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SARPEX

FAQs on South Asian Regional Power Exchange (SARPEX)

1) What is the concept behind SARPEX?

Currently in the SA regional power market, there is long and medium term power trading though bilateral agreements. However to extract the full benefit of regional power trade of day ahead nature, a regional power exchange is essential. The sporadic demand-supply mismatch at the geographical level also calls for a market place where surpluses can be disposed of efficiently on a real time basis to optimise resource allocation The biggest advantage of a market place is that it is less open to manipulation, compared to non-market mechanisms based on negotiations. There is also no room for vested interests and political influence to set prices at inefficient levels. The Ministry of Power (MoP), India has framed the guidelines on Cross Border Electricity Trade, on 5th December, 2016. As per the same, SACs are now allowed to participate in the Indian Power Exchange for Term Ahead Contracts, Intra Day Contracts/Contingency Contracts subject to certain conditions. The guidelines also mentions that other categories of contracts may be included based on review by the MoP, India in consultation with Central Electricity Regulatory Commission (CERC), which could include “Day Ahead Spot“, in the long run. Based on the above, SARPEX is a concept of having a power exchange platform for power trade between the South Asian Nations. The concept is currently applied to only India, Nepal, Bhutan and Bangladesh due to the current state of grid connectivity between these countries. It may be noted that the separate platform concept is applicable for both the Term Ahead and the Day Ahead Market. However, the exercise is being conducted with the Day Ahead Market in mind which is the primary product in a power exchange. There is a distinct possibility of introduction of such a market over the long run in view of the recently issued MoP, India guideline and the draft notification issued by CERC.

2) Why is SARPEX Mock exercise being conducted?

The SARPEX mock exercise is being conducted to demonstrate the feasibility and desirability of a Regional Power Exchange in the South Asian Region. The mock exercise will take place in a Day Ahead Market (DAM) format. The Mock exercise will also prove to be beneficial to Nepal, Bangladesh and Bhutan from a skill and capacity building perspective. In particular the core team will be trained to participate on a Power Exchange, analyse data to determine their bids, place the bids and interpret the results.

3) What are the two modes of operation of the mock exercise?

The following two modes of operation are being evaluated in keeping with the key market objectives and constraints of SARPEX:
  • Unified Mode: In this case, the bids from both the Indian participants and BBN will be cleared simultaneously on the Exchange. In other words, BBN will have a single Unconstrained Market Clearing Price for both India and BBN. In doing so, the key features of the DAM as prevalent in the Indian Exchanges today would remain unaltered for Indian entities. But, the frameworks will need to be developed for integrating BBN and India.
  • Sequential Mode: The bids from the Indian participants and BBN countries will be cleared in a sequential manner. Exchanges for DAM will be run in a sequential manner consisting of two auctions; one to arrive at the market clearing prices and volumes for India and the second one for BBN. The first auction will comprise of market clearing solution for the Indian participants only and will not take into account the bids from BBN. The market will be cleared as per the prevailing Uniform Market Clearing mechanism and the solution will be obtained. Thereafter, a subsequent market will be formed to initiate the second auction comprising of the bids from BBN and all the un-cleared bids taken “as is” from the first auction. The market will be cleared as per Uniform Market Clearing Price mechanism and the price for BBN will be determined.

4) Why the mock exercise is being conducted in two modes of operation?

Two modes of operation have been considered in keeping with the market principles of Social Welfare Maximization and efficiency. Both modes of operation will be compared from this perspective to arrive upon the final mode of operation. A rigorous analysis backed by market simulations will be undertaken to recommend the most appropriate mode of market clearing as a result of this exercise.

5) What is the purpose of the SARPEX web portal?

The following are the two primary objectives of this web portal:
  • It is essentially a knowledge dissemination tool that provides interested parties with details regarding SARPEX and the DAM mock exercise. The portal link may also be forwarded to parties interested in this exercise.
  • Secondly, core team members can place bids and also view the simulated Market Clearing Price (MCP) and Market Clearing Volume (MCV) of the mock exercise after logging in.
  • Link to SARPEX web Portal :-  http://mocksarpex.eu.ai

6) How to Bid on the existing platform?

Bids are placed for every 15 minute interval during the day. Formats in which the bids are to be submitted will be shared prior and the MCP and MCV will be calculated for each time block.

7) What is the role of the SARI/EI Task Force-3 in this exercise?

Under the SARI/EI program to initiate the action towards formulation of South Asia regional electricity market, the Project Steering Committee, guiding the Task Forces, has been set up. In addition, three task forces (TF) have been formed to provide guidance and create enabling conditions in the respective fields. Task Force 3 works for the establishment of South Asian Regional Electricity Markets. As a part of TF-3 activities, a study was conducted for recommending suitable commercial terms and condition and suitable option for a regional power exchange. The long term option for a suitable power exchange has evolved into an idea of SARPEX. All these activities are being conducted under the guidance of the TF-3, which will finally give recommendations on all regional market related activities including SARPEX.

8) What is the role of the MAC in this exercise?

The Market Advisory Committee (MAC) was formed to include suitable experts who can provide guidance to the team for conducting the mock exercise. The functions of the Market Advisory Committee (MAC) are:-
  • To advice on the market rules and design of the pilot market.
  • To monitor the pilot market activities and give suggestion as and when required.
  • To facilitate stakeholder consultation and advocacy of the Mock exercise in the participating Nations.
  • To give guidance to the core teams.

9) What is the role of the core teams in this exercise?

Three core teams with four members each have been nominated by Nepal, Bhutan and Bangladesh. The core team are well conversant with one or more of the following activities in their own organisation:-
  • Power procurement/trading,
  • Assessment of demand and generation availability.
  • Load despatch activities,
  • Generation, transmission and distribution costs and tariffs.
  • Overall knowledge of their national power sector.
  • Finance
The core team will lead the SARPEX mock exercise activities in their own country. They will analyse the data and place bids on the portal. They will also be provided with adequate training in all related areas.

10) Who can have a log in ID and password?

At present the core team members have been provided with the log in IDs and password. They can use the same to place bids and also to see the results generated when the matching engine is run. This is necessary to ensure that only the authorized persons enter the bids.

11) How to be a part of this exercise?

You can be a part of the exercise by giving your valuable suggestions. If desired, you may also give your consent in playing a more active role in this project and suggest the nature of involvement you have in mind. In such cases please do share your details like name, designation, organisations etc. In an exercise of this nature, everyone can contribute by sharing his views and ideas.
For details on the SARPEX Road Map , please click on the following link Roadmap for South Asian Regional Power Exchange