Assessing Competition in the Indian Power Sector With Open-Access Power Networks

Abstract

The Indian power sector has been experiencing considerable stress at the distribution level of the power supply networks. The distribution companies’ position has been financially weakened due to poor recovery of tariffs and losses and also partly due to the regulatory constraints placed on the power networks. The open-access network allows the distributors to share and trade electricity and allows retail consumers to switch to a low-cost power distributor with the payment of a surcharge duty. However, little is known about the optimal bidding strategies of the distributors to purchase power at minimum cost from the generators to fulfil the open-access power requirement of the downstream retail consumers. This research problem formulates the distributors’ upstream and downstream bidding strategies to supply low-cost and non-discriminatory open-access electricity to retail consumers at competitive open-access rates. In line with this, a linear programming model is formulated to evaluate the upstream and downstream bidding strategies of the distributors. The validation is carried out using two separate case studies. The results show that the success of the open-access network is contingent upon the upstream bidding strategies of the distributors, allowing the supply of low-cost power and switchovers above the minimum bid volume and price bids.