Abt meter
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The availability-based tariff (ABT) in India establishes a structured payment system for power generation, linking fixed costs to plant availability and variable costs to scheduled energy generation. It incentivizes power plants to enhance output during peak hours and allows for adjustments in payments based on deviations from scheduled generation to promote grid discipline. This mechanism has improved grid operations, reduced equipment damage, and established clear beneficiary entitlements for power supply.
Abt meter
- 1. Availability Based Tariff (ABT)
- 2. The term Availability Tariff, particularly in the Indian context, stands for a rational tariff structure for power supply from generating stations, on a contracted basis. The power plants have fixed and variable costs: I. The fixed cost elements are interest on loan, return on equity, depreciation, O&M expenses, insurance, taxes and interest on working capital. II. The variable cost comprises of the fuel cost, i.e., coal and oil in case of thermal plants and nuclear fuel in case of nuclear plants. In the Availability Tariff mechanism,
- 3. The fixed and variable cost components are treated separately. The payment of fixed cost to the generating company is linked to availability of the plant, that is, its capability to deliver MWs on a day-by-day basis. The total amount payable to the generating company over a year towards the fixed cost depends on the average availability (MW delivering capability) of the plant over the year. In case the average actually achieved over the year is higher than the specified norm for plant availability, the generating company gets a higher payment. In case the average availability achieved is lower, the payment is also lower. Hence the name ‘Availability Tariff’. This is the first component of Availability Tariff, and is termed ‘capacity charge’.
- 4. The second component of Availability Tariff is the ‘energy charge’, which comprises of the variable cost (i.e., fuel cost) of the power plant for generating energy as per the given schedule for the day. It may specifically be noted that energy charge (at the specified plant-specific rate) is not based on actual generation and plant output, but on scheduled generation. In case there are deviations from the schedule (e.g., if a power plant delivers 600 MW while it was scheduled to supply only 500 MW), the energy charge payment would still be for the scheduled generation (500 MW), and the excess generation (100 MW) would get paid for at a rate dependent on the system conditions prevailing at the time. If the grid has surplus power at the time and frequency is above 50.0 cycles, the rate would be lower. If the excess generation takes place at the time of generation shortage in the system (in which condition the frequency would be below 50.0 cycles), the payment for extra generation would be at a higher rate. To recapitulate, the Indian version of Availability Tariff comprises of three components: (a) capacity charge, towards reimbursement of the fixed cost of the plant, linked to the plant's declared capacity to supply MWs, (b) energy charge, to reimburse the fuel cost for scheduled generation, and (c) a payment for deviations from schedule, at a rate dependent on system conditions. The last component would be negative (indicating a payment by the generator for the deviation) in case the power plant is delivering less power than scheduled.
- 5. Prior to the introduction of Availability Tariff, the regional grids had been operating in a very undisciplined and haphazard manner. There were large deviations in frequency from the rated frequency of 50.0 cycles per second (Hz). Low frequency situations result when the total generation available in the grid is less than the total consumer load. These can be curtailed by enhancing generation and/or curtailing consumer load. High frequency is a result of insufficient backing down of generation when the total consumer load has fallen during off-peak hours. The earlier tariff mechanisms did not provide any incentive for either backing down generation during off-peak hours or for reducing consumer load / enhancing generation during peak- load hours. In fact, it was profitable to go on generating at a high level even when the consumer demand had come down. In other words, the earlier tariff mechanisms encouraged grid indiscipline.
- 6. The Availability Tariff directly addresses these issues. Firstly, by giving incentives for enhancing output capability of power plants, it enables more consumer load to be met during peak load hours. Secondly, backing down during off- peak hours no longer results in financial loss to generating stations, and the earlier incentive for not backing down is neutralized. Thirdly, the shares of beneficiaries in the Central generating stations acquire a meaning, which was previously missing. The beneficiaries now have well-defined entitlements, and are able to draw power up to the specified limits at normal rates of the respective power plants. In case of over-drawal, they have to pay at a higher rate during peak load hours, which discourages them from over-drawing further. This payment then goes to beneficiaries who received less energy than was scheduled, and acts as an incentive/compensation for them.
- 7. The mechanism has dramatically streamlined the operation of regional grids in India. Firstly, through the system and procedure in place, constituents’ schedules get determined as per their shares in Central stations, and they clearly know the implications of deviating from these schedules. Any constituent which helps others by under-drawal from the regional grid in a deficit situation, gets compensated at a good price for the quantum of energy under-drawn. Secondly, the grid parameters, i.e., frequency and voltage, have improved, and equipment damage correspondingly reduced. During peak load hours, the frequency can be improved only by reducing drawls, and necessary incentives are provided in the mechanism for the same. High frequency situation on the other hand, is being checked by encouraging reduction in generation during off-peak hours. Thirdly, because of clear separation between fixed and variable charges, generation according to merit-order is encouraged and pithead stations do not have to back down normally. The overall generation cost accordingly comes down. Fourthly, a mechanism is established for harnessing captive and co-generation and for bilateral trading between the constituents. Lastly, Availability Tariff, by rewarding plant availability, enables more consumer load to be catered at any point of time.
- 8. The Central generating stations in different regions of the country have various States of the Region as their specified beneficiaries or bulk consumers. The latter have shares in these plants calculated according to Gadgil formula, and duly notified by the Ministry of Power. The beneficiaries have to pay the capacity charge for these plants in proportion to their share in the respective plants. This payment is dependent on the declared output capability of the plant for the day and the beneficiary's percentage share in that plant, and not on power / energy intended to be drawn or actually drawn by the beneficiary from the Central station. The energy charge to be paid by a beneficiary to a Central station for a particular day would be the fuel cost for the energy scheduled to be supplied from the power plant to the beneficiary during the day. In addition, if a beneficiary draws more power from the regional grid than what is totally scheduled to be supplied to him from the various Central generating stations at a particular time, he has to pay for the excess drawal at a rate dependent on the system conditions, the rate being lower if the frequency is high, and being higher if the frequency is low.
- 9. The process starts with the Central generating stations in the region declaring their expected output capability for the next day to the Regional Load Dispatch Centre (RLDC). The RLDC breaks up and tabulates these output capability declarations as per the beneficiaries' plant-wise shares and conveys their entitlements to State Load Dispatch Centres (SLDCs). The latter then carry out an exercise to see how best they can meet the load of their consumers over the day, from their own generating stations, along with their entitlement in the Central stations. They also take into account the irrigation release requirements and load curtailment etc. that they propose in their respective areas. The SLDCs then convey to the RLDC their schedule of power drawal from the Central stations (limited to their entitlement for the day). The RLDC aggregates these requisitions and determines the dispatch schedules for the Central generating stations and the drawal schedules for the beneficiaries duly incorporating any bilateral agreements and adjusting for transmission losses. These schedules are then issued by the RLDC to all concerned and become the operational as well as commercial datum. However, in case of contingencies, Central stations can prospectively revise the output capability declaration, beneficiaries can prospectively revise requisitions, and the schedules are correspondingly revised by RLDC.
- 10. While the schedules so finalized become the operational datum, and the regional constituents are expected to regulate their generation and consumer load in a way that the actual generation and drawls generally follow these schedules, deviations are allowed as long as they do not endanger the system security. The schedules are also used for determination of the amounts payable as energy charges, as described earlier. Deviations from schedules are determined in 15-minute time blocks through special metering, and these deviations are priced depending on frequency. As long as the actual generation/drawal is equal to the given schedule, payment on account of the third component of Availability Tariff is zero. In case of under-drawal, a beneficiary is paid back to that extent according to the frequency dependent rate specified for deviations from schedule.
- 11. Prior to the introduction of Availability Tariff, the regional grids had been operating in a very undisciplined and haphazard manner. There were large deviations in frequency from the rated frequency of 50.0 cycles per second (Hz). Low frequency situations result when the total generation available in the grid is less than the total consumer load. These can be curtailed by enhancing generation and/or curtailing consumer load. High frequency is a result of insufficient backing down of generation when the total consumer load has fallen during off-peak hours. The earlier tariff mechanisms did not provide any incentive for either backing down generation during off-peak hours or for reducing consumer load / enhancing generation during peak- load hours. In fact, it was profitable to go on generating at a high level even when the consumer demand had come down. In other words, the earlier tariff mechanisms encouraged grid indiscipline.
- 12. The Availability Tariff directly addresses these issues. Firstly, by giving incentives for enhancing output capability of power plants, it enables more consumer load to be met during peak load hours. Secondly, backing down during off-peak hours no longer results in financial loss to generating stations, and the earlier incentive for not backing down is neutralized. Thirdly, the shares of beneficiaries in the Central generating stations acquire a meaning, which was previously missing. The beneficiaries now have well-defined entitlements, and are able to draw power up to the specified limits at normal rates of the respective power plants. In case of over-drawal, they have to pay at a higher rate during peak load hours, which discourages them from over-drawing further. This payment then goes to beneficiaries who received less energy than was scheduled, and acts as an incentive/compensation for them.
- 13. The mechanism has dramatically streamlined the operation of regional grids in India. Firstly, through the system and procedure in place, constituents’ schedules get determined as per their shares in Central stations, and they clearly know the implications of deviating from these schedules. Any constituent which helps others by under-drawal from the regional grid in a deficit situation, gets compensated at a good price for the quantum of energy under-drawn. Secondly, the grid parameters, i.e., frequency and voltage, have improved, and equipment damage correspondingly reduced. During peak load hours, the frequency can be improved only by reducing drawls, and necessary incentives are provided in the mechanism for the same. High frequency situation on the other hand, is being checked by encouraging reduction in generation during off-peak hours. Thirdly, because of clear separation between fixed and variable charges, generation according to merit-order is encouraged and pithead stations do not have to back down normally. The overall generation cost accordingly comes down. Fourthly, a mechanism is established for harnessing captive and co-generation and for bilateral trading between the constituents. Lastly, Availability Tariff, by rewarding plant availability, enables more consumer load to be catered at any point of time.
- 14. Thanking You Jay Ranvir Chemtrols Solar Private Limited Amar Hill Sakhi Vihar Road Powai mUmbai -400 072 Jay.ranvir@chemtrolssolar.com ranvircboi@gmail.com M 9594998390