India Negative Pricing to Manage Power System Oversupply
India uses negative energy pricing, or the practice of allowing power prices in an electricity market to fall below zero, to discourage generation during periods of oversupply on the electric grid. This strategy can minimize the curtailment of generation and expand opportunities for use of renewable energy sources. India’s work on negative pricing aligns with its target of 175 GW of renewable energy capacity by 2022, which is also articulated in its INDC. Key actions and good practices supporting negative pricing in India, and detailed in the case study, are highlighted below.
- The India Central Electricity Regulatory Commission developed a regulation that implemented negative pricing for energy supply deviations greater than 12%.
- Together with negative pricing, increasing the number and frequency of allowed revisions to the schedule for renewable energy generation is enabling efficient grid outcomes.
- Accurate forecasting systems are also supporting efficient outcomes within the context of negative pricing and grid integration more broadly. Negative pricing has provided a clear economic incentive to generators to improve their forecasts.