Getting the market framework right for efficient demand response aggregation

Transcription

1 Getting the market framework right for efficient demand response aggregation Florence School of egulation Marion Labatut irector Policy issues - EUELECTIC 27 October

2 To develop both implicit and explicit demand response further Ensure that electricity bills are not overly burdened with taxes and levies igitalization and automation Accelerate electrification of transport and H&C to increase the demand side flexibility potential 3 emand response aggregation business models istribution Congestion management Voltage control Balance esponsible Party Spot market Intraday market Self balancing/passive balancing Hedging/portfolio adequacy Electricity Supply Flexibility Flexible consumer Flexibility Transmission Primary control Secondary control Tertiary control Congestion management Nat. capacity market/strategic reserves Source: NV GL on behalf of EUELECTIC 4 2

3 s as integral electricity market players - balancing responsibility is key C Customer S A - Without activation C S Schedule of C s demand A Schedule of C s demand Energy procured Schedule without activation With activation C activated S C s actual demand including Supply schedule before volume correction (=energy sourced) Supply schedule after volume correction (=energy sourced) A Schedule corrected for activation (considered equivalent to generation) The imbalance issue may be solved through a transfer of energy between the supplier and the aggregator (or its BPs) before is activated through ex-post correction of imbalance volumes Getting the regulatory framework right for independent aggregators: solving the bulk energy ay -1 12:30 ay 0 elivery ay -1 14:30 ay Ahead Market Intraday Market (I) Balancing Markets (B) sells on Balancing Market sells on I Market Legend: kwh educed energy supply to educed energy supply due due to Source: NV GL on behalf of EUELECTIC 6 3

4 Getting the regulatory framework right for independent aggregators: solving the bulk energy issue ay -1 12:30 ay 0 elivery ay -1 14:30 Intraday Market (I) ay Ahead Market is compensated by for bulk energy withdrawn by Balancing Markets (B) Legend: With sufficiently high prices in I and B markets, can create profits efficiently. kwh Source: NV GL on behalf of EUELECTIC 7 Economically efficient activation is the sustainable pathway of business models Economically efficient activation Economically inefficient activation Electricity market Electricity market 25 / 50 / 30 / 30 / Sourcing Sell Price Flexible consumer 30 / Flexible consumer 30 / 50 / Surplus 25 / Loss Source: NV GL on behalf of EUELECTIC 8 4

5 Assessment of activations in Intraday markets Source: NV GL on behalf of EUELECTIC 1 of activated between 228 to 590 times with price >40 / Impact on supplier in the range of 7K 30K /year if sourcing costs estimated at -1 and 7k-18k if sourcing costs estimated at average baseload price There is a margin for aggregators beyond the compensation of sourcing costs 9 ecommendations Increase the potential of and its attractiveness for consumers Ensure that policy support costs are not only borne by electricity consumers Ensure that electrification is accelerated through the CEP and the Mobility Package Welcome the introduction of a high level framework in the Clean Energy Package Key role of both implicit and explicit Access of to all markets on a level playing field with generation s can access consumers without consent of suppliers Compensation of suppliers by aggregators for the sourced energy, MS to set the most adequate rules Balancing responsibility for aggregators and mechanisms to neutralize the effect on other BPs Assess whether a very detailed network code is necessary 10 5

6 ANNEX 12 6

7 There are different models to address bulk energy issue egree of and responsibility for compensation for the bulk energy issue Flexible consumer i.e. no compen-sation i.e. full compen-sation i.e. full compen-sation Full compensation based on broad cost socialisation Economic efficiency + (+) Sourcing costs paid + (+) istributional effect on retailers Source: NV GL on behalf of EUELECTIC 13 Background The newly drafted EU Electricity irective (called Clean energy for all package, COM(2016) 864 final/2) includes provisions to promote emand esponse activated by Independent s: Article 17 emand response 3. Member States shall ensure that their regulatory framework encourages the participation of aggregators in the retail market and that it contains at least the following elements: (a) the right for each aggregator to enter the market without consent from other market participants; (d) aggregators shall not be required to pay compensation to suppliers or generators; 4. [ ] Member States may exceptionally allow compensation payments between aggregators and balance responsible parties. [...that ] must be limited to situations where one market participant induces imbalances to another market participant resulting in a financial cost. 14 7

8 Understanding the proposed model: Issue ay -1 12:30 ay 0 elivery ay -1 14:30 Intraday Market (I) ay Ahead Market Balancing Markets (B) Unless the imbalance ue to is physically activation outside corrected, of control of is obligedenergy to pay, forinto imbalance fed systemto by the exceeds energy consumed by his customers. Legend: by educed energy supplypayment due to supplier kwh Source: NV GL on behalf of EUELECTIC 15 Implementation models: Solution A for Issue ay -1 12:30 ay Ahead Market ay 0 elivery ay -1 14:30 Intraday Market (I) Balancing Markets (B) is always balance responsible as any other market participant. Legend: kwh Notification of by payment Source: NV GL on behalf of EUELECTIC 16 8

9 Contractual template would help ensure a level playing field Scope of a BP It is estimated that the BPs customer portfolio is To keep its balance, the BP supplies 100 Consumption 3rd party aggregator removes 10 of consumption from the BP s portfolio who sourced 100 to be in balance Injection The 10 are sold on the wholesale market by the aggregator 90 The BP faces an imbalance of 10 Injection Consumption Fair allocation of the shifted electricity between BPs all market players should bear the same responsibilities (level playing field) Financial adjustment mechanism ensuring that suppliers are compensated for the electricity they source and inject Adequate communication between aggregators and the BP/supplier. should not bear undue imbalances. 17 ynamic Pricing Finland 18 9

10 ynamic Pricing Estonia 19 10