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GTAM Will Open New Doors to Renewable Power Procurement: JMK Research


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After approving Real Time Market (RTM) trading in power exchanges about two months ago, Central Electricity Regulatory Commission (CERC) has now approved Green term ahead market (GTAM) contracts on the Indian Energy Exchange (IEX) platform.

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IEX is presently operating in-

  • Day Ahead Market (DAM), where transactions in electricity are allowed for a day in advance;
  • Term Ahead Market (TAM), where electricity is traded the same day to up to 11 days in advance;
  • Renewable Energy Certificate (REC), where green energy attributes of electricity are traded; and
  • Real time Market (RTM), where auction sessions are conducted at even time blocks on the hour, and delivery commences one hour after the trade session is closed.

Though the renewable penetration in the country is increasing, the participation of renewable energy in the existing DAM and TAM segment has remained negligible (less than 1%), as there has been no segregation between conventional power and green power by the system and the realization going to the generator was at par with conventional power. Also, renewable developers would prefer to tie their generation in advance for longer periods with the consumers to ensure cash flows and project viability, J M K research stated.

Green Term Ahead Market (GTAM) is an alternative new model introduced for selling off the power by the renewable developers in the open market without getting into long term PPAs. Also, reportedly, in the absence of a suitable trading platform before, it was observed that the RE-rich States are either backing down RE or selling their surplus RE as conventional power which is leading to losses for both DISCOMS and RE generators. Thus, these RE generators and DISCOMS would now be able to access the new niche platform – GTAM – to sell their excess power.

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The tariff mechanism of renewables has transitioned from feed-in tariff regime to competitive bidding regime. Now by allowing competition over the power exchanges will help in better price discovery and foster higher share of renewables into the grid, research added.

it concluded that Green Term Ahead Market (GTAM) will allow the buyers and sellers to trade green power along with the fulfillment of RPO obligations. It is a much needed market-based support for renewable energy to achieve the ambitious target of 175 GW of renewables by 2022 as it will provide a new opportunity to RE merchant capacity to sell power and additionally, it’d also help spawn new RE merchant plants.

The advantages according to j m k research of doing the same would be-

  • With GTAM, the buyers would be able to buy green power along with fulfilling their RPO obligations. This will provide a good opportunity to corporates who wish to fulfill their RE100 goals along with meeting their short term demand at competitive prices. They need not tie up capacity in advance or sign power purchase agreements with DISCOMS or generators.
  • In some renewable energy rich states like Tamil Nadu, Karnataka, Andhra Pradesh, the issue of ‘curtailment’ is prevalent. With GTAM, solar power developers can now trade the surplus renewable energy in power exchange without being concerned regarding uncertainties around the signing of long term PPAs and recovery of the cost of generation.
  • A market-based mechanism where RE surplus and RE deficit states would trade RE power and balance their RPO targets would incentivize RE resource rich states to develop RE capacity beyond their own obligation.
  • Recently, there has been an upsurge in the trade of RECs due to collective push from regulators to meet compliance. This has led to depletion of REC inventory. GTAM will allow the RE generators to explore more avenues to sell power beyond conventional PPAs and REC framework.
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The market will offer trade in four types of G-TAM contracts. There will be separate contracts for Solar and Non-Solar energy.

Market TypeGreen Intra Day contractsGreen day Ahead Contingency ContractsGreen Daily ContractsGreen weekly contracts
Contract available for trading15-minute15-minute15-minute15-minute
MatchingQuantity (MW) and price (Rs/MWh)Quantity (MW) and price (Rs/MWh)Energy (MWh)Energy (MWh)
Delivery Day,(T- Trading day)TT+1T+2 to T+10T+2 to T+10
Trading hoursRound the clock,00:30 hrs to 20:00 hrs daily15:00 hrs to 23:00 hrs13:00 hrs to 17:00 hrsFriday and Saturday
Trading cycleContinuous tradingContinuous tradingContinuous trade or uniform price step open auctionContinuous trade or uniform price step open auction
Quantity variationZero quantity variation allowedZero quantity variation allowedDownward variation up to 15% of Energy Traded.Downward variation up to 15% of Energy Traded.

Source: India Energy Exchange

How will G-TAM be different from RECs?

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While in REC framework only green attributes are traded on power exchange and bought by entities obligated to fulfill their RPO obligations, in G-TAM the physical delivery of green power will take place and the RPO obligations would be fulfilled simultaneously. G-TAM will be beneficial for entities who are looking beyond just fulfilling their RPO obligations and moving to green energy. It would be a good alternative for RE100 companies to explore and commit to their sustainability goals. As the regulators are being stringent with DISCOMS regarding fulfillment of their RPOs, DISCOMS can now meet their short term energy demand in addition to RPO compliance instead of just buying RECs. As there is shortage of solar RECs, many states are not able to buy RECs even if they wish to, so this will provide an alternative mechanism to ensure that RPO compliances are met. In short, both G-TAM and REC market will complement each other.

Mechanism of REC trading

green term ahead market
source: JMK Research

Renewable power has now matured in India in terms of volume, forecasting certainty, cost competitiveness, players in the market, and risk perception. Opening a separate renewable energy trading window in exchanges will lead to enhanced visibility and create organized competition. 

Going forward, as the market and technology would evolve and grid integration of RE becomes relatively easier, the RE generating sources can also compete with conventional power on equal footing in the DAM/TAM segment. How the market is going to evolve will depend on the supply and demand and it would be too early to comment on the price competitiveness for now.

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