Q. Why is this in News?
A. Recently, the Union Minister of Power & New and Renewable Energy has launched the new market segment, Green Day Ahead Market (GDAM) at the Indian Energy Exchange.
- India is the only large electricity market in the world to implement a Green Day Ahead Market (GDAM) exclusively for renewable energy.
Q. What is Indian Energy Exchange?
- Indian Energy Exchange is the first and largest energy exchange in India providing a nationwide, automated trading platform for physical delivery of electricity, Renewable Energy Certificates and Energy Saving Certificates.
Q. What is Day-Ahead Market (DAM)?
- It is a physical electricity trading market for deliveries for any/some/all 15 minute time blocks in 24 hours of the next day starting from midnight.
Q. What is Term-Ahead Market (TAM)?
- The contracts under TAM cover a range for buying/selling electricity for duration up to 11 days.
- It enables participants to purchase electricity for the same day through intra-day contracts, for the next day through day-ahead contingency, on a daily basis for rolling seven days through daily contracts.
- It 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.
Q. What about working of the GDAM?
- It will operate in an integrated way with the conventional day-ahead market.
- The Exchanges will offer the market participants to submit bids together for both conventional and renewable energy through the separate bidding windows.
- This mechanism will allow renewable energy sellers to subsequently bid in the conventional segment should their bids remain uncleared in the green market.
- There will be separate price discoveries for both the conventional and renewables.
Q. What are the Expected Benefits?
- Deepen Green Market:
- It will deepen the green market and will provide competitive price signals, besides offering an opportunity to the market participants to trade in green energy, in the most transparent, flexible, competitive, and efficient manner.
- Accelerate the Renewable Capacity Addition:
- It will provide another option to renewable generators to sell power as well as accelerate the renewable capacity addition towards India's vision as a sustainable and efficient energy economy.
- The distribution utilities would also be able to sell surplus renewable power generated in their area.
- Shift from PPA based Contract to Market-Based Models:
- It will create a domino effect that will lead to a gradual shift from Power Purchase Agreements (PPAs) based contracts to market-based models.
- It will build and deepen the markets to the next level, paving the way for India to meet its ambitious target of 450 GW green capacity by 2030.
- Reduction of Curtailment of Green Power:
- It would reduce the curtailment of green power, unlock untapped renewable energy potential, ensure instant payment to Renewable Energy generators i.e. on the day of delivery itself.
Q. What is the status of Renewable Energy in India?
- India is the world's third largest consumer of electricity and the world's third largest renewable energy producer with 38% (136 GW out of 373 GW) of total installed energy capacity in 2020 from renewable sources.
- In 2016 under the Paris agreement, India made the commitment of producing 450 GW, or 40% of its total electricity, from non-fossil fuel sources by 2030.
- The GDAM comes at a time when the country is facing a shortage of coal.
- The country needs to decrease its dependence on imported sources of fossil fuel.
Q. What are the Related Initiatives?
- National Solar Mission (NSM)
- National Biofuels Policy and SATAT
- Small Hydro Power (SHP)
- National Hydrogen Energy Mission (NHEM)
- Production-Linked Incentive (PLI) Scheme
- National Biofuels Policy and SAYAY