Centre, states tussle over a centralised market for electricity
- Union & states are at odds due to a plan by the former to jettison the existing decentralised, voluntary pool based electricity market in favour of a radically different mandatory pool model on a pan-India basis.
Market-Based Economic Dispatch (MBED) mechanism
- The Ministry of Power proposal envisages centralised scheduling for dispatching the annual electricity consumption of around 1,400 billion units.
- Marks a clear shift from a decentralised model followed now, which has been buttressed by the Electricity Act 2003 and follow-on reforms.
- Impinges on the relative autonomy of states in managing their electricity sector.
MBED as pitched by the Union
- A way forward to deepen power markets in line with the Centre's 'One Nation, One Grid, One Frequency, One Price' formula .
- Will ensure the cheapest electricity generating resources are supplied to meet overall system demand
- A win-win for both the distribution companies and the generators and result in savings for consumers.
Concerns of states
- Power is in the Concurrent List of the Constitution, with the electricity grid being divided into statewise autonomous control areas managed by the State Load Dispatch Centres (SLDCS).
- Supervised by Regional Load Dispatch Centres (RLDCS) and the National Load Dispatch Centre (NLDC).
- MBED model proposes to change this.
- Puts in place a central market operator to dispatch the interstate & intrastate generation plants.
- Could potentially clash with emerging market trends.
- The increase in renewable energy and numbers of electric vehicles plugging into the grid necessitate decentralisation of markets and voluntary pools for efficient grid management and operations.