{"id":220265,"date":"2022-12-29T14:53:28","date_gmt":"2022-12-29T09:23:28","guid":{"rendered":"https:\/\/blog.forumias.com\/?page_id=220265"},"modified":"2022-12-29T14:53:28","modified_gmt":"2022-12-29T09:23:28","slug":"answered-the-concept-of-a-centralized-electricity-market-sounds-sensible-in-theory-but-is-likely-to-be-unworkable-in-practice-discuss-in-the-light-of-the-one-nation-one-grid-initiative","status":"publish","type":"page","link":"https:\/\/forumias.com\/blog\/answered-the-concept-of-a-centralized-electricity-market-sounds-sensible-in-theory-but-is-likely-to-be-unworkable-in-practice-discuss-in-the-light-of-the-one-nation-one-grid-initiative\/","title":{"rendered":"[Answered] The concept of a centralized electricity market sounds sensible in theory but is likely to be unworkable in practice. Discuss in the light of the One Nation, One Grid initiative."},"content":{"rendered":"<table>\n<tbody>\n<tr>\n<td width=\"616\"><strong>Introduction:\u00a0<\/strong>Contextual introduction.<\/p>\n<p><strong>Body:\u00a0<\/strong>Explain some significance of One Nation, One Grid initiative.\u00a0\u00a0Also write some issues.<\/p>\n<p><strong>Conclusion<\/strong>: Write a way forward.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>The One Nation, One Grid initiative is based on the <strong>market-based economic dispatch (MBED<\/strong>) mechanism. It is part of the National\u00a0Electricity\u00a0Policy of 2021 which proposes to double the penetration of short-term power markets by 2023-24. Under this mechanism the power ministry is planning to set up a central scheduling and pooling system.<\/p>\n<p><strong>Significance:<\/strong><\/p>\n<ul>\n<li><strong>T<\/strong>his system will <strong>allocate power at a favourable price<\/strong> by prioritizing the least-cost and most efficient generators and removing more expensive ones.<\/li>\n<li>This system will <strong>reduce consumers\u2019 power-purchase cost<\/strong> initially by 5 percent and will help in the distribution of cheap power across the country.<\/li>\n<li>This system will also replace the existing decentralised and voluntary system which operates through a network of load dispatch centres.<\/li>\n<li>It will lead to a<strong> \u201cuniform clearing price\u201d. <\/strong>Sellers and buyers will be able to bid for the day ahead of the market leading to market clearing price. This in turn will help to generate savings for consumers.<\/li>\n<\/ul>\n<p><strong>Issues:<\/strong><\/p>\n<ul>\n<li>Generators use their capacity under long-term power-purchase agreements (PPAs) up to 25 years with state distribution companies (discoms) at negotiated prices. Therefore, it is unclear how MBED will work in these long-term PPAs in its \u201clowest-cost\u201d pricing.<\/li>\n<li>The inclination of states to <strong>offer power to politically sensitive groups<\/strong> below actual cost will impose <strong>burden on discoms<\/strong>. This has already made the financial conditions of discoms bad and their dues on states stand at Rs 1.3 trillion.<\/li>\n<li>As per a recent study by the RBI, a bailout of discoms in 18 large states is likely to impose a burden equivalent to around 2.3 per cent of the GSDP of these states.<\/li>\n<li><strong>Regulatory issues<\/strong> in the eastern part of India have halted the progress of the project.<\/li>\n<li><strong>Small companies<\/strong>were given the project they could not complete. The Petroleum and Natural Gas Regulatory Board (PNGRB) was also writing off the contracts and seek new bids.<\/li>\n<li>The matter regarding various statutory approvals for laying natural gas pipelines is under the purview of the state governments or other central ministries.<\/li>\n<\/ul>\n<p>Power lies in the concurrent list of the Constitution and centralising pricing and supply decisions can take away the autonomy of states. The ministry should evolve a project monitoring mechanism in which all stakeholders may be brought, and the project can be monitored and implemented in a time-bound manner.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Introduction:\u00a0Contextual introduction. Body:\u00a0Explain some significance of One Nation, One Grid initiative.\u00a0\u00a0Also write some issues. Conclusion: Write a way forward. The One Nation, One Grid initiative is based on the market-based economic dispatch (MBED) mechanism. It is part of the National\u00a0Electricity\u00a0Policy of 2021 which proposes to double the penetration of short-term power markets by 2023-24. Under&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/answered-the-concept-of-a-centralized-electricity-market-sounds-sensible-in-theory-but-is-likely-to-be-unworkable-in-practice-discuss-in-the-light-of-the-one-nation-one-grid-initiative\/\">Continue reading <span class=\"screen-reader-text\">[Answered] The concept of a centralized electricity market sounds sensible in theory but is likely to be unworkable in practice. Discuss in the light of the One Nation, One Grid initiative.<\/span><\/a><\/p>\n","protected":false},"author":10320,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"class_list":["post-220265","page","type-page","status-publish","hentry","entry"],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/pages\/220265","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10320"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=220265"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/pages\/220265\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=220265"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}