Page 13 - Electricity Market Annual Report 2019-2020

12 Electricity Market Annual Report 2019-2020

Payments to Sellers

Capacity Payment
• To all the units ready to produce Energy
• Based on available capacity, not used capacity
• Motivational factor for being available during peak hours (Capacity Payment Factor (CPF))

In order to attract and retain adequate resources for the reliable operation of the energy market,
revenues from energy, ancillary services and capacity must be adequate for those resources. The
capacity payment plays vital role of managing the revenues sufficiency of the suppliers as well
as reducing the magnitude of unappropriated price volatility. Net revenue from the energy and
capacity markets is a key measure of overall market performance as well as a measure of the in-
centive to invest in new generation capacity.
Energy Payment (Market Based)

• To those units accepted in the market
• Based on the produced energy
• Based on the hourly price (As offer price / Pay as bid)
• Price Cap for offer price
Ancillary Services
• non-competitive environment and based on regulated tariffs

o Frequency Regulation Payment
o Black start
o Reactive power

Transmission Service

Regional electricity companies (REC) are the transmission owners and paid for the transmission
services they provide.
Payment of transmission services is based on the capacity and the energy flow. Transmission
lines and power transformers are subject to payment based on their available capacity and also
the energy passing through them. The total transmission costs are allocated to all of the buyers
sellers to remunerate the RECs.

Buyer’s Bill

In the spot market, regional electricity companies (REC) and electricity distribution companies
(EDC) take the role of the buyers in the wholesale electricity market. It is worth mentioning that
beside their role in transmission services, RECs act as the suppliers for high voltage consumers.
The buyers that purchase energy from spot market will pay hourly market average price.

Currency

The official currency of Iran is Rial and all the financial numbers here in this report are expressed
in Rial. The Exchange rates of Rial to different currencies are reported by the central bank of the
Islamic republic of Iran. 1

1. www.cbi.ir