The Central Electricity Regulatory Commission (CERC) issued the Draft Central Electricity Regulatory Commission (Deviation Settlement Mechanism [DSM] and Related Matters) Regulations in April 2024. The commission found that the existing DSM pricing structure was leading to over-incentivisation of deviations from scheduled transactions, resulting in suboptimal grid operations and impacting grid stability. Generators were using DSM as a market medium rather than a tool to avoid frequency deviations and ensure grid stability. The draft DSM regulations 2024 aim to address these challenges through a commercial mechanism.
Higher injection of intermittent RE to achieve the 500 GW target and initiatives such as electrification of the transport sector, implementation of rooftop photovoltaics, promotion of green hydrogen, and the solarisation of agricultural feeders may lead to grid imbalances in the future. While the revised regulations may help alleviate grid issues to some extent, with an increasing emphasis on the clean energy transition, it is important to focus on developing state-wise resource adequacy plans along with accurate RE and demand forecasting. This will help in building a self-sufficient generation capacity at the state level to meet peak demands and in ensuring the availability of an adequate reserve margin in the system at all times while maintaining the grid frequency.
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