Adjusting the energymarket

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Dominic Austin
6 years ago
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1 Adjusting the energymarket Electricity Market Conference, 24th November 2016 Bente Hagem, Executive Vice President, Statnett

We agree on the main issues 1. Make energy markets work and we have to work hard to make energy markets work well 2. Do we still need to incentivize capacity? NO! YES! 3.

2 We agree on the main issues 1. Make energy markets work and we have to work hard to make energy markets work well 2. Do we still need to incentivize capacity? NO! YES! 3. Consider solution carefully! Regional adequacy assessment and regional coordination of solutions Ensure cross-border participation Market based and technology neutral Limit efficiency of energy markets as much as possible

We need to improve the energy market asap Integrate wholesale and retail markets Ensure dynamic pricing Expose renewables to cost of balancing Get rid of

3 We need to improve the energy market asap Integrate wholesale and retail markets Ensure dynamic pricing Expose renewables to cost of balancing Get rid of priority dispatch Make markets reflect physics getting the bidding zones right Finer time resolution Regional adequacy assessment using EU platform Accept price spikes

4 Failing to capitalize on cross-border trade Market areas not reflecting physical market conditions but national borders 2015

5 Market failing to mirror physics Fremtiden er elektrisk

6 Failing to activate citizens Regulated end-user prices, limited link to prices in the wholesale market Prices reflect costs Limited possibility for price response Situation is similar in many states across Europe

7 Now the power system is in transition Share of RES % Share of RES % Statnett study from fall 2015

8 We fix short-term challenges! Flexibility from thermal and DSR manage situations Demand response: Illustrates an extreme winter week: Total load and flexibility Low RES + high load + high industry response Thermal generation covers 70% of demand and additional capacity is available Load covers the rest and is reduced 20 GW for 3 days Fremtiden er elektrisk

9 We fix short-term challenges! Flexibility from thermal and DSR manage situations Demand response: Detail of the demand adjustment: Illustrates an extreme winter week: Total load and flexibility Low RES + high load + high industry response Thermal generation covers 70% of demand and additional capacity is available Load covers the rest and is reduced 20 GW for 3 days Fremtiden er elektrisk

almost no wind Four consecutive weeks with low wind and PV generation (a

10 But are we prepared for Dealing with weeks with low renewable generation Extreme experience Extreme future scenario December a week with almost no wind Four consecutive weeks with low wind and PV generation (a 50 year event) How will we meet a growing demand for back-up with duration?

11 The way we prepare GRIDS & MARKETS

12 Connecting the Nordic to the Continent integration improves ability to handle stress >10 GW capacity by 2021

13 and Europe integrates further

14 MAJORITY OF INVESTMENTS ABOUT TO BE REALIZED (STATUS TYNDP 2014) Ahead of plan or on plan 40% Rescheduled 20% Cancelled 7% Commissioned 8% Delayed 25% Reasons for delays: Permitting (58%) Financing (24%) Other (18%) 14

15 Energy markets have to improve first! Integrate wholesale and retail markets Ensure dynamic pricing Expose renewables to cost of balancing Get rid of priority dispatch Make markets reflect physics getting the bidding zones right Finer time resolution Regional adequacy assessment using EU platform Accept price spikes

Statnett study, conclusions on the energy only market in 2030 Energy only is possible, however we have to accept: significant price spikes - without intervening periods of load shedding that industry

16 Statnett study, conclusions on the energy only market in 2030 Energy only is possible, however we have to accept: significant price spikes - without intervening periods of load shedding that industry can not be protected from price fluctuations that the decision to go for energy-only is sustainable the possibility that peak-load generation plants close down due to high business risk and we will still need thermal generation expected to meet up to 70% of residual load critically important when RES is out for days more grid helps, but wind/sun correlates across regions Finally, a capacity market with low capacity margins and significant DSR will be very similar to a pure energy only market Fremtiden er elektrisk

17 Thank you for the attention!

Generation Adequacy. Generation Adequacy. market measures to secure it and methodology for assessment

Generation Adequacy. Generation Adequacy. market measures to secure it and methodology for assessment market measures to secure it and methodology for assessment Introduction Power markets are at a crossroad. The structure of power generation capacity is changing towards more intermittent renewable energy,