Why SECED is a bad idea for Indian Power Sector

As India moves forward with its ambitious energy transition plan and develop its carbon market, the idea of integrating emissions constraints into real-time dispatch has been suggested by the World Bank in December 2024 to CERC. While the concept sounds promising on paper, its implementation carries significant risks and challenges that may outweigh the intended benefits. It is important to recognize that Security Constrained Economic Dispatch (SCED), which optimizes cost and security in dispatch, still faces several implementation challenges in India. These include limitations in real-time coordination between NLDC and SLDCs, inadequate flexibility in generation resources, and inconsistent data availability for system optimization. Adding SECURITY AND EMISSIONS CONSTRAINED ECONOMIC DISPATCH (SECED) to this framework, which introduces emissions constraints, will only compound these challenges by increasing computational complexity, requiring more accurate emissions data, and necessitating deeper integration with SCADA/EMS systems. Without addressing the foundational gaps in SCED, transitioning to SECED may amplify existing inefficiencies and create further operational and financial uncertainties. A critical assessment outlining why, given the current circumstances, implementing SCED in India's power sector may be inadvisable is presented as follows:

⚡️ A. Technical and Modeling Challenges

1. Data Accuracy and Availability: A Fundamental Weakness

SECED relies heavily on accurate and granular data related to:

• Emission factors

• Variable costs

• Ramp rates

• Minimum loading limits

Unfortunately, India's emission profiles and plant-wise operational data are often outdated, inconsistent, or aggregated. Without real-time, plant-level data, any dispatch optimization based on emissions constraints is bound to be flawed.

👉 Reference:

• Page 16: Discussion of emission factors and variable cost relationships in SECED modeling.

• Page 24: Additional cost and emissions data analysis, comparing emission factors and variable costs.

2. Computational Complexity: Too Slow for Real-Time Use

SECED introduces multiple constraints, including emissions caps and system security, into an already complex dispatch optimization framework. As a result, the computational requirements for solving such multi-variable mixed-integer programming (MIP) models increase exponentially.

Real-time dispatch, which requires solutions within seconds to minutes, may become impractical with SECED due to excessive computation time.

👉 Reference:

• Page 6: Introduction of SECED functionality and the complexity of multi-variable optimization.

• Page 7: Description of SECED's dispatch function, emphasizing computational challenges.

3. Inadequate SCADA/EMS Integration: Lack of Real-Time Capability

SECED demands seamless integration with SCADA/EMS systems to facilitate real-time emissions monitoring and dispatch adjustments. However, the current infrastructure of SLDCs and NLDC is optimized for economic dispatch without emissions considerations.

This lack of integration will make it extremely difficult to execute emissions-constrained dispatch efficiently.

👉 Reference:

• Page 5: Explanation of SECED's need to integrate real-time monitoring with SCADA/EMS systems.

• Page 16: SECED planning and dispatch function considerations.

📊 B. Operational Challenges

4. Inflexibility of Coal Plants: The Achilles Heel

India’s thermal power plants, particularly coal-fired plants, have limited ramping capabilities and high minimum load constraints. SECED may force these plants to reduce emissions by ramping down frequently, but these plants are not built for such flexibility. This could lead to operational inefficiencies, increased costs, and higher forced outage rates.

👉 Reference:

• Page 7: Discussion on the limitations of coal plants' ramping capabilities and their impact on emissions-constrained dispatch.

• Page 21: SECED planning for maintenance and retirement decisions.

5. Variability of Renewable Generation: Increased Uncertainty

With the growing penetration of variable renewable energy (VRE), integrating emissions-constrained dispatch adds another layer of uncertainty. Renewable generation variability, coupled with emissions limits, could lead to dispatch inconsistencies, making it difficult to maintain system balance.

👉 Reference:

• Page 14: Description of VRE impact on dispatch and emissions limits.

• Page 15: SECED's marginal abatement curve for Maharashtra, illustrating emissions variability.

6. Shadow Prices and Permit Prices may defeat the objectives of SECED

While SECED aims to reduce emissions by optimizing dispatch decisions, misalignment between shadow prices and permit prices can inadvertently defeat its objectives. If the permit price in a carbon trading system is too low, generators may prefer to buy permits rather than reduce emissions through dispatch adjustments, leading to minimal actual emissions reduction despite an emissions cap. Conversely, if the shadow price — reflecting the marginal cost of meeting emissions limits — is significantly higher than the permit price, the system may prioritize costlier dispatch adjustments over cheaper permit purchases, resulting in higher costs with negligible additional emissions reductions. Such misalignments can lead to gaming of the system, inefficient dispatch outcomes, and increased financial burden on DISCOMs, ultimately undermining SECED's goal of achieving cost-effective emissions reduction while maintaining grid security.

❗️ Conclusion: Why SECED May Do More Harm Than Good

While SECED aspires to achieve emissions reduction through dispatch optimization, the technical, operational, and regulatory challenges it introduces could undermine the very objectives it seeks to fulfill.

Key Risks Include:

• Higher costs for DISCOMs and consumers.

• Inefficient dispatch outcomes due to inaccurate emissions data.

• Greater market distortions and risk of gaming.

India’s power sector is already grappling with issues related to financial health, grid reliability, and market reform. Adding SECED to the mix without addressing its foundational deficiencies may push the sector toward greater instability rather than achieving decarbonization.

✅ Recommendation:

As of now, SECED has not been implemented in any country. It is not understood why the World Bank wants to experiment this idea in India ignoring the risks associated with it. Implementing SECED in current framework is a bad idea and India should first focus on improving data accuracy, strengthening regulatory frameworks, and enhancing dispatch flexibility before considering the large-scale adoption of SECED.