7. ELECTRICITY
CERC determines the tariffs for generators owned by the central government and for those supplying electricity to more than one state. CERC sets the tariffs for transmission and is also in charge of the licensing interstate transmission and trading by generators, grid discipline and grid security, market development and market monitoring, as well as the promotion of renewable energy and energy efficiency by regulating the renewable energy certificates and the energy saving certificates. CERC also has oversight over the two power exchanges, the Indian Energy Exchange and the Power Exchange India. The Central Advisory Committee is in place to advise CERC on policy questions, compliance of power market licensees and standards of performance by utilities; however, it has no direct policy or regulatory control.
Figure 7.8 Structure of India’s power sector
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The State Electricity Regulatory Commissions (SERCs) regulate electricity generated by individual states’ generators and sold within a single state. SERCs grant licences for intrastate transmission, intrastate trading and distribution. The GoI is planning a nationallevel selection committee for appointing chairpersons and members in all state electricity regulatory commissions to set the bodies free from political intervention and improve decision making at the central level.
The Forum of Regulators of India brings together CERC with the SERCs as a forum for discussion and exchange of views, based on model guidelines or regulations (model guidelines on rooftop solar and net metering rules, tariff rationalisation and tariff guidelines).
Market structure
India’s power market activities are largely unbundled, based on the separation of generation, transmission and distribution under the Electricity Act of 2003, with retail activities been carried out mostly by DISCOMs. Generation does not require a licence.
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7. ELECTRICITY
While around 45% of generation is privately owned, the lion’s share is owned by the governments (30% by the states and 25% by the central government) and unbundling of retail and distribution grid activities remains incomplete. Private investment is strongly growing in the area of renewables, and was previously the case for natural gas. There is a large efficiency gap between private and state-owned power plants (World Bank, 2019).
India’s power market has around 600 generating stations, 30 transmission licensees, around 70 distribution licensees and two power exchanges with around 40 trading licensees. Similar to the European Union, India has power exchanges but no market operator.
India opened the electricity market to competition with the Electricity Act 2003. Many independent power producers (IPPs) have entered the market. However, the retail market is largely closed and has only limited competition. India has around 70 DISCOMs, most of which are state-owned and purchase power from generators, mostly through long-term power purchase agreements (PPAs), and sell them to residential, retail, agricultural, commercial and industrial consumers. Today the National Capital Territory of Delhi has a private DISCOM and seven other states have established private DISCOMs. All DISCOMs act as regional monopolies.
The power system is operated by the Power System Operation Corporation (POSOCO), a state-owned company under the MoP. Since 2017 POSOCO has been fully responsible for ensuring the integrated operation of the grid in a reliable, efficient and secure manner through its five Regional Load Despatch Centres (RLDCs) and the National Load Despatch Centre (NLDC). It is fully independent from transmission activities.
Transmission
India has several electricity transmission operators across its territory. Power Grid Corporation of India Limited (Powergrid), a listed company with GoI holding 57.9%, operates under the MoP as the central transmission utility. Owning around 85% of India’s transmission network, Powergrid owns and operates the interstate transmission lines, with a share of 40-50% of all transmitted electricity. It is required to ensure the development of a system of efficient, co-ordinated and economic interstate transmission lines, and to guarantee non-discriminatory open access to its transmission system, subject to availability of adequate transmission capacity. For the intrastate transmission systems these functions are performed by the state transmission utilities. There is a small number of private companies operating certain transmission lines. Powergrid also operates and maintains the international transmission interconnections with Bhutan, Nepal and Bangladesh.
Under the Electricity Act 2003 and Tariff Policy 2006, the MoP encouraged competitive tenders for transmission, based on the MoP “Guidelines for encouraging competition in development of transmission projects” and “Tariff-based competitive bidding guidelines for transmission services”. Since 2011 all interstate transmission projects have to be implemented through tariff-based competitive bidding, except for some projects that are identified by the MoP for implementation by Powergrid (including projects that are strategic in nature, are technical upgrades or have time constraints as defined in Tariff Policy 2016).
By July 2019 India’s interstate system had a length of 417 141 circuit kilometres and a transformation capacity of 917 843 megavolt amperes (MVA) (220 kilovolts [kV] and
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