Determining the optimal use of wind power in the balancing markets

Transcription

1 Determining the optimal use of wind power in the balancing markets Amsterdam 17 October 2013 Henning Parbo Chief Economist Market Development Energinet.dk 1

2 Agenda Briefly about Energinet.dk Wind Power as the generator of imbalances The Nordic regulating power market The integration of wind power in the regulating market Conclusions 2

3 Energinet.dk National Transmission System Operator for Electricity and Gas in Denmark Independent public enterprise with approx. 600 employees Owns and operates the main electricity and natural gas grids Core tasks: Develop a more flexible power system capable of handling considerably larger amounts of renewable energy. Ensure well-functioning electricity and gas markets. Energinet.dk 3

4 Development of wind power in Denmark Max load Today MW Min load Capacity, onshore [MW] Capacity, offshore [MW] Wind power production as a percentage of demand 4

5 From 20 % to 50 % of wind power in ten years Yesterday (2010) Tomorrow (2020) % of demand covered be wind power 20% wind power % of demand covered be wind power Wind power Demand Wind power Demand Vind power covers total demand In the future wind power will cover demand for more than 200 hours per year for more than 1000 hours per year 5

6 Wind power production is hard to forecast Change of wind speed 1 m/s Wind power production changes 550 MW (25% of minimum load) Forecasting errors with regard to wind power production today causes approx. 65% of total imbalances. An increase of wind power capacity will cause imbalances to increase proportionately. 6

7 Structure of wind power imbalances State of the art forecasting models can predict wind power production hours ahead with a MAPE 1 of 15-20%. This means that 15-20% of the wind energy produced ends as imbalances. The average error is a combination of many hours with very small forecasting errors and a few hours with very significant forecasting errors (wrong timing of front). 1 MAPE: Mean Absolute Percentage Error 7

8 1000 The need for regulating power (Western Denmark) Behov for regulerkraft i Vestdanmark 1. april marts MWh/h

9 Agenda Briefly about Energinet.dk Wind Power as the generator of imbalances The Nordic regulating power market The integration of wind power in the regulating market Conclusions 9

10 The Nordic power regulating market A common Nordic power regulating market has been in operation since A minor proportion of the bids have been prepaid to be available (stand by charges, manual reserves FRR-M). The major proportion of the bids are voluntary. The Nordic regulating power market is highly liquid. Almost no trade in the intraday market in the Nordic area 10

11 The Nordic power regulating market, cont d The settlement in the regulating market is market based throughout: Regulating power bids are collected from all Nordic countries and listed in price order (NOIS = Nordic Operational Information System). Bids are activated in accordance with the price list and the marginal bid in one hour determines the price for all suppliers (marginal pricing with special arrangements in case of transmission congestions). Imbalances are settled according to the polluter-pays principles and the price is determined as the costs of removing the imbalances no penalties or other surcharges apply. 11

12 The integration of wind power in the regulating market In November 2011 Energinet.dk changed the market regulation in order to facilitate active participation of wind turbines in the regulating market. (The technical regulations already ensured capability to regulate). The change was made at the request of the Danish Wind Association: The imbalances from wind power are settled in the regulating market and this is associated with considerable economic risks (no price cap in the regulating market). By participating actively in the regulating market wind turbines can reduce imbalances, earn money and put a lower limit on the price for down regulation. 12

13 The integration of wind power in the regulating market, cont d A very simple implementation has been made from start: The BRP for wind turbines submits bids to the regulating power market based on his own weather forecast. The bids from wind turbines shall be marked wind power but are treated in the same manner as all other bids. When a bid is activated the BRP returns a time series showing the number of MWs (installed capacity) of the total portfolio of wind power that have been closed down. Standard question: How can you allow wind turbines in the regulating market without knowing exactly what they are going to deliver?? 13

14 The first wind farm to participate on the new terms was Sund&Bælt with 21 MW. The below example shows the response from February 14,

15 Second example: 25 th December 2013 where the spot price was at lower limit (- 200 EUR/MWh), full import from Germany and with curtailment of sales bids. 15

16 A total of 450 MW of down regulating bids from wind turbines was activated. 16

17 Conclusions With a massive expansion of wind power, it is necessary that wind turbines participate actively in the electricity markets to secure an efficient operation. Wind turbines can earn money and reduce risks when they take part in the regulating power market. A very liquid regulating market gives the TSOs operational security that can provide further benefits to other users e.g. in the case of transmission congestions. 17