Risk assessment for unscheduled interchanges in availability based tariff
Student name: Mr M S Chhabra
Guide: Dr Puneet Chitkara
Year of completion: 2007
Host Organisation: TERI University
Abstract: Power is an important element of infrastructure and a key driver for economic growth of any country. In India since independence the development of power sector, has largely been through vertically integrated Government entities. The deregulation of electric industry provides many opportunities for business expansion and new investors to take interest in the sector. A good investor analyses the risk and return of the business . In India, imbalance settlement mechanism has been implemented through Availability Based Tariff (ABT) to minimize the unscheduled interchanges and maintain grid discipline. This mechanism sends signal to generators and beneficiaries to maintain grid discipline with incentive for the same. The incentive can be negative and introduces a new kind of risk in the electricity business. The report discusses a methodology to assess the risk due to unscheduled interchanges. Value-at-Risk (VaR) approach is applied here to quantify risk using normal fit distributions. The methodology is to use historical data of various states of the Northern Region grid constituents.
