PRESENTATION

ON COMPETITIVE WHOLESALE POWER MARKET (CTBCM)

APRIL 15, 2020

 Scheme of
Presentation

Part-1 Setting the Perspective

Part-2 CTBCM Model

Part-3 CTBCM Implementation Plan & Monitoring

Part-4 Key Recommendations

[Link]
Part-1
Setting the Perspective
 Wholesale (CTBCM) and Retail Market
• Market : Multiple buyers and sellers

• Wholesale Market(CTBCM): Buyers are buying in bulk quantity and

sellers are selling in bulk quantity. Large Consumers (BPCs ≥ 1MW)
also participate.

• Retail Market: Electricity is supplied to small consumers. Small

consumers get choice of
Supplier.
1st Stage: Wholesale (CTBCM) 2nd Stage: Retail
2000+, 16% 26.6 Mln, 84%
Large / Licensed Consumers
Large Consumers
Power Wholesale Supplier .
Consumers
.
Generation Market Base Supplier
Companies Index Traders (DISCO) .
Licensed N-Consumers
Supplier
 Market Transition – A Big Task

• Transition of electricity sector towards a Competitive Market

Structure is a big task that requires:
o Alignment of the legal and policy frame work
o Alignment of the regulatory framework
o Readiness of the entities involved
o Technology deployment

• Pakistan’s Framework and Entities Involved

 Market Transition – CPPA’s Mandate and Timelines
given by the ECC
• ECC of the Cabinet in its Decision of April 30, 2015 mandated CPPA-G to
prepare a comprehensive Competitive Trading Bilateral Contract Market
(CTBCM) Plan

• In compliance of the directions of ECC, the conceptual model and

comprehensive implementation plan was submitted to NEPRA for regulatory
approval in March 2018

• Revised ECC Decision dated October 30, 2019 granting 1.5 years extension
in the CoD date.

• The CTBCM Model submitted by CPPA-G was approved by NEPRA vide

determination dated December 05, 2019

• The determination approving CTBCM Model by NEPRA enlisted certain

directions for different entities of the power sector to be undertaken within
stipulated timeframe.
 Competition Level and Liberalization

The level of competition in electricity market is proportional to the liberty /

private participation across the supply chain
Turkey High
Retail UK
US
Level of Power Sector Opened to

Argentina
Retail

Level of Market Liberalization

Brazil
Moldova
Wholesale Peru Competition
Philippine
Bangladesh
Competition

Pakistan
Kuwait Wholesale
Qatar
Morocco Competition
Genco Vietnam
Entry
South Africa
Single
Tajikistan
g
Afghanistan Buyer as in n
Malawi
nc re titio
I pe
m
None
Vertically Co
Integrated
Low Envisaged evolutio
None Intermediate High n to Retail Competi
tion
Level of Competition
Electricity Market Design Parameters and
choices made for CTBCM
 DENMARK
Every Market has a unique
• Net Pool
• Day Ahead Market
• Intraday Market

design and is primarily based on •

•
Balancing Market
EPEXSPOT/Nord Pool
Exchange

some broad parameters

TURKEY
• Net Pool

AESO NYISO • Day Ahead

Market
• Gross pool • Day Ahead Market • Intraday Market
• Price Based • Real Time Market • Real time Market
• ISO Model • Security constraints
• 7 day ahead scheduling Economic Dispatch
• Price Based Pool

PERU Philippine
• Gross Pool
• Gross pool
• IMO is independent
• Cost Based
•
•
ISO Model
Real Time Mandatory Pool •
INDIA
Hybrid Structure
& SO is part of
Transmission
• Company
Long term PPAs
• Hour Ahead Market
•
BRAZIL
Day Ahead
• Real time Market
Market

AREGNTINA • Real Time Market for

Imbalance Settlement
• Regional ,State &
National SO
• Gross pool • Weekly System • Exchange exist
• Hourly Marginal Price Marginal price
• ISO Model • System Operator and
• Ancillary Services Payments Market Operator are
Separate
• Similarities exists b/w
CTBCM and Brazilian
Market Details
 Market Design Parameters
Sr.# Design Parameters
1 Type of Pools Gross Pool, Net Pool
2 Market Architecture Day Ahead, Intra-Day, Real Time Markets & Ex-post settlement
3 Products Traded & System • Energy, Capacity, Ancillary Services
Reliability • Centralized and Decentralized Capacity Auctions
4 Pricing Mechanism • Basis of Market Price (Cost based, Price based Bids)
• Market Price Formation (Single System Marginal Price, Zonal/Nodal Marginal
Prices)
• Market Clearing (Whole volume cleared through MO or Only imbalances are
settled by MO)

5 Contractual Arrangement • Contracts procurement (Regulated Consumers through Base Suppliers)

• Contracts type (Physical, Financial Forwards, CFDs, Derivatives)
• By Large Consumers through Competitive Suppliers and/or Generators

6 Market Structure /Institutional ISO, TSO, IMO, Power Exchanges

Arrangement
7 Types of Consumers • Eligible Consumers (BPC/Large consumers)
• Non-Eligible Consumers
8 Types of Suppliers • Base Supplier(also performs function of Last Resort Supplier)
• Competitive Supplier

Details
 CTBCM Design Parameters
Sr. No. Design Parameter Adopted for CTBCM

Qualifies under Gross Pool with Security Constrained Economic Dispatch (SCED)
1 Gross Pool or Net Pool (US, Canada, South & Latin America, Philippines)

2 Market Architecture Real Time Market to Primarily Settle Imbalances (South & Latin America)

Products Traded in the Energy and Capacity

3.1 Market (Brazil, Peru, US)

3.2 Resource Adequacy Ensured through Capacity Obligations, & centralized Auctions (USA, Brazil )

Variable Cost Based Economic Dispatch.

4.1 Basis of Market Price Marginal price of capacity discovered through technology serving the
incremental demand
(Latin American Countries)

Single Price (System Marginal Cost)

4.2 Market Price Formation (IESO, AESO, Turkey)

MO Clears the imbalances only in Pool

4.3 Market Clearing (NYIOS, PJM, Philippines)
 CTBCM Design Parameters
Sr. No Design Parameter Adopted for CTBCM

Power/Energy procurement for

5.1 Regulated Consumers (through Centralized procurement for all DISCOs, Contracts signed individually
Base Supplier) proportional to their demand (Brazil)

5.2
Procurement by Large Consumers Decentralized Procurement with same portfolio of contracts. They can
(through Competitive Suppliers) procure/negotiate on their own, non regulated contracts

Contracts Type (Physical Forwards, 5 types of forward supply contracts with central dispatch (Load following,
5.3 CFDs, Futures, Options) Generation following, Fixed quantities, Energy with associated capacity,
Capacity only)(Latin America, Canada, Philippines)

6
Market Structure /Institutional System Operator (embedded in Transmission Company), Independent
Arrangement Market Operator, IAA
 Market Development Journey

• The journey started in 2015 and continues…

• MO’s capacity in Market Design and Development
• Dedicated Market Design and Development Department
• MRC Market Design Consultants hired through ADB’s support since 2016
• & 3 x Local full time Expert Consultants
• MoUs with EPIAS, EPEXSPOT and LUMS/NUST as Market Development Partners
• Training Partners (PSR Brazil, CRA and others) imparted several trainings in Pakistan
• Learning Exchanges with Turkey, India, US, Canada, South Korea, England
• Market Literature studied related to European, North and South American,
Asian Markets
• 100+ consultative sessions including workshop and one-to-one
consultation meetings with stakeholders
• Around 2,500+ man days of training on market development

[Link]
Part-3
CTBCM Implementation Plan and Monitoring
 Assigned Role of Other Stakeholders

Relative Weighted Work Required By Entities

Model CPPA
25 Submitted (Support and Strengthening, coordination, detailed design)

NEPRA
(Model approval, Market Regulations and Codes, Monitoring for
35 Implementation)

GoP
20 (NEP & Rules)

NTDC/DISCOs
10 (Metering and Open Access,
Institutional Strengthening )

PPIB/AEDB
10 (Centralized Auctions for
Procurement)

Moving towards target date of CTBCM

Detailed Gantt
 Implementation & Monitoring

•Cross the sector change, as such implementation to be done by

respective entities.
•CPPA under the role of central facilitator as directed by the
Regulator has created:
o An Electricity Market Team (EMT)
o 15 Working Groups in all relevant entities
• Strategic Monitoring and Coordination:
o Market Implementation and Monitoring Group (MIMG) for
supervision and support at the strategic level headed by MoE (PD)
o Market Implementation Support Committee (MISC) of CPPA
Board for supervision, guidance and support at the implementation
level
[Link]
Part-4
Key Points for Decision and Monitoring by
CCoE
 Monitoring

• As depicted earlier, this a big task and all entities of the sector have to
perform their job, as such it is requested that a member of CCoE may
lead 2-3 member committee comprising representative of MoE(PD)
and NEPRA to monitor and guide all entities in performing their tasks
in a timely manner.

• The committee may conduct periodic progress review with relevant

entities as was desired in the decision of this house in Case No. CCE-
5/2/2020 dated March 27, 2020 for submission of monthly report to
CCoE on the progress to achieve CoD of CTBCM
 Things to be decided for smooth transition…

1. Transition to Competition Cost

• Stranded Assets: Stranded assets cost is incurred due to inclusion of
capacity in the system for all Consumers. Different mechanisms can be
considered for the recovery of stranded assets cost that are employed in
various global markets. Accordingly, CCoE is requested to decide whether
the transition to competition cost (stranded cost) is paid through GoP
subsidy or otherwise charged to consumers through regulatory process.
• Cross Subsidy: Cross Subsidy (CSS) should be paid by all BPCs whether
being served from DISCOs or through market
2. Signing of New PPAs: Either stop signing new long term PPAs or stagger
the PPAs in pipeline on case to case basis , keeping in view the low demand
growth.
3. The MO & SO as per CTBCM Plan will initially obtain license before Nov
2021. Formation of ISO (merging MO & SO) require modification of
Section 18, sub-section 2, clause (e) of NEPRA Act, per which NGC is to
Thanks

[Link] 20
 Market Transition is within a Framework and is a
Big Task
Legal Constitution NEPRA Act 2018 Electricity Act 1910

Alignment of
National Electricity
Policy Power Policy 2013 1994, 2002, 2015 Legal Policy &
Pakistan’s Electricity Market Framework
Policy & Plan
Regulatory
Market Rules, Power Grid, Commercial and Wheeling, Competitive Bidding, Framework
Regulatory Procurement Rules Distribution Codes Import Regulations

Generation IPPs Public Sector K-Electric

Transmission Network System Metering Service

Transmission Operator (TNO) Operator (SO)
Planner Provider
Alignment of
System Supply = Demand Operational Planning Institutional
Operator Roles &
Market Market & Product
Responsibilities
Agency Role Billing & Settlement
Operator Development

Distribution Wire Metering Service Sales or Supply Business

Distribution Business (Regulated) Provider (Regulated) (Competition)

Competitive
Markets Transition Vertically Integrated Single Buyer Single Buyer Plus
Wholesale & Retail
 Compliance to the Directions of NEPRA
Given in Approval of CTBCM Model (Dec 05, 2020)
# Deliverables Submitted pursuant to Authority’s Direction Responsible
Entity
Target Date
Status of
Compliance

1 Updated CTBCM Implementation Plan CPPA Feb 5, 2020

2 Updated CTBCM Detailed Design Report CPPA Feb 5, 2020

Updated Integrated Market Simulation Model (IE-MSM)

3
Report CPPA Feb 5, 2020

4 Formation of Market Implementation Groups DISCOs Feb 5, 2020

5 DISCOs Detailed Implementation Report DISCOs Feb 24, 2020

6 NTDC Detailed Implementation Report NTDC Feb 24, 2020

7 NPCC Detailed Implementation Report NPCC Feb 24, 2020

8 Approval of above submitted deliverables NEPRA Awaited

 Timelines – Development of Wholesale Competitive
Market
May 2020
Jan 2020 Feb 2020
Expected approval of
Nov 2021
Stakeholder Consultations Submission to NEPRA by Commercial
deliverables by NEPRA
(Plan Update + Respective Entities by Feb 24 Operation Date of
Detailed Design) (Plans Detailed Reports), CTBCM
Formation of Working Groups

Nov
Jan Feb Mar Apr May 1.5
Years 2021

Feb 2020
Submission to NEPRA by Feb 4
18 Months
(Updated Plan +
Implementation of CTBCM Plan
Detailed Design Reports)
by respective entities
 Completive Power Market Stages Envisaged
• Market based contracts
implemented
• Wheeling • BPC threshold reduced • Further
arrangements under that enhances retail evolution based
NEPRA 2016 competition on market
Regulations made • Roadmap to bifurcate conditions
operational DISCOs licenses
• Roadmap for implemented
developing wholesale • Demand Supply balanced
market implemented

2018- 2021 2023- 2026

2018 2021
2021 -2024 2025 onwards

First Target Market

New • Competitive • Electronic Trading
NEPRA Wholesale Market Platform for
Act, starts with Balancing Bilateral Trading
including Mechanisms may start
Market • Provides Market Price • At the same time
Law (Energy & Capacity Reverse E-auctions
both) may commence
• Competition for BPCs
commences
 CTBCM Approved Model

• Market Design based on International Experiences and local

market conditions
• Cost based Gross Pool
• Introduction of Market Based Contracts based on risk
sharing principle
 Eligible Consumers freely negotiate their contracts
 Procurement for regulated consumers through Centralized
Auctions
• Discovery of System Marginal Price indices (Energy &
Capacity)
• Gradually moving away from Sovereign Guarantees of GoP
• Up-dation and alignment of Legal, Policy and Regulatory
Bilateral Contract Market with Balancing Mechanism

Bilateral Market
Settlement and Payments
Bilateral Contracts
G D
Invoicing and Payments
Se t
en

Physical differences
Physical differences
ttl
em em
en ttl
t Se

MO

Sale / Purchase Differences

Balancing Mechanisms Detail

 CTBCM Plan (Actions to be Completed by Nov 2021 by
Respective Entities
• 19 Group of Actions in Updated Plan submitted to NEPRA on Feb 05, 2020 for approval

• Broadly Categorized into:

• Policy & Regulatory Actions related to Rules (change and new)

Power Policy 2015 Revised Draft: Sep 2020 Approval: Mar 2021
Qualification and Rules Draft Preparation: Oct 2020 Approval: Apr 2021
Modification Existing Rules Revised Draft: Nov 2020 Approval: Apr 2021

• Regulatory Actions (Regulations, Codes and Guidelines)

Alignment of Regulations Daft Preparation: Dec 2020 & Approval: May 2021
(NEPRA)
Commercial Code Draft Preparation: Jan 2021 (CPPA) Approval: May 2021(NEPRA)
Grid Code Revised Draft: Feb 2021 (NTDC) Approval: June 2021(NEPRA)
 CTBCM Plan (Actions to be Completed by Nov 2021 by
Respective Entities
• Institutional Actions (MO & SO Licenses, Auctioneer Registration): Jun 2021

• Strengthening of entities (System Operator, Planner, DISCOs): Jun 2021

• IT related actions (Automated hourly metering at wholesale level, IT tools and data
institutionalization): May 2021

• Parallel run and Commercial Operation – Nov 2021

• PPA’s Integration (Legal Language of our PPAs)

Gant
 Implementation Coordination in Market for CTBCM

CPPA Core 15 Working

Market Dev. Team Electricity Groups
Market (PPIB, DISCOs, KE, NPCC, NTDC,
Team NEPRA-CPPA)

[Link]
 Market Opening From Wholesale to Retail
Competition

Generators as Market Participants Transmission Service - DISCOs: Wire Business & Supplier - Eligible Consumers
Provider NTDC - Participants as Retail Suppliers BPC > 1MW
10 DISCOs and KE - Non-eligible Consumers
- Service Provider for < 1 MW
wire business/distribution

[Link]
 Single Buyer Model

Market Structure: Pakistan has a single-buyer market

structure in place.

Buyer: Central Power Purchasing Agency Guarantee (CPPA-G)

Ltd.

Invoices CTR & ETR

Generators CPPA-G DISCOs

CTR = Capacity Transfer Rate Payments

ETR = Energy Transfer Rate [Link]
 CTBCM: Market Design Objectives

• providing open access to all market participants on a non-discriminatory basis;

• creating an environment for investment on risk sharing basis;
• promoting competitive arrangements, both for and in the market;
• eliminating sovereign guarantees over time, where they exist;
• promoting payment discipline among wholesale market participants;
• ensuring compatibility with retail market operations; and
• ensuring further evolution of wholesale market to advanced phases;
• creating an environment for compatibility / participation of regional electricity market

[Link]
 Market Opening Benefits

• Competition provides customers with choices

• Pressure on Price / Adequacy through competition
• Create the conditions for a fair allocation of risk and benefit sharing between
investors/sellers and buyers/consumers
• Achieve efficiency in market operations
• Ensure transparency and predictability
• Standard products traded in market enhancing liquidity
• Stimulate appropriate infrastructure investments from private sector
• Removing conflict of interest to enhance confidence of market participants

[Link]
 Review of existing Legal and Regulatory Framework

• Before proposing the Model

• A thorough review of the existing legal and regulatory framework was undertaken
• Peculiarities identified and discussed in detail
• Various option analyzed to address different aspects of the model

• Review of the carved-in-stone PPAs and their integration with the market
was analyzed
• Forced market integration
• Forced contract negotiation
• Voluntary renegotiation
• Adaptation of market rules
• Virtual Generation / Managed Contracts
• Contractual Buy-Outs
[Link]
 Approved CTBCM Model

Existing PPAs between IPPs and NTDC/CPPA G (on behalf of

Discos) will be bi-lateralized through commercial allocations.

CPPA G

MO SPS IAA

Plus a Balancing Mechanism

to settle contract deviations

CPPA-G Power Market Operator 35

[Link]
 CPPA G Transition to the CTBCM

CPPA G Ring fence Legal

1. Settlement and Market Operator:

Invoicing centralized market services
2. Procurement from Special Purpose Trader (SPT): non
PPAs (Agent) “bilateralized “PPAs procurement
3. New Capacity
Procurement Independent Auctions Administrator:
new capacity procurement facilitator

[Link]
 Matrix: Salient Features of CTBCM Design Parameters
Sr. No. Design Adopted for Salient Features
Parameter CTBCM
1 Gross Pool or Qualifies under Gross Pool with • Creation of and Independent System Operator (separate
Net Pool Security Constrained Economic license under Section 23 G&H of the Act)
Dispatch (SCED) • SCED run through state-of-the-art tools
(US, Canada, South & Latin America, • IT enablement
Philippines) • Short, medium and long term cost optimization
• All Generators connected at Transmission Voltage will be
centrally dispatched

2 Market Real Time Market to Primarily Settle • Creation of and Independent Market Operator (separate
Architecture Imbalances (South & Latin license under Section 23 A&B of the Act)
America) • Ensure impartiality in its operations
• Automation of processes
• Guidance to Market Participants
• Registration of all contracts to check validity
• Advocacy for clear rules and regulations for the market
• Transactions will be backed by Credit Covers

3.1 Products Traded Energy and Capacity • Introduction of Firm Capacity as Certified Product to ensure
in the Market (Brazil, Peru, US) reliability of the system
• Both energy and capacity will be primarily traded via
bilateral contracts
• Balancing Mechanisms introduced for both products to clear
imbalances and generate proper price signals
 Matrix: Salient Features of CTBCM Design Parameters
Sr. No. Design Adopted for Salient Features
Parameter CTBCM

3.2 Resource Ensured through Capacity Obligations, • Capacity Obligation to ensure resource adequacy in the
Adequacy & centralized Auctions (USA, Brazil ) system
• Obligations imposed both on Base Suppliers as well as
Competitive Suppliers
• Base suppliers will comply with their obligations by
procurement through Centralized Auctions run by the
Independent Auctions Administrator (IAA)
• Competitive Suppliers will freely negotiate their contracts
with generators having Firm Capacity Certificates to comply
their obligations

4.1 Basis of Market Variable Cost Based Economic • SCED will be based on Variable Cost of Generators using the
Price Dispatch. Merit Order approach
Marginal price of capacity discovered • Variable Costs will be subject to tests by System Operator
through technology serving the • The SCED will take short and medium term view in deciding
incremental demand the dispatch of each plant
(Latin American Countries) • No bilateral contracts will be considered in optimizing the
system costs
 Matrix: Salient Features of CTBCM Design Parameters
Sr. No. Design Adopted for Salient Features
Parameter CTBCM

4.2 Market Price Single Price (System Marginal Cost) • A single market price will be determined through the
Formation (IESO, AESO, Turkey) marginal cost principle
• The marginal cost of the system will be determined through
a set of procedures approved by the Regulator
• All Energy Imbalances will be priced on the System Marginal
Cost
• The Price in the Capacity Balancing mechanism will be set by
the Cost of New Entry (CONE) of reference technology
reflecting the most efficient option

4.3 Market Clearing MO Clears the imbalances only in Pool • The MO will follow the Commercial Code approved by the
(NYIOS, PJM, Philippines) Regulator in Market Clearing
• The Imbalances will be calculated and priced on hourly basis
and settled on monthly basis
• The Metering Service Providers (MSPs) will provide the
hourly generation and consumption data to MO
• The settlement will take due care of the losses
• The process will be automated through ICT
• Dispute Resolution Mechanism
• Information publishing
 Matrix: Salient Features of CTBCM Design Parameters
Sr. No. Design Adopted for Salient Features
Parameter CTBCM

5.1 Power/Energy Centralized procurement for all • IAA created to facilitate procurement by Base Suppliers
procurement for DISCOs, Contracts signed individually • IAA will be responsible to organize Centralized Auctions for
Regulated proportional to their demand (Brazil) the demand to be procured by the Base Suppliers
Consumers • Each winning generator in the auctions will have a bilateral
(through contract will all Base Suppliers proportional to its demand
Suppliers of Last • Approved IGCEP will be followed in deciding the quantum
Resort) and technologies to be procured
• Credit worthy DISCOs will provide Credit Cover while the
weaker DISCOs will be supported by GoP Guarantee

5.2 Procurement by Decentralized Procurement with same • Large Consumers will freely negotiate their contracts
Large portfolio of contracts. They can • These contracts will only be valid if registered with the
Consumers procure/negotiate on their own, non Market Operator
through regulated contracts • Only the hourly quantum will be informed to the Market
Competitive Operator and the Price of the Contracts will be a confidential
Suppliers matter between the buyers and the sellers
 Matrix: Salient Features of CTBCM Design Parameters
Sr. No. Design Adopted for Salient Features
Parameter CTBCM

5.3 Contracts Type 5 types of forward supply contracts • All contracts will be forward supply contracts subject to
(Physical with central dispatch (Load following, Centralized Economic Dispatch as per Nepra Act.
Forwards, CFDs, Generation following, Fixed quantities, • Different contract designs allowed to match the need of the
Futures, Energy with associated capacity, buyers and sellers
Options) Capacity only)(Latin America, Canada, • New contracts will be designed for new capacity
Philippines) procurement under the CTBCM
• Existing contracts will be integrated through Generation
Following Design
• All existing contracts will be commercially allocated to the
DISCOs

6 Market System Operator (embedded in • System Operator will be strengthened to take care of the
Structure Transmission Company), Independent system reliability and generating electricity at the least cost
/Institutional Market Operator, IAA • An independent and impartial market operator will be
Arrangement established to run the commercial part of the market
• An Independent Auction Administrator (IAA) will be
established to facilitate the procurement of energy and
capacity by the base suppliers
 Matrix: Salient Features of CTBCM Design Parameters
Sr. No. Design Adopted for Salient Features
Parameter CTBCM

7 Provision of NTDC will be the main Transmission • NTDC and other transmission licensees will grant open
Network Company along with other access to its network and will be regulated entities and will
Services Transmission Licensees earn through regulated Use of System Charge
The Base Suppliers will provide • All base suppliers will provide Distribution Network Services
Distribution Network Services to all to all market players and these will also be regulated entities
players and will earn through regulated wire tariff
• All network licensees will sign separate connection
agreements with the applicants who are desirous to connect
to their network.
• Network Charges will also include other sector charges such
as cross subsidies, stranded costs, special charges etc.

8 Treatment of All Suppliers are responsible to pay for • Suppliers are responsible to pay for the approved losses
Losses the approved losses in the • An uplift will be applied to the metered values while
Transmission and Distribution Network calculating the imbalance quantities on hourly basis
• The demand of BPCs procuring from Competitive Suppliers
be uplifted by the regulated distribution loss margin and
then by actual Transmission Loss in that hour
• There will be an annual reconciliation of the transmission
loss to check for the regulated cap.
• Any access loss than the regulated cap will be procured by
the network companies
 Balancing Mechanism for Energy: Hourly Marginal Prices

10
Price (PKR)

1000 2000 3000 4000 5000 6000 7000

Demand
(MW)
[Link]
 Balancing Mechanism for Capacity (BMC): Yearly Settled

Price 2* [levelized fixed cost of

the reference technology]
B
A
Mandatory Capacity Price
Capacity
1* [levelized fixed cost of
C the reference technology]

D
Efficient 0.8* [levelized fixed cost of
Capacity the reference technology]

Demand mandatory curve Capacity

Demand efficient curve
Supply curve
[Link]
 Integrated Electricity Market Simulation (IE-MSM)

Using State of the Art Tools (SDDP and PLEXOS)

• Future market price projections (Marginal Costs Forecasts)

• Optimum dispatch mix

• Market Contracts Analysis (MCAT)

• Firm Capacity Analysis Tool (FCAT)

• Electricity Cost Allocation Tool (ECAT)

[Link]
 Market Price Discovery and Projection

Long, Medium and Short Term Tools

Long and Medium
Term Demand
Forecast
Outputs

Long Term Medium Term Short Term

Short Term Demand
Forecast
NTDC CPPA NPCC NPCC

Transmission Network Price Dispatch Unit

IGCEP*
Projections* Optimization* Commitment***
Candidate Plants
(Investment Data)

Existing Generation
Fleet (Operational
Data)
* WASP, OptGen, Plexos
Other Inputs ** SDDP licenses acquired
*** NCP
 Integrated Electricity Market Simulation (IE-MSM)
Report
ojections / Simulation Results
Demand Forecast Demand Growth Scenario
300000 350

CAGR = 5.61 % 325

250000
300

CAGR = 4.46% 275

200000

250

Energy (TWh)
Energy (TWh)

150000
225

200
100000
175

50000 150

125
0
16 17 18 19 20 21 22 23 24 25 26 26 27 28 29 30 31 100
15- 16- 17- 18- 19- 20- 21- 22- 23- 24- 25- 25- 26- 27- 28- 29- 30- 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20

PMS - Energy Demand Forecast Regression - Energy Demand Forecast Low / Rationalized Normal High

[Link]
 Integrated Electricity Market Simulation (IE-MSM)
Report
ojections / Simulation Results
Optimum Mix to Meet Expected Demand Marginal Price for different Demand Scenarios
70
200000

180000
60
160000

140000
50
120000
Energy (TWh)

100000
40
80000

Rs/kWh
60000
30
40000

20000 20
0
VRE

VRE

VRE

VRE

VRE

VRE

VRE

VRE

VRE

VRE

VRE
Thermal

Thermal

Thermal

Thermal

Thermal

Thermal

Thermal

Thermal

Thermal

Thermal

Thermal
Hydro

Hydro

Hydro

Hydro

Hydro

Hydro

Hydro

Hydro

Hydro

Hydro

Hydro
10
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

0
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Low Normal High Low Normal High

 Marginal Cost

SRMC - Annual
14

12

10

8
Rs/KWh

0
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

[Link]
 Integrated Electricity Market Simulation (IE-MSM)
Report
ojections / Simulation Results
Scenario Low Normal High
Year EPP CPP PPP EPP CPP PPP EPP CPP PPP
2020 4.82 6.78 11.60 5.76 5.74 11.50 6.70 5.42 12.12

2021 4.39 6.62 11.00 5.09 5.75 10.84 6.10 5.34 11.44

2022 3.94 7.18 11.12 4.39 6.40 10.79 5.57 5.82 11.39

2023 3.90 7.98 11.89 4.31 7.29 11.60 5.38 6.51 11.89

2024 3.67 8.27 11.94 3.93 7.71 11.64 5.08 6.76 11.84

2025 3.22 8.90 12.12 3.33 8.39 11.72 4.43 7.21 11.64

2026 3.15 9.03 12.18 3.32 8.41 11.73 4.50 7.26 11.76

2027 3.15 8.42 11.57 3.32 7.89 11.21 4.61 6.80 11.41

2028 3.02 8.79 11.80 3.22 8.26 11.47 4.46 7.10 11.56

2029 2.98 7.99 10.97 3.20 7.52 10.72 4.50 6.52 11.02

2030 2.92 7.73 10.66 3.13 7.26 10.39 4.42 6.36 10.78
PPP comparison under demand growth scenarios (2020 – 2030)
 250,000
14,000
200,000
12,000
Energy (TWh)

150,000 10,000

Generation (GWh)
100,000 8,000

6,000
50,000
4,000
-
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2,000

-
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Hydro PV Wind Nuclear Bagasse Indg. Gas RLNG Imp. Coal Dom. Coal RFO PV Wind

14
14.00
12
12.00
10
10.00

8.00 8
Rs/KWh

6.00 6

4.00
4
2.00
2
-
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 0
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Per Unit VC Rs/KWh Per Unit FC Rs/KWh Per Unit Total Rs/KWh
SRMC (Rs/kWh) Per Unit Avg VC (Rs/kWh)
 70.0%
10000
9000 60.0%
8000
7000 50.0%

6000
Million PKR

40.0%
5000
4000 30.0%
3000
20.0%
2000
1000
10.0%
0
1 2 3 4 5 6 7 8 9 10 11 12
(Year) 0.0%
0 500 1000 1500 2000 2500 3000 3500 4000 4500 5000 5500 6000 6500 7000 7500 8000 8500
Income-PPA Income-LF Contract Income-LF Contract Avg
Solar Wind Hydro Biomass
Part-4
CTBCM Implementation Plan & Monitoring
Structure
 Implementation & Monitoring

• Implementation to be done by respective entities

• Strategic Monitoring and Coordination at three different tiers:
i. Market Implementation and Monitoring Group (MIMG) for supervision and
support at the strategic level
ii. Market Implementation Support Committee (MISC) of CPPA Board for
supervision, guidance and support at the implementation level
iii. CPPA-G in the role of Central Coordinator / Facilitator

[Link]
Creating Readiness for CTBCM
Market Operator (MO)
System Operator (SO)
Planner
Commercial Metering System
Distribution Service Providers &
Last Resort Supplier

IT Infrastructure
Market Data Institutionalization
Formation of Electricity Market Teams
(EMT)
Market Implementation Monitoring Group
(MIMG)
[Link]
 Compliance to the Directions of NEPRA
Given in Approval of CTBCM Model (Dec 05, 2020)
# Deliverables Submitted pursuant to Authority’s Direction Responsible
Entity
Target Date
Status of
Compliance

1 Updated CTBCM Implementation Plan CPPA Feb 5, 2020

2 Updated CTBCM Detailed Design Report CPPA Feb 5, 2020

Updated Integrated Market Simulation Model (IE-MSM)

3 CPPA Feb 5, 2020
Report

4 Formation of Market Implementation Groups DISCOs Feb 5, 2020

5 DISCOs Detailed Implementation Report DISCOs Feb 24, 2020

6 NTDC Detailed Implementation Report NTDC Feb 24, 2020

7 NPCC Detailed Implementation Report NPCC Feb 24, 2020

8 Approval of above submitted deliverables NEPRA Expected by May, 2020

Part-5
Key Recommendations
To Market Opening
 The Mandate

• CPPA perform two roles (a) Market Operator and (b) Power Procurement Agent
• In the role of Market Operator; CPPA was mandated by ECC in 2015
• Gist of ECC Decision 2015:
• CPPA to prepare Competitive Trading Bilateral Contract Market (CTBCM) Model
and Plan in two years through consultation process
• CTBCM means wholesale market
• CTBCM to be approved by NEPRA
• The Plan shall be implemented within 3-4 years after approval of CTBCM Plan
• CTBCM to commence on July 1, 2020

[Link]
 The Mandate

• Gist of ECC Decision 2019: Completion of CTBCM Plan within 18 months after
approval of CTBCM Plan by NEPRA
• Responded to several comments from stakeholders including written 300+ comments
mainly provided by IPPs during the CTBCM approval process by NEPRA
• NEPRA in Dec 2019 while approving the Model, directed to update the Plan and re-
submit in 60 days for its approval
• Updated Plan submitted on Feb 05 by CPPA and anticipated to be approved by May
2020. This will take the start of First Target Market to Nov 2021.

[Link]
 Global Markets – Historical
Market Development
Initial Market Design
Current
Market Design
Eligibility of Consumers Over Treatment of
Time Legacy
Contracts
Remarks

Price Based Pool, No consumer was eligible Contractual

7 day Ahead Scheduling, Same as initial, till 2001 buyout and
AESO Real Time Market, Capacity Market is All consumers made virtual -
Hourly Single Market Clearing under consideration eligible, Retail was started generation/man
Price at once aged contacts

Addition of :
Price-based centralized pool, Day Scarcity pricing
ahead scheduling and market, Demand Response
NYISO (SCED) hourly LBMP, Real Time TCC - - -
Market and hourly LBMP Carbon pricing (in
progress)

100% Bilateral Contracts of Market Design is the

Financial Supply Contract Nature, same, however, great All transmission connected
Dispatch optimized through improvements have (2.3 KV) consumers having State Owned
models using variable costs and been achieved in the load above 3 MW are Generation
Brazil water values Centralized Auctions eligible to trade in the Free Privatized -
CCEE set Prices in the Real Time for Procurement of Market (ACL) through Market
Market on Weekly Basis for three Power and Based Contracts
load blocks and Four Zones Transmission Services
 Global Markets – Historical
Market Initial
Market Design Development
Current
Market Design
Eligibility of Consumers
Over Time
Treatment of
Legacy Contracts Remarks

<200kW (no choice)

Bilateral Contracts, Same design with 200-2500kW (option)
Centralized Dispatch, participation of large 2.5-10 MW
15 Minute Nodal consumers/DISCOs (mandatory)
Peru Prices, allowed up to 10% of >10MW (mandatory - -
No consumer side their demand to and can purchase from
participation in the purchase from Real market directly)
market Time Market

Tested Variable Cost

was used for the Generators bid the 1998: > 15GWh/Year
dispatch of Power variable cost Hour- 1999: >1GWh/Year - -
Argentina Plants & Ahead (Price Cap: fuel
Ancillary Service price + 15%) 2000:> 1kV
Payments

Legacy Contracts
Price Based Pool, Addition of: At start:1 MW in 2013 transferred to IPPAs by
Hour ahead and real Retail Competition and Reduced to 750 kW auctions.
Philippines time scheduling and Open Access(RCOA), in 2016, Contracts are of BOOT -
hourly LBMP without Reserve Market Plan to reduce to 500 nature, so at the end
open access (in progress) kW IPPA will be the owner.
 Global Markets – Historical
Market Initial Market Design Development
Current
Market Design
Eligibility of
Consumers Over Time
Treatment of
Legacy Contracts Remarks

Price based net pool, The Eligible Legacy PPAs with EUAS
Price based net pool Hourly Day Ahead consumers (hydro plants)& IPPs
with Bilateral Contracts, Market, threshold reduce remain with TETAS and
Turkey Ex-Post imbalance Hourly Balancing from 7.8 GWh/years TETAS (back to back -
Settlement Power Market, (2004) to 2.4 bilateral contract with
Hourly Settlement MWh/years (2018) DISCOs)

1997: >100
Price based net pool Same design with GWh/Year
Hourly Day Ahead Market addition of Real time 2000: >10 GWh/Year - -
Denmark Hourly intraday market Balancing market 2001: >1GWh/Year
2003: All consumer

OTC Markets
Spot trading on Different for -
India Multi Buyer / Seller Exchange different states, -
DSM typically 1 MW
 Net Pools Transition: Power Exchanges
Traded Volume

EXCHANGE MARKETS 3-91% GLOBALLY GLOBAL BENCHMARKS ON PENETRATION OF ST MARKETS

Exchange traded ( % total
consumption)

VOLUME IN BU (Billion Units) 100

Nordic

80

Italy
60
Germany
UK
40 Netherlands

France
20

India
0
2004 05 06 07 08 09 10 11 12 13 14 15

[Link]