Mercados assists the clients in power sector (Generation, Transmission and Distribution) in filing the application for determination of tariff before the Central / State Electricity Regulatory Commission. We also work from the side of Commission in processing of tariff orders or other related matters related to regulated entities. Besides, we are also assisting the players in assignments related to power markets and power systems.
The Power generation sector in India has transitioned from power deficit to capacity surplus largely on account of significant capacity addition by Central sector generators and IPPs. Besides, the significant capacity push on the renewable side has landed the utilities in a power surplus position.
The contract structures in Indian context are largely cost plus for Central and State generators and competitive for most of the IPPs. The cost plus projects are prone to change in the regulations on a periodic basis which poses threat to cost recovery of fixed charges and pass through of actual fuel cost. Similarly, the plants operating under competitive bidding have to struggle before appropriate Regulatory commissions to get a pass through of any additional cost pursuant to Change in Law.
From the perspective of Regulatory Commission, only the prudent costs need to be allowed as a pass through and the policy and regulatory return should be commensurate with the changing/reduction in risks in the sector.
Mercados with its in-depth expertise in the sector, supports it clients by providing strategic advice on policy and regulatory interpretations and legal precedence while dealing with the issues.
Mercados plays an active role in the South Asian region in assisting the transmission policy initiatives including formulation of transmission pricing for the Electricity Regulator and Assessment of the impact of alternative pricing methodologies based on global studies.
Mercados also assists private clients in understanding the commercial position of new assets with respect to the prevailing transmission pricing methodology.
The distribution sector is experiencing a fundamental shift owing to key policy initiatives like UDAY. Mercados EMI is helping distribution companies improve operational and financial performance through implementing loss reduction strategies, power purchase cost optimization organisational restructuring and reengineering.
Mercados is currently assisting one of the largest Utilities in India for achieving the loss reduction targets under UDAY.Our management solutions are based on our own innovative approaches, supported by proprietary information systems.
Indian Power sector has evolved from a conventional market to a competitive market where the participation is scaling from a single industrial consumer to multiple discoms. After introducing Open Access in power sector, the market has seen an exponential growth in both participation as well as volumes which created a bench mark for procurement of power in Short term market. This brings out the importance for statistical and simulating models to forecast the demand and prices of exchange so as to mitigate the risk of participation and selection of volume for generators and discoms.
Mercados assists clients to mitigate the risk of price volatility on exchange and providing price forecast from day ahead to month ahead considering various risk and opportunity cost in the market. Mercados is providing services to discoms and generators in demand forecasting and procurement planning from short term to long term considering the different available market instruments.
As the transmission systems are becoming more complex with the integration of Renewable energy systems, the Utilities are looking to re-visit the transmission master plans developed considering predominant coal based generation.
Mercados EMI has been assisting Utilities to develop next level transmission plans which allows them to plan capex and opex according the RE mix envisaged to be installed in their system.
OUR OFFERINGS
Tariff Design
Mercados assists the clients in power sector (Generation, Transmission and Distribution) in filing the application for determination of tariff before the Central/State Electricity Regulatory Commission. We also work from the side of Commission in processing of tariff orders or other related matters related to regulated entities. Host of services offered to our clients (utilities) are summarized below:
- Assistance in preparation of petition, filing of tariff formats and compliance/adherence to regulatory procedures/timelines.
- Assistance in preparation of presentations for Technical Validation Sessions and/or Public hearing and support in delivering the same before the Commission.
- Assistance in analysis of order and providing recommendations for filing of review/appeal before the ATE. We also provide support in preparing technical grounds for such review/appeal.
Other matters in which assistance is provided on similar lines include approval of PPA, demand supply assessments, capital cost benchmarking/comparison, support in preparing comments on proposed tariff regulations etc.
While working from the Commission side, MEMI assists the Commission for undertaking the following:
- Analysis of petition and preparing summary for quick assimilation of key concerns, overall tariff increase and likely impact on future tariff.
- Identification of data gaps in petition and seeking responses/interactions with the utilities during data validation sessions.
- Preparation of tariff models, establishing prudency of expenditures and assistance in drafting the tariff order
- Assistance in review petition/appeal in case preferred by the utility.
Besides, we also offer support to the Commission(s) in other matters in which assistance is provided on similar lines include approval of PPA, demand supply assessments, capital cost bench-marking/comparison, support in preparing comments on proposed tariff regulations etc.
Transmission Pricing
Our experts assist client in:
- Estimation of transmission charges as per current Regulations/Methodologies
- Assessment of existing transmission pricing and sharing mechanism
- Assessment of various transmission pricing mechanisms in practice and theory
- Estimation of Transmission Charges as per other Methodologies
- Assessment of the impact of transmission pricing as per different methodologies
- Recommendations on transmission pricing and sharing mechanism methodology
Bid Advisory Support
Mercados offers bid advisory support for conventional, renewable and downstream City gas distribution projects and offers end to end services including the following:
- Site selection/relative ranking of opportunities
- Overall fitment with strengths of Client, Identification of project risks and mitigation strategy
- Undertaking market surveys/demand assessment
assistance in finalizing the assumptions of capital expenditure requirements - Preparation of financial models
- Scenario Analysis- key project financials
- Preparation of Bid formats – assistance in submissions
- Assistance in reverse bidding (if applicable)
- Contract Signing support.
In case required, we also assist the clients in finding a strategic partner for pursuing projects on a large scale.
Policy and Regulatory Support
The Policy and Regulatory Support practice includes services related to policy, regulatory and institutional issues arising on energy sector restructuring and new markets design and implementation, and social and regional policy issues associated to these processes.
- Energy sector restructuring and markets design
- New regulatory and institutional frameworks
- Wholesale markets design and regulation (market rules, balancing and settlement rules, ancillary services regulation)
- Regional markets design
- Support to institutional development and regulatory implementation national or regional markets initiatives
- Subsidy policies and implementation schemes
- Rural electrification (regulatory and institutional issues)
- Private sector participation processes design and implementation
- Stranded assets regulation and assessment
- Incentive-based schemes and efficiency targets
- PPAs and other commercial instruments / contracts design and trading support
- Competition policy in wholesale markets
- Disputes and litigation services
- Regulatory analysis and advice for sector agents
Market Assessment and Entry Strategy Design
Mercados has this core expertise in undertaking market assessment and entry strategy for clients desiring into the Indian Energy Space in conventional, renewable and midstream/downstream gas business. We offer specialized services covering the entire portfolio from analysis to actual on ground support in establishing the business in India. The scope of services includes the following key activities:
- Analysis of Sector Landscape – Policy and Regulatory Scenario
- Identification of risks across value chain
- PEST analysis, Entry barriers, competition analysis
- Strategic fitment of client and need for external support- JV/strategic partner
- Demand Supply analysis
- Development of Financial model- scenario analysis
- Go-to market strategy and expected market share over the business plan period
- Identification of strategic partners/JV partners
- Commercial/Financial Due-diligence
- Hand-holding support in initial setting-up of business in India
Commercial and Economic Analysis
Mercados EMI helps to shape policy and regulatory regimes, and advises regulated companies on how to optimise their performance and improve profitability within the regulatory framework.
Our services draw on the outstanding background of our experts that have assisted Utilities across the South Asian region.
This practice includes services related economic and commercial analysis of key regulatory decisions on sectors and assets through development of comprehensive business plans and financial models.
Utility Management and Turnaround Support
Mercados EMI helps utilities improve operational and financial performance through organizational restructuring and reengineering. Our management solutions are based on our own innovative approaches, supported by proprietary information technology systems. Our services include benchmarking and performance improvement, design and implementation of strategic plans for optimizing company’s performance and organizational restructuring.
This practice includes services related to strategic and management support to energy utilities:
- Restructuring process road maps
- Business restructuring and competitive strategies
- Technical and Commercial Loss reduction strategies
- Commercial, technical and financial appraisals
- Project implementation and management
- Bench-marking analysis and performance improvement
- OPEX analysis and “Reference utility” methodology
- Strategic plans for optimizing company performance
- Organizational restructuring
- Technical and commercial process re-engineering
- Non-Technical Loss Reduction
- Optimization of metering, billing and collections
- Remote metering, disconnection and re-connection schemes
- Prepaid consumption management programs
- Adoption of global standards to promote competition
Market Simulation and Modelling
To support Discoms and Generators from market risk, Mercados designs and simulates econometric models applying different variables according to the requirement of the client. The Mercados is pioneer in designing customized models for clients which are very dynamic with the market risk.
Transmission System Planning and Load Flow Studies
Our experts assist clients in
- Review of the Existing Transmission System
- Preparation of Base Model
- Preparation of Scenarios
- Load Flow Simulations
- Identification of Capacity Addition/ Augmentation in the network
- Expansion Model Implementation
- Transmission System Expansion Plan
Capacity Building and Training Support
Mercados EMI has been leading several global capacity building and training programs for utilities, regulators and private clients in several areas including
- Renewable Energy
- Integration of Renewable Energy Resources (RES) into the Grid
- Utility Turnaround
- Loss reduction strategies
- Transmission Master Planning
- Power Procurement Optimization
- Role of Smart Grids in Evolving Power Markets
- Procurement of STS based Smart Meters
- Power Markets
- Least cost based long term Generation Planning
- Role of Inter-regional exchange in short term markets
Transaction Advisory
The transaction Advisory services deals with diverse requirements of clients in undertaking technical, commercial and financial due-diligence in buy and sell side mandates. With deep expertise in the power sector value chain, we bring in-depth coverage of the issues, risks and potential upsides for the clients looking for acquisition/divestment from the sector.
The scope of services may include the following as applicable to the transaction:
- Review of current project status – clearances, approvals, physical status, commercial agreements
- Inherent risks in the projects
- PEST analysis, Entry barriers, competition analysis
- Future earning potential – policy, regulatory and market landscape for the project
- Valuation analysis – scenario building
- Strategic negotiations
- Representation before appropriate regulatory commission(s) in seeking approvals
- Assistance to legal team of client in preparing technical grounds/understanding of core sector issues.
The power sector is currently experiencing its most significant transformation globally in history, fueled mainly by the urgent need for cleaner energy. With this transformation, Renewable energy is set to grow at an accelerated pace, giving rise to a newer global energy economy. However, the government's 2030 target to achieve 50% of installed capacity from non-fossil fuel-based generation, along with a long-term target of achieving net-zero emissions by 2070, poses significant challenges for both developers and system planners. In line with these, the government has set ambitious medium term targets to reduce emission intensity by 45% from 2005 levels by 2030, achieve 50% of non-fossil fuel capacity by 2030, and create a carbon sink of 2.5-3.0 billion tons of carbon dioxide.
Further, to achieve net-zero emissions by 2070, the Indian government has also introduced the Net Zero Emissions Bill, 2022 with an aim to provide relief for vulnerable communities from the effects of climate change, as per India's nationally determined contributions under the UNFCC; while Energy Conservation Amendment Act, 2022 poises to bring in voluntary markets into force by July 2023 in addition to mandatory de-carbonization of buildings and industries.
As of March 2023, the total installed capacity of renewables reached ~172 GW (including large hydro), majorly influenced by a considerable addition of solar power projects, which have seen significant growth over the last decade. The Ministry of Power has also identified a trajectory for the energy mix that states need to follow, with the goal of achieving 43.33% renewable energy by 2030, indicating the government's efforts for emergence of renewable dominated energy mix.
Due to such changing market dynamics and the introduction of new instruments into the market there are significant challenges for consumers and distribution utilities as well, especially in devising their portfolio strategies or moving towards 100% renewable energy.
To help the clients with a variety of challenges, Mercados EMI offers strategic guidance to private sector companies, banks, and utilities on the best effectively possible ways to navigate and capitalize on the opportunities in the emerging markets while adapting to changing environmental policies. Our services encompass a range of Policy, Regulatory, technical, and strategic challenges that are relevant to the renewable energy sector guided by a strong set of values.
OUR OFFERINGS
Bid Advisory Support
Mercados offers bid advisory support for conventional, renewable and downstream City gas distribution projects and offers end to end services including the following:
- Site selection/relative ranking of opportunities
- Overall fitment with strengths of Client, Identification of project risks and mitigation strategy
- Undertaking market surveys/demand assessment
- Assistance in finalizing the assumptions of capital expenditure requirements
- Preparation of financial models
- Scenario Analysis- key project financials
- Preparation of Bid formats – assistance in submissions
- Assistance in reverse bidding (if applicable)
- Contract Signing support.
In case required, we also assist the clients in finding a strategic partner for pursuing projects on a large scale.
Market Assessment and Entry Strategy Design
Mercados has this core expertise in undertaking market assessment and entry strategy for clients desiring into the Indian Energy Space in conventional, renewable and midstream/downstream gas business. We offer specialized services covering the entire portfolio from analysis to actual on ground support in establishing the business in India. The scope of services includes the following key activities:
- Analysis of Sector Landscape – Policy and Regulatory Scenario
- Identification of risks across value chain
- PEST analysis, Entry barriers, competition analysis
- Strategic fitment of client and need for external support- JV/strategic partner
- Demand Supply analysis
- Development of Financial model- scenario analysis
- Go-to market strategy and expected market share over the business plan period
- Identification of strategic partners/JV partners
- Commercial/Financial Due-diligence
- Hand-holding support in initial setting-up of business in India
Commercial and Economic Analysis
Mercados EMI helps to shape policy and regulatory regimes, and advises regulated companies on how to optimize their performance and improve profitability within the regulatory framework.
Our services draw on the outstanding background of our experts that have assisted Utilities across the South Asian region.
This practice includes services related economic and commercial analysis of key regulatory decisions on sectors and assets through development of comprehensive business plans and financial models.
Feasibility Study and DPR Preparation
Mercados assists the clients at different phases of the project to estimate renewable resource for sites and prepare feasibility reports and bankable detailed project reports. Mercados understands and prepare feasibility reports and detailed project reports (DPR) specific to the sectors to meet client’s business requirements. We help Financial Institutions, Independent Project Developers (IPP), Captive consumers and multilateral institutes in following aspects:
- Detailed geotechnical analysis of sites
- Site specific resource assessment
- Meteorological data validation
- Generation estimates through PVSyst and other modelling softwares
- Infrastructure adequacy
- Grid availability
- Yield prediction
- Social and Environmental Impact Assessment
- Financial modelling
- Business model strategy
- Technology evaluation and selection
- Outline designs and layouts
- DPR preparation
Renewable Energy Grid Integration Studies
- With growth in Renewable energy penetration it is paramount to know:
- Which are the issues and problems renewable energy poses to the power system.
- Which are the means to overcome these problems.
- Which are the regulatory measures adopted and if they are suitable or not.
- Renewable energy impact on the power system in the following ways
- Grid stability: Most of the installed RE energy used a technology which was very sensitive to grid voltage variations.
- Wind turbines disconnected from the grid when facing voltage dips.
- As a consequence, there was a big wind generation loss when the grid faced transient conditions with sudden voltage changes (the so- called voltage dips).
- The subsequent generation lack must be balanced instantaneously by importing energy from the interconnection with neighboring countries.
- The Spanish interconnection capacity with the rest of Europe is very limited and occasionally it can not supply the desired amount of energy
- The balance between generation and demand is jeopardized, putting in risk the stability of the grid.
Our expert assist utilities:
- Review of existing transmission system
- Load flow studies to assess the overloading elements in the network as per the RES capacity addition plans/scenarios
- Identification of network expansion/augmentation required for evacuation of RES generation under multiple cases for RES capacity addition plans/scenarios
- Identification of reactive power elements required under multiple cases for RES capacity addition plans/scenarios
- Assessment of the operational challenges posed by Different RES technologies- Solar, Wind
- Detailed Analysis of the available technological solutions
- Assessment of Policy/Regulatory and Market Framework in India and abroad
- Assessment of the Ancillary Services Market in India and abroad
- Assessment of forecasting tools and techniques for RES generation
Lenders Engineer Services
Mercados provides Lender’s Engineer services in Solar, Wind, Small Hydro, waste to energy and biomass power plants to Financial institutes, Banks and multilateral organizations. We are preferred and empaneled Lender’s Engineer with multiple PSU financial institutes to advise them on technical and commercial fronts of the power renewable power plants. We have provided Lender’s Engineer services for over 400MW of Renewable energy plants which includes one of the biggest solar parks in India and biggest waste to energy power plant in India. Our Lender’s Engineer services covers the entire project life cycle from pre-financial closure to post-commissioning performance analysis.
Our scope of services is as follows:
- Pre-financial closure phase (Technical & Commercial due diligence)
- Review of project feasibility
- Review of project design
- Project commercial appraisal
- Review of agreements
- Review of cost-breakup and schedules
- Review of BOM and technical specifications
- Verification of approvals and Clearances
- Implementation phase
- Physical progress monitoring
- Verification of actual cost incurred
- Scrutiny of Test reports
- Periodic site inspections
- Review of draw down requests
- Post commissioning phase
- Review of O&M arrangements
- O&M schedule review
- Comments on Adequacy of spares
- Periodical performance assessments
- Periodical O&M site inspections
Project Management Consultancy
Techno-commercial Feasibility Study
- Accompany Client team during site selection process
- Analysis of survey report of identified project site (Soil investigation / survey would be conducted by vendors selected by Client and is not inclusive in Mercados Scope)
- Preparation of Detailed Project Report covering financial analysis based on acquired land, achieved bid price and approved EPC quotations/ project cost
Project Monitoring and Assistance in Loan Disbursement
- Regular monitoring of EPC / vendors with respect to timelines given the implications of LDs during development phase
- Review of certificates and data sheets for various equipments being ordered by EPC in order to ensure alignment with contracts
- Selection of suitable dashboards for regular monitoring of plant post Commercial Operation
- Assistance in Disbursement of Loan
Approvals
- Accompanying Client team in Interactions with State Govt and related bodies for Statutory approvals and Single Window Clearances
Mercados EMI offers a wide range of advisory services to regulators and regulated companies in this sector including development of detailed Feasibility Report preparation for Tier II city gas distribution project, feasibility Study for setting up a LNG Re-Gasification Terminal in India, Study of Natural Gas Availability, Pricing and Economics, market assessment all India demand assessment for natural gas /re-gasified liquefied natural gas.