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Stages of Market Opening

Stages of Market Opening. www.cppa.gov.pk. Scheme of Presentation. www.cppa.gov.pk. Part 1 Background of Market Development in Pakistan. Market Development in Pakistan. Vertically Integrated Utility. Single Buyer Model. Single Buyer Model. WAPDA Hydel. WAPDA Hydel. IPPs. IPPs.

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Stages of Market Opening

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  1. Stages of Market Opening www.cppa.gov.pk

  2. Scheme of Presentation www.cppa.gov.pk

  3. Part 1 Background of Market Development in Pakistan

  4. Market Development in Pakistan Vertically Integrated Utility Single Buyer Model Single Buyer Model WAPDA Hydel WAPDA Hydel IPPs IPPs GENCOs GENCOs Generation (Hydel/Thermal) PPAs NTDC PPAs Transmission NTDC Monopolistic control CPPA-G Distribution DISCOs DISCOs Consumers BPC Consumers BPC Consumers 1998 1958 2015 Current www.cppa.gov.pk

  5. Part 2 Stages of Market Opening

  6. Stages of Market Development • Stage 1: Doable, legally correct recommendation proposing an interim solution on wheeling, followed by developing regulations and commercial code. • Stage 2: Development of Procurement Regulation to streamline the current procurement process for regulated consumers. • Stage 3: Implementation of the seventeen group of actions for establishment of Competitive Wholesale Electricity Market targeted for June 2020. www.cppa.gov.pk

  7. Opening Of Wholesale Market In Three Stages -Detailed Comparison

  8. Opening Of Wholesale Market In Three Stages -Detailed Comparison Back www.cppa.gov.pk

  9. Market Development – Important Timelines Competitive Wholesale Market Model Single Buyer Model (Separation of CPPA from NTDC) Single Buyer Plus Model 2017 2020 • CPPA Established as Independent Legal Entity (Single Buyer & MO) • CPPA continue to act as Single Buyer on Behalf of DISCOs as well as MO • Only BPCs are Allowed to Purchase Power Directly from the Generator • Separation of MO and Agency Functions of CPPA • Entry of Traders and Suppliers in the Market for Trading • DISCOs can also Perform Trading Directly in the Market www.cppa.gov.pk

  10. Market Share-Eligible Consumers/BPCs DISCO-wise Share in Electricity Consumption (BPC share in terms of No. of consumer to be added) Share in Electricity Consumption www.cppa.gov.pk

  11. Part 3 Current Wheeling Arrangement(Key Challenges)

  12. Challenges with Wheeling Regulation 2016 • Self Dispatch – The Wheeling Regulation is based on self-dispatch irrespective of voltage level which violates the provisions of NEPRA Act (14B), Grid Code and Gen. Licensing Rules. • Wheeling from RE having non-firm capacity is not covered in Wheeling Regulation • Banked Energy: This is an outdated concept which is at heart of Wheeling Regulation (a) Physically the electricity cannot be stored in the System; and (b) the price of electricity changes with time. Banking therefore is not a practically implementable solution. • The losses treatment mechanism is also missing in Wheeling Regulation. • Wheeling at the time of Maintenance of Generating unit etc. not covered • Other Challenges • Amendments in other rules and regulations • Technical capability of DISCOs to operationalize the wheeling regulation (structural and HR) • Lack of proper settlement system for imbalances • Wheeling in surplus regime • Stranded costs www.cppa.gov.pk

  13. Three Important Concepts • End Consumer Tariff Structure • Firm Capacity Concept • Central Dispatch

  14. End Consumer Tariff Structure www.cppa.gov.pk

  15. End Consumer Tariff Structure: Fixed Vs. Variable Charges Recovery

  16. End Consumer Tariff Structure Fixed Vs. Variable Charges Occurrence & Recovery www.cppa.gov.pk

  17. Cost Transferring Mechanism NTDC Settlement by CPPA-G UoSC = F.C DISCOs 71% FC 29% VC CTR for FC End Consumers 3% FC 97% VC CPPA-G Tariff MO Fee = F.C ETR for Energy Generators Capacity Invoices = F.C Energy Invoices = VC + FC (REs & RLNG) www.cppa.gov.pk

  18. Example of Typical Household Load Case1: House with no Net Metering Case2: Same House with Roof Top Solar or Net Metering www.cppa.gov.pk

  19. Firm Capacity Concept www.cppa.gov.pk

  20. Summary: Firm Capacity of Generators Firm Capacity is a concept related to security of the system. It is defined as the capacity of the power plant to be available at the most critical event of the system. There is proper methodology to determine the firm capacity of each power plant in each system The firm capacity concept is used in the peak constrained systems while firm energy concept is used in the energy constrained systems Normally, Thermal and Reservoir based hydro power plants have high values of firm capacity The firm capacity of VREs and Run of River Hydro depends on the system characteristics and the generation profiles of these technologies. www.cppa.gov.pk

  21. Generation Technology & Firm Capacity www.cppa.gov.pk

  22. FFC Wind Hourly Generation (2017-18) Capacity www.cppa.gov.pk Time

  23. Hourly FFC Wind Generation (Jun 2018) Capacity Time www.cppa.gov.pk

  24. Wind Profile Annual-Total Wind(2016-17) Capacity Time www.cppa.gov.pk

  25. Solar Profile Annual Capacity Time www.cppa.gov.pk

  26. Conclusion Due to their fluctuating profile, VREs have little firm capacity The Generation of Run of River Plants having pondage is quite stable and they also contribute to firm capacity to certain extent The Reservoir based hydro and thermal plants can have the most stable generation profile and contribute the most to the firm capacity in the system. Firm Capacity requirement is needed to make sure the adequate supply in the System to serve the load at all time Single Buyer was covering firm capacity and distributing the costs to all buyers, however, market opening will require this firm capacity additions to ensure security of supply www.cppa.gov.pk

  27. Central Dispatch www.cppa.gov.pk

  28. Legal & Regulatory Framework NEPRA Act 1997 Clause 14 B sub clause 4 states that:

  29. Legal & Regulatory Framework: Grid Code

  30. Legal & Regulatory Framework: Grid Code (Contd…)

  31. The Electricity Market: An Analogy

  32. Technical and Commercial Transactions in Stage 1 & 2 MPA MPA CPPA-G PPAA PPA/EPA Power Flow $$ Consumers Transmission System Distribution System G Non-Eligible Consumer (<1 MW) G Eligible Consumer (>=1 MW) Connection Agreement (Demand) Connection Agreement (Generation) Eligible Consumer G1 Deviation Settlement Mechanism Actual Contract Bilateral Contract www.cppa.gov.pk

  33. Technical and Commercial Transaction in CTBCM (Stage 3) CPPA-G PPAA Contract = Actual Power Purchaser (DISCO’s Agent) PPA/EPA Settlement Market Operator Central Dispatch (NEPRA Act Sec.14D and 23G) Self Dispatch (Grid Code) Power Flow Consumers Transmission System Distribution System G Non-Eligible Consumer (<1 MW) G Actual Contract Eligible Consumer (>=1 MW) $$ Balancing Mechanism BME + BMC T G T S Eligible Consumers/DISCOs (NEPRA Act Sec.22) (NEPRA Act Sec.23C) (NEPRA Act Sec.23E) www.cppa.gov.pk

  34. Thanks

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