Availability Based Tariff

ABT was adopted in India by CERC in 2000, to bring about better grid
discipline and to provide suitable incentives for responsible market
participation by the generating units and the State Electricity Boards.
For several years the national grid was haunted by widely fluctuating
frequency by states over-drawing from the national grid. The grid
frequency well below the rated 50 Hz was common, resulting in
severe damage to the costly power systems and equipments and
eventually bringing the grid down. To bring about a responsible
behavior by the market participants, CERC mooted the concept
(originally proposed by ADB) of ABT.

In ABT, we look at the cost of the generator from a fixed cost and
variable cost point of view. The generator is compensated for the
fixed cost based on the declared capacity or the available MW. This
is the capacity charge. On the other hand the variable cost is met
through a payment depending on the scheduled generation. This is
the energy charge. If the actual generation on a particular day
deviates from the original schedule, a payment at the Unscheduled
Interchange (UI) rate has to be paid to / received by the generator.
The amount thus paid /received depends on the grid conditions. If
there is excess generation, the grid frequency will be above 50 Hz
and any generation by the generator in excess of its schedule will be
paid at a lower UI. On the other hand if the grid frequency is below 50
Hz, there is excess demand and any generation by the generator
above its original schedule will be rewarded with a higher UI. Similarly
excess withdrawal by an SEB at a good grid frequency (frequency
above 50 Hz) will attract a lower UI and vice versa. The deviations
are measured in 15 min time blocks. So in short the capacity charge
is for the declared capacity and the energy charge is for the
scheduled generation and any deviation in the scheduled generation
will be compensated at a rate (UI) that depends on the system
conditions, specifically the system frequency.