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MNRE launches Green Day Ahead Market (GDAM)

Context:

Union Minister of Power & New and Renewable Energy, launched the new market segment, Green Day Ahead Market (GDAM).

Relevance:

GS-III: Industry and Infrastructure (Renewable sources of Energy, Energy Security, Solar Energy)

Dimensions of the Article:

  1. What is Green-Day-Ahead Market (GDAM)?
  2. How will GDAM be beneficial?
  3. Significance of GDAM

What is Green-Day-Ahead Market (GDAM)?

  • Green Day Ahead market (GDAM) 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.
  • The energy company now has the option of the market rather than suffering a loss of revenue in case any electricity distribution company (Discom) refuses to buy their electricity.
  • The Green Day-ahead market will operate in an integrated way with the conventional day-ahead market but with a separate clearing mechanism and price discovery for both the renewable segment and convention energy segment.
  • Participants in the market (sellers and buyers) can submit their bids together for both conventional and renewable energy through separate bidding windows. The clearance will take place in a sequential manner, with priority given to renewables.
  • Sellers and buyers can submit bids during a window each day, the electricity would be delivered the following day. Unlike GTAM (Green-Term Ahead Market) which was not for sale or purchase of power the following day, the sellers will get instant payment on the day of delivery itself.

How will GDAM be beneficial?

  • The launch of GDAM will offer competitive price signals as well as an opportunity to the market participants to trade in green energy in the most transparent, flexible, competitive, and efficient manner.
  • With the market-based competitive prices, the renewable generators will find an option to sell power as well as boost the renewable capacity addition towards the government’s vision of building India as a sustainable and efficient energy economy.
  • Benefits of free ISTS (inter-State transmission system) will be available for renewable energy and open access will be available within 15 days.
  • The distribution utilities would also be able to sell surplus renewable power generated in their area.
  • The obligated entities (distribution licensee, open access consumers, and captive power consumers) would also be able to meet the RPO target by directly buying green power from the power exchange(s).
  • The non-obligated entities will be able to buy power on a voluntary basis and help increase the share of green power.
  • Other benefits of GDAM include reduction of curtailment of green power, assured instant payment to Renewable Energy generators on the day of delivery itself, and tapping into the unlocked renewable energy potential of India.

Significance of GDAM

  • Green-Day-Ahead Market has been termed as a unique product launch in the energy market in India. The world is witnessing a wave of energy transition. India is also committed to the energy transition from fossil fuel to non-fossil fuel sources.
  • There is a significant shift in the buyer’s behavior from long-term contracts to short-term contracts, and also towards the power market. GDAM aims to enable this energy transition for India.
  • GDAM will enable the achieving India’s green targets and facilitate the integration and expansion of green energy in an efficient, competitive, sustainable & transparent manner.
  • GDAM is expected to create a domino effect that will lead to a gradual shift from PPA-based contracts to market-based models and enable India in achieving its ambitious target of 450 GW green capacity by 2030.

-Source: PIB

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October 2022
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