The TSO s need for additional flexibility the role of Transfer of Energy. James Matthys-Donnadieu, Head Market Development October 26th, 2017

Transcription

1 The TSO s need for additional flexibility the role of Transfer of Energy James Matthys-Donnadieu, Head Market Development October 26th, 2017

2 Major trends impacting the power system The development of intermittent generation Decentralisation, digitalisation & new players The regionalisation of the electricity sector Consequences More & long distance transmission & interconnection More flexibility needs to balancing system with high amounts of variable RES More flexibility available at end-user level & appearance of new business model Intensified coordination local (DSO-TSO) & supranational (ENTSO-E, CORESO, etc.) 2

3 Integrating more renewables challenges the way we balance the system Installed renewable generation capacity in Belgium Base scenario Example of wind generation in Belgium during some days in March [MW] The variability of renewables need to be managed at different time-frames: not only daily but also weekly and seasonal. Need for (more) flexibility in the system is a consequence of the integration of (more) renewables. 3

4 Increased flexibility needs for balancing [MW] NEEDS VOLUMES FCR R1 afrr Day-Ahead R2 Market mfrr R3 NEW Year FRR+ afrr+ mfrr+ FRR- afrr- mfrr Intra Day 924 (ID) Market TREND Source: Adequacy study and assessment of the need for flexibility in the Belgian electricity system - April 2016, available on Disclaimer: indicative volumes non binding based on the 2016 applicable volume determination methodology excluding any additional measures/volumes that would be require to deal with exceptional situation (e.g. storm risk) ; these volumes have as sole purpose to give an idea of the future trend wrt volume needs and do by no means substitute for the legally/regulatory determined volume assessment process in place between Elia and the CREG 4

5 Managing flexibility: a multi-dimensional approach Context Impact for Grid Operators Necessary Answers A rapidly changing environment with challenges & opportunities requires an ambitious but pragmatic approach RES development Flexibility needs More important & more volatile Keep needs under control Enforced Balancing Responsible Party (BRP) role Dynamic needs dimensioning Develop robust DA and ID markets Decentralisation, digitalisation & new players The regionalisation of the electricity sector Flexibility sources New technologies & players Focus Transfer of Energy Cover needs efficiently Reserve sharing Cross border integration Shorter term procurement Open market to all All technologies (batteries, load,..) All players (independent FSP) All voltage levels (TSO & DSO levels) 5

6 ToE: regularisation of existing (experimental) practice? 1. Objectif du avant-projet de loi en matière de flexibilité de la demande La participation de la flexibilité de la demande aux marchés de l électricité contribue au bon fonctionnement des marchés (en flexibilisant la courbe de demande, en augmentant la liquidité), à la sécurité du réseau ainsi qu à la sécurité d approvisionnement (en réduisant le niveau de la demande lorsque l offre est limitée). Il est donc important que les obstacles à son développement soient réduits au maximum. Or, la législation actuelle prend comme point de référence une conception de marché selon laquelle l offre s adapte à la demande. Elle ne reconnaît pas, par ailleurs, un droit au client final de valoriser sa flexibilité par lui-même ou via un intermédiaire de son choix, indépendamment de son fournisseur d énergie. Dans une phase expérimentale, à une échelle limitée mais avec succès, le gestionnaire du réseau de transport a permis aux clients finals de participer en direct ou via un agrégateur à certains marchés de services auxiliaires et de la réserve stratégique en s appuyant sur des dispositions du règlement technique fédéral, sur les règles de fonctionnement de ces marchés et sur des contrats bilatéraux. L objectif du présent projet est de généraliser ces expériences en permettant la participation de la demande à tous les marchés de l électricité notamment les marchés à un jour et intra-journalier. La mise en place d un nouveau modèle de marché est nécessaire à cet égard. 6

7 Current Practice w/o Transfer of Energy Products: R3 flex, R3 Standard offered by Non CIPU Units (i.e. mainly demand side management), (Strategic Demand Response). These products are capacity options bought forward by Elia and for which Elia pays a reservation/capacity fee which is captured by the seller. There is no strike price or activation price (except for SDR). The capacity seller (FSP/BSP) does not have to be a BRP, neither is the BRP aware on which of his points the GU has authorised an FSP/BSP to market the flex Rationale IN 100MWh OUT 100MWh IN 100MWh OUT 82MWh Pimb+ Applied since 2013 allowing independent aggregators to offer demand and distributed flexibilty to ELIA Aggregator: capacity remuneration BRP: energy remunerated through imbalance mechanism (as opposed to based on an explicit activation (or strike) price Under the assumption that the was balanced, any activation of R3flex/standard will cause a positive imbalance in his balancing perimeter. This results in a positive imbalance price paid to the to compensate the latter for the energy produced (that was not consumed, not billed to and hence not paid by the end customer via the energy supplier) As these R3 products are used at the end of merit order, for activation of balancing energy, the applicale imbalance price is expected to be high (enough), hence compensating the BRP for the energy at a price higher than the market price (and thus more than compensating the foregone revenu from the reduced consumption of his customer) Mechanism only applicable to capacity options/product and not energy products => not applicable for e.g. bidladder No activation/strike price: no merit order activation (hence no extension possible towards R2, XB balancing, ) 7

8 Transfer of Energy - principles A supplier has sourced (via his BRP) an amount of energy in the day ahead market that is equal to the forecast of its customers demand. Hence, the BRP perimeter is balanced. When a demand response dispatch occurs in real-time that is not initiated by the supplier, it changes the actual consumption of its customer base. This creates two distinct impacts: 1. The BRP cannot charge or receive payment for part of the electricity it sourced on the market (this electricity is consumed by clients of other suppliers). 2. While the BRP is required to balance its portfolio, it is put in imbalance due to the action of a third party aggregator. the customer has, through the aggregation contract, sold the value of its demand side flexibility to be used into the market directly, and the customer should have the right to the market value of that flexibility. Source: SGTF-EG3 Report: Regulatory Recommendations for the Deployment of Flexibility (January 2015) Neutralization of imbalance risk Financial compensation to Supplier

9 Future Practice with Transfer of Energy ToE- Principles IN 100MWh is neutralized with delivered energy in his balancing perimeter (as if there was no impact) => use of baselining techniques BRPfsp assumes balancing responsibility for activated flexibility by the FSP: balancing perimeter of the BRPfsp is corrected/adjusted with the requested energy and the effectively delivered energy (calculated using baseline vs measurement) FSP compensates Supplier for the delivered energy. Compensation is based on o o OUT 100MWh IN 100MWh OUT 82MWh 18MWh Aggregated volumes per Supplier per qh (confidentiality!) BRPfsp IN 18MWh 2MWh Pimb- BRPfsp OUT 20MWh Bilateral agreed price, or in absence of an agreement, a regulated price imposed by CREG Aggregator: capacity remuneration (if any) and energy remuneration BRP: no remuneration; impact on his portfolio is neutralized Mechanism (in theory) applicable to capacity products AND pure energy products * Activation/strike price allows merit order activation 9

10 Some essential comments/insights A Flexibility Market DOES NOT EXIST. E-markets are defined based on the time before delivery (Y-1, D-1, ID, balancing, ) and the technical requirements to which the energy delivery must comply with (profile, reaction speed, ramping requirements...) The more flexible a process the more markets it can valorize its energy flexibility upon ToE IS NOT a new market, it is only a new model (modus operandi) to allow a GU (or the person mandated by him (FSP/BSP)), to valorize flexibility on an existing national markets without prior agreement/knowledge of the Supplier/BRP. The model consists in neutralizing the effect of the FSPs actions onto the BRP portfolio and financially compensating the supplier for the resold energy ToE is not eligible for congestion management. However, this does not mean that for DSO connected flex to access E-markets with the use of ToE, market parties would not have to respect the existing applicable technical rules and regulation that applies to DSO connected flex that want to access national E-markets and that are aimed at, amongst other things, that DSO can assure themselves that the use of this flex will not cause congestions in their grid (Net Flex Study) ToE does not alter the existing principles linked to the prequalifation of flex as set out in the DSO-FSP contract and the Grid User- DSO contract The amount of resold energy (or activated flex ) is determinated through the use of a Baselining techniques. A baselining technique is a technique used to determine what the consumption/generation profile would have been if no flex had been activated, and hence to determine/estimate the amount of flex that has been activated Baseling is an essential element in the settlement of the activated flex between the FSP and the supplier and in the neutralisation of the activated flex in the BRP portfolio by the TSO The accuracy of baselining techniques and their robustness against gaming increases for products/markets closer to real time (like the balancing market), as the consumption/generation profile can be estimated in a much more precise way and is less prone to gaming. The applicability of ToE on markets less closer to real time could reveal challenging 10

11 ToE Law in Belgium Flexibility Service Provider (FSP) BRPfsp ToE-rules Transer of Energy 11

12 ToE Law in Belgium Eligible markets content ToE-rules Regulated price formula data management for ToE Coordination with DSOs 12

13 ToE rules and related documents (ex. For ToE on Bidladder (= non contracted mfrr)) ToE-rules (to be approved by CREG following consultation of regional competent authorities) describe The principles to determine the activated volume of flexibility The principles to correct the quarter-hour imbalance, caused by the activation of Vraagflexibiliteit by an FSP The necessary exchange of information and data to facilitate the transfer of energy The phased implementation of the Transfer of Energy in the different markets. stands in relation with following 3 contracts 1. BRP contract Imbalance adjustment of and BRPfsp 2. GFA Bidladder Calculation of delivered energy Data exchange to facilitate financial compensation between Elia-FSP 3. Supplier Contract: Calculation of delivered energy Data exchange to facilitate financial compensation 13

14 TSO/DSO Collaboration: common data hub What: DSO s and Elia develop a common data hub: to exchange data in an efficient and reliable way, necessary to realize the control and the market processes (perimeter correction and settlement) related to flexibility services provided to Elia; to support the exchange of data with the concerned market actors. Functionalities: Measurement data register 15min measurement values of DP s in flex register are the basis for calculation of activated volumes Delivered by the system operator of the DP (DSO or TSO) Flex activation register Register flex activations by FRP : product (or bid), FSP, requested volume, start time, duration, activated DP s, Calculation engine Calculation of activated volume per DP based on baseline method Aggregation of volumes and communication to the market TSO delivers corrected activated volume to the data hub after imbalance adjustment This is the basis to supply aggregated activated volumes to supplier and FSP (Market Parties) 14

15 Thank you for your attention