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Market Based Economic Despatch (MBED)

Market Based Economic Despatch (MBED):

Ministry of Power has circulated discussion Paper on Market Based Economic Despatch (MBED) on 1st June 2021 to all concerned stakeholders for obtaining their inputs and comments.

  • Power despatch meaning: Since electricity cannot be stored in power lines, the entity operating the power grid must continuously adjust the output of its power plants to meet electricity demand. This process is called the “dispatch” of power plants.
  • The existing electricity scheduling and despatch mechanisms in the country are siloed and the day-ahead procedures result in sub-optimal utilization of the country’s generating resources.
  • It has been observed that the states very often end up committing and utilizing costlier generation plants, while cheaper generation plants are not fully scheduled/utilized across the country.
  • MBED will ensure that the cheapest generating resources across the country are despatched to meet the overall system demand.
  • This will be a win-win for both the distribution companies and the generators and ultimately result in estimated annual savings in excess of INR 12,000 crores for the electricity consumers. MBED shall also facilitate larger integration of variable renewable energy
  • Implementing Market-Based Economic Despatch (MBED) will ensure a “One Nation, One Grid, One Frequency, One Price” framework.
  • It has been suggested to implement MBED in phases.
  • The Ministry of Power intends to implement Phase 1 of MBED from 1 April 2022.
  • The first phase of MBED would involve only the thermal fleet of central generating stations to test the efficacy of the mechanism and allow for necessary infrastructure and systems to be built out and tested before scale-up.