CERC Rejects SECI’s Request for Additional Trading Margin on BESS Ancillary Services
CERC ruled against SECI's request for an additional trading margin for BESS charging and discharging in Ancillary Services, citing potential financial burden and double payment. The Commission emphasised cost optimisation and upheld its original order, dismissing SECI’s review petition.
November 20, 2024. By EI News Network
SECI had requested an additional margin of INR 0.07/kWh for this process. However, the Commission directed that SECI shall not charge any additional trading margin beyond the 0.5 percent of the Capacity Charge for the charging and discharging of BESS under Ancillary Services.
It may be mentioned that SECI has filed a review petition concerning the Commission's order related to the advance procurement and dispatch of a 150 MW/300 MWh BESS out of the 500 MW/1000 MWh (2 hours storage) standalone ISTS-connected BESS pilot project located at the 400/220 kV Fatehgarh-III substation in Rajasthan. SECI sought clarity and modification regarding the admissibility of an additional trading margin of INR 0.07/kWh for facilitating BESS operations for grid ancillary services.
SECI contended that an additional trading margin of INR 0.07/kWh is essential to cover the procurement, scheduling, accounting, and market operations related to charging and discharging BESS for NLDC/Grid Controller of India. These services, according to SECI, are distinct from automatic grid operations and arise under specific commercial needs. SECI also identified a typographical error in the original order, which incorrectly assigned the trading margin to the BESS developer (JREFL) instead of SECI. Furthermore, SECI argued that the 0.5 percent capacity charge trading margin should be payable to them, irrespective of NLDC's use of the ancillary services, citing a similar arrangement in Gujarat.
However, the Commission found that the Ministry of Power (MoP) guidelines do not place the responsibility for charging and discharging the ancillary portion of the BESS capacity on SECI. As a result, providing an additional trading margin would create an extra financial burden on the Deviation Settlement Mechanism (DSM) and Ancillary Services Pool Account. Furthermore, it would result in a double payment of the trading margin for the same quantum of power, which the Commission sought to avoid.
In its decision, the CERC referred to the Trading Regulations, 2020, which specify that the cumulative trading margin across all traders in the transaction chain should not exceed the ceiling established by the Commission. This regulation ensures that in the case of multiple trader-to-trader transactions, the total margin does not exceed the maximum limit. The Commission highlighted that, within this ceiling, the contracting parties are expected to mutually agree on the trading margin, which should be subject to the provisions of the Trading Regulations, 2020.
Since this is a pilot project, the Commission stressed the importance of optimising costs within the power sector. Accordingly, it directed that the cumulative value of the trading margin (which includes the 0.5 percent of the capacity charge and any additional margin for charging and discharging of BESS) should not exceed INR 0.07/kWh. Furthermore, if the power is arranged through ancillary services, no additional trading margin should be payable to SECI over and above the 0.5 percent of the capacity charge.
The Commission also examined whether SECI had presented any new evidence or pointed out any errors that would justify revisiting the original decision. SECI failed to provide sufficient grounds for invoking Regulation 52 of the CERC (Conduct of Business) Regulations, 2003. As such, the Commission ruled that there was no error apparent in the previous order dated May 16, 2024, and therefore, a review of the order was not warranted.
In conclusion, the CERC disposed the petition maintaining its original stance on the issue of the additional trading margin for BESS in the context of Ancillary Services. The Commission's decision can be seen as a move to optimise costs and ensure regulatory clarity in the power sector.
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