Energy Market Reforms

How is India's power sector likely to look in 2070 It was a memorable moment when NITI Aayog recently released the report “Sectoral Insights: Power - scenarios towards Vikshit Bharat and Net Zero”. The report was the result of hard work over the last 18 months by the Working Group chaired by me. It was the first ever official document of the Government of India outlining the roadmap for growth and decarbonisation of the power sector for the period up to 2070. https://lnkd.in/gAG7X2D8 Speaking on this occasion , I made the following key points :- >Whatever are the scenario assumptions, renewables with storage are the dominant players in the least cost solution for India in medium to long term >The present trends in technology costs are going against coal and nuclear > Pace of expansion of renewables must match with the growth in demand in the state concerned otherwise integration costs seem to impact affordability  >Government policy as determined by geo-political and energy independence considerations will be the key determinant for fuel mix which may not be least cost >System planners will have to anticipate and plan well in advance to avoid the curtailments being currently faced >Affordability will be key factor for faster electrification of energy services to achieve net zero >We need to move away from LCOE centered approach to integrated resource planning which not only considers generation options but also transmission, storage and demand response options together >Minimise the distortions like waiver of transmission charges or net metering for C& I consumers  >Restoring the viability of Discoms needs targeting ATC losses of 8% (global average) by 2030  and mandatory yearly  revision of tariffs to reflect the  current prudent costs >For new projects,  PPAs need to be redesigned for shorter duration and balanced sharing of demand risk between supplier and the off takers NITI AayogC.E.A. Ministry of PowerAll India Discoms Association ( AIDA ) 

india’s power sector is changing. and the biggest pressure today sits on the companies we rarely talk about… the power distribution companies, known as discoms. for years, discoms have been the weakest point in the electricity chain. they buy power from power generating companies. they move it through the state transmission system. and they supply it to homes and businesses. but their finances show a clear problem. today, discoms hold debt of around 7.5 lakh crore rupees. even with regular support from state governments, many still report losses. in FY 23, the loss was around 31000 crore rupees. the core issue is straightforward. the cost of supplying one unit of electricity is higher than the revenue they collect. why does this gap exist. first, electricity tariff revisions get delayed by state electricity regulatory commissions. second, government subsidies arrive late, so discoms borrow more to manage cash flow. third, industries pay higher tariffs to cover the lower rates given to agriculture and households. this pushes industries to buy power directly from the open market. fourth, technical losses and unpaid bills remain high, even if they have improved over the last decade. another pressure point is long term power purchase agreements, called ppas. discoms pay a fixed charge to power generating companies even if they do not use the full power. as renewable purchase obligation increases, coal based power will get costlier because fixed costs will be spread over fewer units. now, the central government is pushing major reforms through the electricity amendment bill 2025. the key ideas are clear and practical. annual tariff revisions based on real cost. ending cross subsidy within 5 years. government subsidies to be paid in advance. shared distribution networks to allow competition. and an electricity council for joint decisions between states and the centre. the direction is positive. if these steps are implemented properly, they can reduce losses, improve cash flow, and attract private players. this will make the sector more stable and better prepared for long term growth. what is your view on these reforms

As energy systems evolve, relying on the Levelized Cost of Electricity (LCOE) as the primary decision metric is no longer fit for purpose. The recent analysis from the Grantham Research Institute at The London School of Economics and Political Science (LSE) highlights a structural issue: LCOE does not capture when power is delivered, how it interacts with the grid, nor the system-level value or cost it creates. These blind spots become critical as variable renewables expand and system complexity increases. The message is aligned with ongoing work at UNECE Sustainable Energy: policymakers and market designers need metrics that reflect real-world operational realities—grid integration requirements, flexibility value, dispatchability, system resilience, and the avoided cost of infrastructure upgrades. These factors define the actual cost and contribution of each technology to a secure decarbonisation pathway. The transition demands clear-eyed assessment tools. A system-level approach supports better investment decisions, more predictable policy outcomes, and a more reliable trajectory toward net-zero power systems. #EnergyPolicy #EnergyTransition #PowerMarkets #GridPlanning #SystemCosts #Decarbonisation #CleanEnergy #UNECE #LSE

Pleased to introduce the Draft Report for the National Electricity Market (NEM) wholesale market settings review in Australia. It builds upon the significant work of previous reforms and seeks to re-embrace the foundational principles of microeconomic reform that led to the NEM's establishment, updated for the challenges and opportunities of the energy transition. Main Takeaways: 1️⃣ The report recommends retaining the real-time, energy-only spot market as the core mechanism for efficient dispatch. The key challenge of "hidden" price-responsive resources will be addressed by requiring a broader range of these resources to be visible and dispatchable in the market, ensuring the system can operate securely and efficiently. 2️⃣ To counter declining liquidity and ensure all participants can manage risk, the Panel recommends establishing an "always-on" market making obligation (MMO) for key derivative contracts. This will be supported by a new co-design process with industry to ensure contracts evolve with the market's needs. 3️⃣ The report identifies the "tenor gap"—the mismatch between long-term investment needs and short-term contracting—as the most significant barrier to new investment. To solve this, the Panel proposes a new Electricity Services Entry Mechanism (ESEM), an enduring feature embedded in the National Electricity Law to facilitate investment in bulk energy, shaping, and firming services. 4️⃣ The reforms are designed to ensure consumers have access to reliable electricity at fair, simple, and stable prices. Challenges: ✴️ The rise of variable renewable energy (VRE) and "hidden" consumer energy resources (CER) creates volatility and makes it harder for the market operator (AEMO) to forecast and maintain system security. ✴️ The exit of thermal generators threatens the availability of traditional hedging products, potentially eroding competition and raising costs, especially for smaller retailers. ✴️ Structural Barriers to Investment: The "tenor gap" and uncertainties around the timing of coal plant closures create a "vicious cycle" that discourages the timely, long-term investment needed for a seamless transition. Opportunities: ✳️ Millions of consumers are now electricity producers. Properly integrating their resources (rooftop solar, batteries, EVs) can improve efficiency, reduce system costs, and provide them with new revenue streams. ✳️ The ESEM is designed as a market-linked, efficient, and enduring mechanism to de-risk investment in the later years of a project's life, bridging the tenor gap without crowding out private initiative. ✳️ A more liquid and transparent derivatives market will allow all participants, especially new entrants and smaller players, to manage risk effectively, fostering competition and delivering better outcomes for consumers. #Australia #Electricity #NEM #ESEM #Batteries #Renewables #VRE #Decarbonization

We are the POLITO ‘’Energy & Climate High Level Group’’. We share with you the advice we give to this TOP WORLD Tech Univ in Turin. Today: Lucia Visconti Parisio ‘’How Long-Term arrangements (like CfDs or PPAs) are reshaping our EU electricity markets’’ As EU moves without credible alternatives towards a decarbonised electricity system, long-term contracts (LTCs) are rapidly becoming a structural element of our EU electricity market design. The key question is no longer whether LTCs should exist, but how they can be integrated into our EU market design without undermining competition, price signals, and cross-border market integration. 5 key policy conclusions emerge: 1• LTCs are becoming a structural feature of electricity markets, necessary to finance capital-intensive low-carbon investments and manage price risk. 2• Spot and forward markets remain essential for efficient dispatch, liquidity, and cross-border price convergence. LTCs must complement, not replace, these markets. 3• The cumulative impact of LTCs matters. Even well-designed contracts can affect price formation, market liquidity, and investment incentives when deployed at large scale. 4• National LTC schemes have cross-border implications. Greater transparency, monitoring, and coordination are needed to preserve the integrity of our Internal Electricity Market. 5• Distributional effects matter. Ensuring that the benefits of long-term contracts reach households and SMEs is crucial for the political and social sustainability of market reforms. As LTCs expand across Europe, the challenge for regulators will be to balance long-term risk hedging with the functioning of short-term markets. This makes monitoring, transparency, and coordination, particularly at the EU level, more important than ever. #ElectricityMarkets #EnergyTransition #EnergyPolicy #PowerMarkets #CfDs #PPAs #Decarbonisation Access to the full Lucia’s report 👇 https://lnkd.in/dcb8jc5M

Reforming Transmission Loss Charges: A Path to Lower Consumer Costs and Renewable Energy Growth David Osmond's insightful May 2024 article on RenewEconomy highlights a potential reform in Australia's National Electricity Market. The article details how changing the rules on transmission losses for wind and solar farms could save billions for consumers and support the growth of renewable energy. Key Points: 1. Impact on Consumer Costs: The current Marginal Loss Factors (MLF) system inflates consumer electricity bills by tens of billions over the next few decades. Switching to Average Loss Factors (ALFs) could save consumers billions, making energy more affordable. It’s essential to ensure cost savings are passed directly to consumers and communicated effectively. 2. Financial Viability for Renewables: MLF volatility increases financial risk for renewable energy developers, raising financing costs. ALFs or hedging mechanisms could reduce this risk, making projects more competitive. Clear guidelines and engagement with financial institutions are crucial for support. 3. Market Bias: The current system biases against renewables by impacting projects far from demand centres. A fairer system would encourage renewable investment and support a low-emission grid. Ensuring the new system remains technology-neutral and monitoring its impact is vital. 4. Complexity in Renewable Energy Targets: MLFs complicate setting and achieving renewable energy targets. Using ALFs would simplify this, providing a clearer pathway for meeting commitments. Updating frameworks and providing training are necessary steps. 5. Financial Risks and Market Stability: The current MLF system introduces financial and operational uncertainty. A more predictable system for charging losses would enhance investor confidence and market stability. A phased implementation plan and monitoring mechanisms would be needed. 6. Strategic Site Selection: The current system forces renewables to be sited based on proximity to demand centres. A fairer system would allow for strategic site selection, reducing social licence issues. Engaging with communities and developing balanced policies are important. 7. Holistic Approach to Energy Market Design: Reform highlights the need to consider interconnected impacts on generation, transmission, and consumption. A holistic approach will create a sustainable energy market. Involving stakeholders and continuously reviewing market design is essential. 8. Policy and Innovation Synergy: Aligning regulatory changes with technological innovations can maximise benefits. Synergy between policy and innovation can drive growth in the renewable sector. Collaboration and incentives for R&D in grid efficiency and energy storage are key. Reforming NEM transmission loss charging system is crucial for reducing consumer costs and supporting renewable energy growth. By addressing current biases and inefficiencies, we can create a fairer, more sustainable energy market.

Vietnam 🇻🇳 — In response to concerns raised by a member of parliament about whether the amended Electricity Law would effectively address monopolistic practices, the Deputy Minister of Industry and Trade stated that the government would retain control only over core areas such as grid dispatch and operation, while other segments would be opened up to private sector participation. Below are the key takeaways from recent discussions on the draft law at the National Assembly. 🏛️ Monopoly Retention: — The State will maintain a monopoly on core functions such as grid operation and management of high-voltage (220 kV and above) systems, as well as nuclear and multi-purpose hydroelectric projects. — Other sectors, including power generation, distribution, and retail, will be opened to private and non-state actors. 🔑 Opening Up the Market: — The draft law encourages socialization in investment and infrastructure, attracting various economic players to invest in the electricity sector. — Private companies can now build and operate power grids, under the framework of competitive market principles. 💲 Price Reforms: — Electricity prices will follow market mechanisms, with government regulation to ensure fair competition and to reduce cross-subsidies. — This move aims to create transparency and accountability in the industry, preventing state-owned enterprises like EVN (Electricity of Vietnam) from blaming losses on controlled pricing. ⚡️ Energy Security and Market Transition — While the focus is on reducing monopolies, the State will maintain control over essential elements to ensure energy security. — A more competitive power market is being gradually formed, with steps like transferring the National Load Dispatch Centre (A0) from EVN to the Ministry of Industry and Trade (MOIT) in August 2024. 📈 Market-driven Pricing: — Transitioning to market-based pricing is crucial to ensuring that power companies operate efficiently without relying on subsidies. — Policy adjustments will be made to balance the needs of vulnerable populations with market realities. 💪 What's ahead: — The draft law is scheduled for further review in the May 2025 National Assembly session, providing more time for thorough discussion and refinement. These reforms signal a significant shift in Vietnam’s approach to electricity, aiming to balance state control with greater private sector involvement and competition. The focus remains on ensuring energy security while fostering transparency and efficiency within the market. #Energy #ElectricityReform #Vietnam #MarketCompetition #Sustainability #SolarStorageLiveVN

India’s power market is quietly preparing for one of its most important operational shifts. The proposed shortening of Real Time Market (RTM) timelines by Central Electricity Regulatory Commission is not just a regulatory adjustment. It signals the beginning of a far more dynamic and real-time electricity ecosystem. Today, schedule revisions happen nearly 75 minutes before actual power delivery. The proposal aims to reduce that to 50 minutes. At first glance, it looks like a technical market reform. In reality, it changes how DISCOMs, GENCOs, IPPs, EPCs, and renewable energy operators will function in the coming years. Why this matters: India’s renewable energy penetration is rising rapidly. But solar and wind generation can change within minutes due to: cloud movement wind fluctuation temperature variation weather disturbances The older scheduling framework was built for a predictable thermal-heavy grid. The future grid will operate differently. A renewable-heavy grid needs: faster balancing shorter forecasting cycles intelligent dispatch real-time optimization automated compliance systems This proposal pushes the industry in that direction. For DISCOMs: Better demand matching Lower DSM penalties Improved portfolio optimization Higher dependence on real-time forecasting systems For GENCOs and IPPs: Faster response expectations Reduced schedule deviation risk Stronger value proposition for BESS integration Increased need for automated scheduling and forecasting For Solar & Wind EPCs: The scope is no longer limited to plant construction. Future-ready projects will increasingly require: forecasting integration telemetry readiness EMS compatibility compliance automation grid intelligence capability The biggest shift may happen in forecasting and compliance. Earlier, forecasting was often treated as a regulatory requirement. Now it is becoming a financial and operational necessity. Because in a faster RTM environment: forecast accuracy directly impacts profitability scheduling efficiency affects DSM exposure real-time intelligence becomes critical for grid participation This is where forecasting, analytics, compliance, EMS, and AI-driven optimization platforms become central to the renewable energy ecosystem. The Indian power sector is gradually moving from: “schedule and operate” to: “predict, optimize, and respond in real time.” That transition will define the next phase of renewable energy growth in India. #RenewableEnergy #BESS #EnergyStorage #PowerMarket #RTM #Forecasting #SolarEnergy #WindEnergy #EnergyTransition #GridManagement #DSM #EnergyAnalytics #DISCOM #IPP #EPC #SmartGrid #IndiaEnergy #CleanEnergy #BatteryStorage #AIinEnergy

Recent power exchange (PX) price discovery reflects a structural distortion in market outcomes rather than normal volatility. Prices collapsing to ₹1–3/kWh during solar hours (7 AM–6 PM) and persistently hitting the ₹10/kWh ceiling during evening and night indicate a binary market split, surplus-driven pricing in the day and artificially capped scarcity at night. PX is no longer clearing on marginal cost but oscillating between zero-price surplus and capped scarcity, with quantity rationing replacing price discovery, an early sign of structural market distortion. The repeated binding of the price cap suggests that the market is no longer clearing on marginal cost, but is constrained by regulatory limits, thereby weakening the core function of efficient price discovery. More concerning is the emergence of nearly 50 GW of uncleared bids, coupled with pro-rata allocation at the ceiling price, which signals a shift from price-based allocation to quantity rationing. This leads to inflated bidding behaviour, as participants converge at the cap without revealing true willingness to pay, thereby distorting scarcity signals. The result is a breakdown of economic efficiency: prices no longer reflect system conditions, efficient generators are not prioritised, and the exchange risks losing credibility as a transparent market platform. This evolving pattern points to the need for urgent market design interventions. Key measures include revisiting the price cap framework to enable scarcity pricing, accelerating deployment of storage and flexible resources to smooth intraday imbalances, and introducing advanced market mechanisms such as ancillary services and real-time balancing markets. Without such reforms, the PX risks transitioning from a competitive price discovery platform to a rationed allocation system, undermining investment signals and long-term market sustainability. #PowerMarket #ElectricityMarkets #PriceDiscovery #MarketDistortion #ScarcityPricing #RenewableIntegration #DuckCurve #GridFlexibility #EnergyTransition #PowerSectorReforms

⚡️Ministry of Power seeking comments on Draft Electricity (Amendment) Bill, 2025. Proposed Amendments to the Electricity Act, 2003: To support India’s vision of Viksit Bharat @ 2047, the proposed amendments aim to create a financially sustainable, environmentally sound, and competitive power sector. The reforms address persistent issues in distribution, regulatory delays, and high industrial tariffs, while promoting clean energy and ease of doing business. 1. Financial Viability • Cost-reflective tariffs made mandatory for Electricity Regulatory Commissions. • Advance subsidies allowed by State Governments to protect vulnerable consumers. • Suo motu tariff determination by regulators to avoid delays and ensure timely revisions. 2. Economic Competitiveness • Open Access Reform: Distribution Licensees may be exempted from Universal Service Obligation (USO) for large consumers, enabling direct power purchase. • Cross-subsidy removal for Railways, Metros, and Manufacturing Enterprises within 5 years to reduce logistics costs. • Captive Generation: Central and State Governments to frame clear rules, encouraging self-generation and industrial growth. 3. Energy Transition • Market-based mechanisms to be introduced by CERC for renewable capacity addition. • Non-fossil energy obligations to be aligned with the Energy Conservation Act for consistency and enforcement. 4. Ease of Living & Doing Business • Minimum service standards to ensure reliable power supply nationwide. • Consumer-friendly appeals: Capping unauthorized use assessment to 1 year; reducing mandatory appeal deposits. • Simplified licensing: Removal of Central Government NOC for defense areas without infrastructure work. 5. Regulatory Strengthening • Accountability: Governments can act against CERC/SERC members for misconduct or negligence. • Timely adjudication: 120-day limit for regulatory decisions. • APTEL expansion: Members increased from 3 to 7 to reduce backlog. 6. Other Reforms • Right of Way (RoW): Legal clarity for electric line installation under the Electricity Act. • Cybersecurity: CEA to frame regulations for secure power system operations. • Network sharing: Distribution licensees can share infrastructure to reduce duplication. • Electricity Council: A new high-level body to coordinate reforms between Centre and States.