India’s wholesale electricity markets are on a path toward key market design reforms with the Central Electricity Regulatory Commission (CERC) proposing the framework and draft amendments for a real-time market. These reforms have the potential to substantially improve the efficiency of the power sector. A series of discussion papers CERC published on real-time markets, day-ahead markets and ancillary services markets has started several meaningful dialogues, debates and analyses in the sector. As with any significant change, stakeholders are trying to piece together the implications of the proposed reforms.
RAP in collaboration with Resources for the Future, the University of Virginia, Bostian Consulting LLC and Cornell University has developed several resources to support these policy discussions. The package offers a variety of approaches to help stakeholders explore, study and evaluate the proposed electricity market reforms and the key economic concepts and principles that underpin them.
More than 200 experts from load dispatch centers, regulatory commissions, distribution companies, generation companies, consumer advocacy groups, civil society organizations and academia already have participated in workshops using the resources. Because of high demand for the materials, including a lecture-based curriculum and interactive player-driven simulation game, we are making them available free online to anyone interested in using them.
Market Economics Curriculum
We developed a curriculum focused on the fundamental economic engineering concepts underlying competitive electricity markets. Power sector professionals can use the curriculum to deepen their understanding of wholesale electricity markets and evaluate how different market designs affect their operations.
The Economics for Wholesale Electricity Markets curriculum consists of 70 short videos organized into seven modules:
- Module 1: The Language of Costs
- Module 2: Services of Different Plants
- Module 3: Costs of Different Plants
- Module 4: Existing Plant Decision-making
- Module 5: New Plant Decision-making
- Module 6: Contracts, Auctions and Exchanges
- Module 7: System Management
Each module includes a presentation download, and the short videos allow viewers to easily revisit specific topics anytime from the complete playlist.
India Electricity Simulation Tool
The innovative India Electricity Simulation tool models the real-world outcomes of wholesale power market transactions. It offers stakeholders and policymakers an opportunity to evaluate their decisions under different market designs.
This immersive learning experience is completely player driven. Participants (or teams) assume the roles of power sector entities — both distribution utilities (Discoms) and generating companies (Gencos) — and make electricity sector investment and operational decisions under different scenarios. Since the tool is online, participants need not be in the same physical place to play together, although a team may find it easiest to cooperate in person.
The participants have different objectives, depending on their assigned role. The Discoms seek to serve their customer load at the lowest cost, while the Gencos seek to run their generator portfolio as profitably as possible. As participants advance through the simulation, they must make decisions about procuring capacity, scheduling power and managing real-time imbalances.
The tool offers five market designs ranging from a completely decentralized bilateral contracts model to a centralized pool-based model. By playing multiple scenarios with different market structures and different assigned roles, participants can learn more about the nuances of different market designs as well as the decision-making behavior of the Discoms and Gencos.
Policy discussions and design questions that the tool can support include:
- What is more effective in ensuring that least-cost electricity is being scheduled and dispatched: bilateral or centralized day-ahead scheduling of transactions?
- What is the importance of flexible resources in the system, and how can we accurately reflect the value of these resources?
- What kind of market design can optimally utilize flexible resources to manage system imbalances?
- How best to make long-term decisions about procuring or building new capacity and the type of capacity to invest in?
Interested in learning more or setting up a game? Visit the India Electricity Simulation tool and check out the Instructor Guidebook, which provides an overview of using the tool as well as discussion questions. For more information on using these tools, contact Dheer Patel.
Learning by Doing
CERC’s proposed market reforms have the potential to cost-effectively integrate the rapidly growing share of renewable energy into India’s grid. We hope the markets curriculum and the India Electricity Simulation tool give stakeholders the knowledge and experience to embrace the reforms and bring new insights to the policy discussion.