NLDC), Power System Operation Corporation Limited (POSOCO) as the nodal agency has set up the requisite technologies and infrastructure for the launch of the GDAM.
With GDAM, any renewable energy generating company can set up and sell renewable energy on the exchange. The energy company now has the option of the market rather than suffering a loss of revenue in case any electricity distribution company (Discom) refuses to buy their electricity.
Green-Day-Ahead Market: Significance
Green-Day-Ahead Market has been termed as a unique product launch in the energy market in India. The dynamics of the energy and power market are changing. The world is witnessing a wave of energy transition. India is also committed to the energy transition from fossil fuel to non-fossil fuel sources. There is a significant shift in the buyer’s behavior from long-term contracts to short-term contracts, and also towards the power market. GDAM aims to enable this energy transition for India.
GDAM will enable the achieving India’s green targets and facilitate the integration and expansion of green energy in an efficient, competitive, sustainable & transparent manner.
GDAM is expected to create a domino effect that will lead to a gradual shift from PPA-based contracts to market-based models and enable India in achieving its ambitious target of 450 GW green capacity by 2030.
Benefits of Green-Day-Ahead Market
•The launch of GDAM will offer competitive price signals as well as an opportunity to the market participants to trade in green energy in the most transparent, flexible, competitive, and efficient manner.
•With the market-based competitive prices, the renewable generators will find an option to sell power as well as boost the renewable capacity addition towards the government’s vision of building India as a sustainable and efficient energy economy.
•Benefits of free ISTS (inter-State transmission system) will be available for renewable energy and open access will be available within 15 days.
•The distribution utilities would also be able to sell surplus renewable power generated in their area.
•The obligated entities (distribution licensee, open access consumers, and captive power consumers) would also be able to meet the RPO target by directly buying green power from the power exchange(s).
•The non-obligated entities will be able to buy power on a voluntary basis and help increase the share of green power.
•Other benefits of GDAM include reduction of curtailment of green power, assured instant payment to Renewable Energy generators on the day of delivery itself, and tapping into the unlocked renewable energy potential of India.
How will Green-Day-Ahead Market work?
The Green Day-ahead market will operate in an integrated way with the conventional day-ahead market but with a separate clearing mechanism and price discovery for both the renewable segment and convention energy segment.
Participants in the market (sellers and buyers) can submit their bids together for both conventional and renewable energy through separate bidding windows. The clearance will take place in a sequential manner, with priority given to renewables.
In the first round, renewable energy bids will be cleared first in accordance with the must-run status of the renewables, followed by the conventional segment. This will allow the renewable energy sellers to place their bids in the conventional segment in case their renewable segment bids remain uncleared. Both segments will have separate price discoveries.
Sellers and buyers can submit bids during a window each day, the electricity would be delivered the following day. Unlike GTAM (Green-Term Ahead Market) which was not for sale or purchase of power the following day, the sellers will get instant payment on the day of delivery itself.
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