THE ROLE OF DEMAND SIDE MANAGEMENT IN SCANDINAVIA AND THE BALTICS

Transcription

1 European Grid Service Markets Symposium 6 th July 2017 Lucerne, Switzerland THE ROLE OF DEMAND SIDE MANAGEMENT IN SCANDINAVIA AND THE BALTICS Thomas Elgaard Jensen, Director, Strategic Market Development, Energi Danmark A/S

2 When asked to talk today, I asked myself how to look at my topic Navn I will give you some of the past, the present and (hopefully) the future

3 Agenda 3 1. Introduction 2. The electricity markets and the Nordic development a) The markets b) The Nordic setup c) Demand response in the market a) Explicit b) Status c) Pilot 3. The Future - Will it all come together?

4 Intro: Energi Danmark Group 4 The Nordic region s leading energy trading group and one of the largest purchasers of energy on the NASDAQ OMX Nordic energy market Main activities: 1. Full service of consumers and producers Balancing handling, Portfolio management, risk management etc. 2. Trading One Stop Shop Concept We follow our costumers to new markets Just under 200 highly-educated, professional employees Turnover is over 15 bill DKK Market share in Denmark is around 40% Group headquarter situated in Aarhus

5 5 The electricity markets and the Nordic development

6 The Electricity market what are we talking about? European perspective Electricity (wholesale) markets are normally illustrated in order of time of the market before real time 6 Market Codes FG Forward FG CACM FG Balancing Financial Day ahead Intraday Balancing Physics Market time before realtime Day+1 1 Day 1 Hour 45min - 0

7 3 synchronic areas (currently) 7 Nordic This means we (at least) look at 3 social planner optimization functions from a balancing cost minimisation view Russia Continent

8 The Nordics and the Baltics 8 15 spot price areas (Nord Pool Spot) Navn The price can vary a lot between areas ( EUR/MWh in the same hour in this example 16. January 2017)

9 The common market setup 9 Financial (Nordic) system price and price area (CfD) Day ahead/spot+ Intraday/Elbas (Nordic + Baltics) Balancing: Navn 1) Regulating Power market/mfrr (Nordic) 2) FCR (Nordic minus DK1 that is connected to the continent)

10 Something has to be done.. Incident from the Nordics 21 January 2016 (day ahead). Demand close still close to vertical. Frequency is more often getting out of good band 10

11 The main balancing market in the Nordics: mfrr/regulating Power Market Bids from all Nordic countries - common merit order list with marginal pricing Real-time balancing Activation on the NOIS list. Operators see/foresee frequency deviations Fast and flexible bids The hourly imbalance price (for each price area) comes from the clearing at NOIS from activated/possible balancing bids Activation of congestion management bids from the same list (but activated as pay as bids in order not to influence the imbalance price)

12 Current developments 12 The Baltics are developing a common balancing setup in order to integrate into the Nordic mfrr market. Estonia wants to leave the Russian synchronic area in 2025 The Nordics have decided to establish a afrr market (first step in 2018) The Nordic will change the balancing principle from current frequency control to ACE (used on the continent) A new one-imbalance-price mechanism and ¼ hour time resolution has been decided (but not how)

13 Current developments II 13 MARI-Project: 19 European TSOs agree to further cooperation on mfrr-platform Timeline -> 2022 This means that all the markets we look at (balancing) are changing

14 14 Demand response in the market

15 Demand response what is it? Demand response is when electricity demand responds to a signal (e.g. price signal) from the market Explicit Demand response (incentive based) When a customer achieves an economic benefit by adjusting his/her demand according to market and system needs The customer s flexibility are taking part in price formation in balancing markets Flexibility is planned ahead and will minimize the risk for the BRP I will only talk about explicit DR Implicit Demand response (price based) When a customer reacts individually to hourly variations in e.g. spot price The customer s flexibility is managed without a link to the market and price formation Implicit demand response is hard to predict and will lead to a higher risk for the BRP (imbalance)

16 Current DR status Smart Energy Demand Coalition report from April (explicit demand response) The conclusion is: no common European approach (every country) Navn

17 Consensus in Europa 17 FLEXIBILITY IS THE KEY! But where does it come from? Demand response, batteries, fuel cells.

18 The Need are Given Philosophy Differences in Europe: Proactive/ Reactive and Self-dispatch/Central-dispatch Restore the system balance 18 Proactive systems: Nordic countries, France Reactive systems: The Netherlands, Germany The reason behind the differences being historical reasons (available resources, well known operations procedures etc.) If resources were shared market based in Europe, the cheapest way to balance would win e.g. the establishment of a common market will converge (some) of the balancing differences Different production mix is also important, but also here we see a converging tendency (shut down of German nuclear, expansion of RES etc.) The self-dispatch / central-dispatch issue (Poland, Italy, Ireland) is more difficult Power / Frequency occurrence of the disturbance Joint Action within Synchronous Area Frequency Containment Process FCR frequency Reactive FRR Time to Restore Frequency reserve activation Frequency Restoration Process manual FRR The target is the same: To create balance real time (50hz) LFC Area Future Proactive mix RR Reserve Replacement Process t

19 Pilot setup in Denmark 19

20 What we want to do 20 We want to pool binary units (consumption) with flexible production With this we want to bid in all balancing markets currently only mfrr

21 Will it all come together? 21

22 Will It All Come Together? 22 Some dark clouds in the horizon: National and protectionist thoughts are seen (like nation capacity markets and different models for market access aggregator etc.) Political uncertainty is killing investment incentives (like CO 2 )

23 Will the Sun Come Out? 23 What we need to do: Push for market integration and one unified European approach Push for RES integration in all markets Accept increased price volatility Harmonize RES support schemes Remove political uncertainty: Let the EU ETS work Push for retail market integration

24 Thank You 24 Questions?