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One Nation, One Grid: A problematic power equation

Concept of centralised electricity market sounds sensible in theory but is likely to be unworkable in practice

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electricity | Business Standard Editorial Comment | Power grids

Business Standard Editorial Comment  |  Mumbai 



The emerging controversy over the creation of a centralised market for demonstrates in microcosm avoidable tensions in federal relations. The concept of “One Nation, One Grid, One Frequency, One Price”, announced in October last year, is part of the National Policy of 2021, which proposes to double the penetration of short-term power markets by 2023-24. It sounds sensible in theory but is likely to be unworkable in practice for a variety of reasons. The intention of this policy is to reduce the price of power to the consumer, but the procedure by which this goal will be achieved appears problematic. The policy is based on the market-based economic dispatch, or MBED, mechanism, under which the power ministry plans to set up a central scheduling and pooling system that will algorithmically allocate power at an optimal price by prioritising the least-cost and most efficient generators and weeding out more expensive ones. This mandatory system, which aims to reduce consumers’ power-purchase cost by 5 per cent initially, is to replace the existing decentralised and voluntary system, which operates through a network of state load dispatch centres connected to regional load dispatch centres and, finally, to national load dispatch centres, which form an inter-regional power grid. In effect, each state and region monitors and balances demand and generation.

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First Published: Mon, September 19 2022. 22:46 IST

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