GDAM will make a difference

Union Minister of Power and Renewable Energy RK Singh has said India is the only large electricity market in the world to implement a Green Day Ahead Market (GDAM), a new market segment, exclusively for renewable energy.

GDAM will enable electricity generation and distribution companies to buy or sell renewable energy through open access, the ministry said in a statement.

“The buyer’s behaviour is shifting from long-term contracts to short-term contracts, which is true even in the power market. This new initiative will help in enabling this energy transition. It will provide competitive price signals and offer an opportunity to the market participants to trade in green energy in the most transparent, flexible and efficient manner. The distribution utilities would also be able to sell surplus renewable power generated in their area at GDAM,” said Singh.

India has set a target to have a 450 GW capacity of pure renewable energy by 2030. At present, the country has an installed renewable energy capacity of 147 GW, including hydro power, and another 63 GW is under installation through various projects. The move is also aimed at reducing the country’s dependence on imported sources of fossil fuels.

Singh said GDAM will help reduce the cost of power. “We saw that spot purchase of electricity shot up in the past few weeks when the demand for electricity from thermal power plants shot up. At present, average cost of electricity per day is about Rs4 per unit, which will further come down with GDAM,” said the minister.

With the launch, the government is aiming to gradually shift from long-term power purchase agreement (PPA)-based contracts to market-based models. At present, PPAs are mostly signed for up to 25 years in the electricity sector in the country.

“The shift to short term power contracts will help open up the renewable energy market further as it will allow large industries also to go green by purchasing clean electricity from GDAM and selling in case of surplus. The GDAM will operate in an integrated way with the conventional day-ahead market (DAM) in the power sector. It will allow market participants to submit bids together for both conventional and renewable energy through separate bidding windows,” the ministry said.