HANDLING OF FLUCTUATING WIND PRODUCTION ON THE EL SPOT MARKET,

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1 HANDLING OF FLUCTUATING WIND PRODUCTION ON THE EL SPOT MARKET, A CASE STORY FROM A PBA. CREATING MORE VALUE IN WIND EWEA2012 PRE-CONFERENCE SEMINAR BY THE DANISH WIND INDUSTRY ASSOCIATION APRIL 15 TH, 2012 BY JENS TANG

2 CONTENT Nordjysk Elhandel - BRP The Role of a Balance Responsible Party Forecasting the wind at Nordjysk Elhandel Active use of forecasts at Nordjysk Elhandel Aggregating important in minimizing errors Risk assesment always an important task Data handling is important 2

3 NORDJYSK ELHANDEL A/S Nordjysk Elhandel was established in 1998 by four Danish DSO s In 2011 bought by private investors Nordjysk Elhandel is managing wind energy, electricity production and consumption and carbon emissions. Largest independent wind balancing company in Europe 140 employees, turnover 2011 (E) 530 mill. Euro ( 4,000 mill. DKK) Our customer portfolio includes: o The majority of wind power operating on market terms in Denmark, a large portfolio in Sweden, Germany and UK totaling > 2500 MW app. 6 TWh wind power production annually o More than 185 CHP plants (coproduction of heat and power) plants totaling > 1000MW of generating capacity o electricity consumers including a number of the largest companies in Denmark annual consumption 3.1 TWh 3

4 NEAS WIND POWER PORTFOLIO NEAS current wind portfolio Denmark 1550 MW Sweden 300 MW Germany 680 MW UK 25 MW Total - > 2500 MW installed NEAS is present in 4 countries 8 pricing areas 4

5 DENMARK A WIND POWER COUNTRY BRP S ARE IMPORTANT 4960 Wind turbines 285 CHP plants 380 Industrial CHP plants 5

6 ACTORS IN THE DANISH ELECTRICITY SYSTEM TSO Transmission System Operator In Denmark Energinet.dk Nord Pool The Nordic Energy exchange Balance Responsible Parties Production, consumption and trade Grid companies (DSOs) Responsible for the distribution grids and the meters at the consumers and producers. Monopolies. Trading companies (Electricity Suppliers) Sell electricity nation wide Companies with a supply obligation Supplying end users who have not exercised their right to choose an electricity supplier Producers / generators Consumers 6

7 COMMUNICATION IN THE ELECTRICITY MARKET Power Exchanges Change of BRP EDI data metered data Online-Data Regulating services Balance Responsible Party Portfolio-Management Forecasts Trading Communication Monitoring ElSpot Trading Intra-Day Trading Day-After Schedules exchange SystemBalancing Regulating services Generator - Consumer TSO system responsible 7

8 BALANCE RESPONSIBLE PARTIES The Balance Responsible Parties assumes the economic responsibility for the balance between: Energy sold at the exchange and the energy generated Energy bought at the exchange and the energy consumed Perfect balance is impossible Imbalance - the difference between the 2 What causes the largest imbalancies: Weather is to blame as always Erronous wind forecasts is the single most ímportant cause of imbalancies High quality Weather input is needed to minimize the imbalance risk 8

9 NORDJYSK ELHANDEL FORECASTING THE WIND AT NEAS Own Weather Desk 3 meteorologists manned 70% of the time In house system w. 3 Providers - 2 deterministic + 1 Ensemble Using different models improve accuracy in forecasts Redundancy is necesarry - Use different providers w. different setup as redundancy. Meteorologist analyse weather data and perform quality check on Statistical models. Meteorologist improve forecast right up to trading deadline. Meteorologists play an active role in intra day trading

10 TIME-LINE ELECTRICITY MARKET Deadline for bids on Nord Pool Spot exchange Nord Pool publicies prices and amounts traded Day ahead Deadline submission of Schedules for Energinet.dk Bidding on Elbas and Energinet s Regulating Power Market Energinet.dk maintains physical balance by use of regulating power Mondag Kl. 00:00 13:00 Day of operation Trade 12:00 Operation Day Ahead 15:00 Settlement

11 AGGREGATNG WIND POWER PR. PRICING AREA DK1 NEAS DK MW installed capacity >2100 Wind turbines Single turbines < 100KW Windfarms > 40 MW DK 2 Single Turbines = large forecast erros Single windfarms = larger forecasts errors MAPE % Aggregated portfolio = smaller forecast errors Large aggregated portfolio with geograhical spread = smallest forecast errors. NEAS typical MAPE 3-8% (monthly) Denmark perfect example distributed generation => better integration 11

12 NORDJYSK ELHANDEL SINGLE WIND FARM IMBALANCE

13 NORDJYSK ELHANDEL AGGREGATED PORTFOLIO IMBALANCE

14 MW NORDJYSK ELHANDEL APPROACH TO WIND2POWER 700,0 NEAS DK1-1. May ,0 500,0 400,0 Prod HIR 00z HIR 06Z ENS 00z ENS 06Z 300,0 200,0 ENS Max ENS P60 ENS P40 ENS Min GFS 00z 100,0 NEAS Prog. 0, Time

15 NORDJYSK ELHANDEL HOW TO IMPROVE FURTHER Optimizing value by: Understanding the market Combining Meteorology and market knowledge Knowing the risk is more important than knowing the volume Continued need for improvements Become better at Short term forecasting online values are very important Intraday trading ELBAS Intra State Bi lateral Risk assesments

16 BRP S INCREASINGLY IMPORTANT AS MARKET PARTICIPANTS WHY Transition to a more market driven energy sector is happening Non utility investors are increasing in number Non utility investors need independent market operators Using market options can ad value to wind power and provide turbine owner better earnings Market based PPA s is becoming important in market driven markets.

17 CONTACT DETAILS: JENS TANG, VP RENEWABLES - GENERATION DIRECT PHONE: JTA@NEAS.DK