Context: Recently, Union Power Minister launches the Green Term Ahead Market (GTAM) in electricity as a first step towards greening the Indian short term power market.
Background

• In August 2020, the Central Electricity Regulatory Commission (CERC) had approved Green term ahead market (GTAM) contracts on the Indian Energy Exchange (IEX) platform.
• Though the renewable penetration in the country is increasing, the participation of renewable energy in the existing DAM and TAM segment has remained negligible (less than 1%), as there has been no segregation between conventional power and green power by the system and the realization going to the generator was at par with conventional power.
• DAM: Day ahead market where transactions in electricity are allowed for a day in advance.
• TAM: Term ahead market where electricity is traded the same day to up to 11 days in advance.
• Also, renewable developers would prefer to tie their generation in advance for longer periods with the consumers to ensure cash flows and project viability.

About Green Term Ahead Market (GTAM)

• It is an alternative new model introduced for selling off the power by the renewable developers in the open market without getting into long term PPAs.
• Also, reportedly, in the absence of a suitable trading platform before, it was observed that the Renewable Energy (RE)-rich States are either backing down RE or selling their surplus RE as conventional power which is leading to losses for both DISCOMS and RE generators.
• Thus, these RE generators and DISCOMS would now be able to access the new niche platform – GTAM – to sell their excess power.
• GTAM will allow the buyers and sellers to trade green power along with the fulfillment of RPO obligations.
• It is a much needed market-based support for renewable energy to achieve the ambitious target of 175 GW of renewables by 2022 as it will provide a new opportunity to RE merchant capacity to sell power and additionally, it would also help spawn new RE merchant plants.
• GTAM is the first exclusive product for the renewable energy sector in the world.

Key features of GTAM

• Transactions through GTAM will be bilateral in nature with clear identification of corresponding buyers and sellers, there will not be any difficulty in accounting for RPO (renewable purchase obligation).
• GTAM contracts will be segregated into Solar RPO & Non-Solar RPO as RPO targets are also segregated.
• Further, within the two segments, GTAM contracts will have Green Intraday, Day Ahead Contingency, Daily and Weekly Contracts.
• Green Intraday Contract & Day Ahead Contingency Contract – Bidding will take place on a 15-minute time-block wise MW basis.

Daily & Weekly Contracts

• Price discovery will take place on a continuous basis i.e. price time priority basis. Subsequently, looking at the market conditions open auction can be introduced for daily & weekly contracts.
• Energy scheduled through GTAM contract shall be considered as deemed RPO compliance of the buyer.