Imbalance Handling mechanism in Indian electricity market

This paper traces the evolution and implementation aspects of Imbalance Handling Mechanism in India. The evolution has been from Unscheduled Interchange Mechanism from 2002 onwards till the present avatar of Deviation Settlement Mechanism. Electricity cannot easily be stored. Generation and supply have to remain balanced at all times in order to provide a reliable supply to consumers. This paper lays down the core principles of Deviation Settlement Mechanism stipulated by the Central Electricity Regulatory Commission (CERC) and describes the commercial implications on market participants. The authors have analysed the behaviour of market participants in terms of improved frequency profile, reduction in deviation volumes, and portfolio management by the utilities etc. for the pre and post implementation period of Deviation Settlement Mechanism. The authors suggest need for 15 minute time block-wise load forecasting in all time horizons, balanced portfolio, Spinning Reserve, Frequency Control, more frequent market clearing and need for Ancillary Services to complement reliable operation of the electricity grids.