Principles of Flowbased Market Coupling

Transcription

1 Commissie voor de Regulering van de Elektriciteit en het Gas Commission pour la Régulation de l Electricité et du Gaz Principles of Flowbased Market Coupling Patrick Luickx, Alain Marien CREG Workshop, Brussel 16 June 2014

2 Congestion Management Difference between ATC & FB method Flowbased Parameters Critical Branches Generation Shift Keys Margins on the CB Impact of FBMC on neighbouring countries ATC determination from FBMC Welfare FBMC < welfare ATC MC CONGESTION MANAGEMENT

3 Congestion Management Capacity Calculation 2-step process Step 1 - Base Case: Determination of the physical flows present in the transmission network and pre-existing to the cross-border allocation process receiving priority access to capacity Exchanges internal to one zone Exchanges between CWE and non-cwe country Step 2 Determination of remaining available cross-border capacities Step 1 Base Case remains the same in FBMC 3

4 Congestion Management Capacity Calculation Kirchhoff laws Physical flows Commercial exchanges Depending on PTDF Loop flows A Generation: MW 1 25 MW 2 B Commercial exchange 100 MW node 1 to node 4 C 75 MW 25 MW Resulting physical flows: 75 MW through line MW through line 12, line 23 and line Load: MW 25 MW 4

5 Congestion Management Capacity Calculation Power Transfer Distribution Factor (PTDF) matrix Transactions (node to hub) Line L12 0-0,75-0,5-0,25 L23 0 0,25-0,5-0,25 L34 0 0,25 0,5-0,25 L41 0 0,25 0,5 0,75 Interpretation: a 1 MW transaction from node 2 to 1 results in a 0,25 MW additional flow on line L34 Calculation: PTDF 2 3 = PTDF 2 1 PTDF(3 1) 5

6 Congestion Management Capacity Calculation Step 1: Base Case Internal exchange in country B assumed in base case 1333 MW commercial exchange from node 2 to 3 A MW 2 B L14 MAX = 500 Physical flows: 1000 MW in line MW (loop-flow) in lines 21, 14 and 43 C 333 MW MW 1333 MW 6

7 Congestion Management Capacity Calculation Step 2 Remaining ATC capacity on line L = 167 MW New ATC country A to C: 167/0.75 = 223 MW Minus arbitrary margin To cover simultaneity with other exchanges Remaining FB capacity on critical branch L14 = Flow max Flow step1 margin Cf. infra: RAM * = F max - F ref - FRM A Step 1 L14 MAX = 500 Step 2 L14 MAX = 223 C Max: 223 MW MW 4 3 Max 223 MW 167 MW loopflow: 56 MW loopflow: 333 MW 2 B * Remaining available margin 7

8 Congestion Management Difference between ATC & FB method Flowbased Parameters Critical Branches Generation Shift Keys Margins on the CB Impact of FBMC on neighbouring countries ATC determination from FBMC Welfare FBMC < welfare ATC MC DIFFERENCE BETWEEN ATC & FB METHOD

9 Difference between ATC & FB ATC based market coupling TSOs give ex-ante defined capacity to the market for allocation Ex ante margin on capacities Flowbased market coupling Capacity calculation and allocation at the same time If well-implemented FB, market decides on the repartition of commercial capacity over network Relationship between commercial capacity on network determined by TSOs via CB, GSK and FRM (see further) Example on next slide Source: P. Schavemaker & M. Aguado, CWE flow-based workshop, European cross border power trading forum,

10 1 MW => TSOs must split per border the available commercial capacity before knowing bidding => not optimized: capacity remain available and optimal solution is not reached Bidding Area B -2 MW Step 1 - TSO: I split import 3 MW A=>B and 1 MW C=>B Bidding Area A + 2 MW Step 1- TSO: I split export 1 MW A=>B and 3 MW A=>C 1 MW Step 2 - Market Parties: optimal is to import 3 MW but only 2 MW has been accepted => optimal wellfare solution is not possible Step 2 - Market Parties: optimal is export 4 MW but only 2 MW has been accepted => optimal wellfare solution is not possible BAD CHOICE! => the market do not need this 1 MW Bidding Area C 0 MW Step 1: TSO: I split import 1 MW A=>C, 2 MW B=>C, and export 1 MW C=>A, and 2 MW C=>B Step 2 - Market Parties: optimal is import 1 MW but 0 MW has been accepted => optimal wellfare solution is not possible => TSOs supply to market physical limits of their grid without splitting per border => full optimized: capacity be used to reach optimal solution Bidding Area A + 4 MW Step 2- Market Parties: With SoS and orderbooks I am able to optimize the usage capacity => optimal wellfare solution where we export 4 MW is OK for the grid 1 MW 1 MW 1 MW 1 MW Step 1 TSO: TSO: We do max no split export anymore is capacity 4 MW. between border => we give to market our common Security of Supply domain in order that the market decide how to use it in an optimal way Bidding Bidding Area Area B B Bidding Area C - 3 MW Step 2- Market Parties: optimal wellfare solution where we import 3 MW is OK for the grid -1 MW Step 2- Market Parties: optimal wellfare solution where we import 1 MW is OK for the grid 10

11 Difference between ATC & FB Euphemia Market Coupling Algorithm ATC algorithm constraint FBMC algorithm constraint 11

12 Congestion Management Difference between ATC & FB method Flowbased Parameters Critical Branches Generation Shift Keys Margins on the CB Impact of FBMC on neighbouring countries ATC determination from FBMC Welfare FBMC < welfare ATC MC FLOWBASED PARAMETERS

13 Flowbased parameters 3 main elements in FMBC Critical Branch (CB) Margin Flow Reliability Margin (FRM) Final Adjustment Value (FAV) Generation Shift Key (GSK) Source of many discussions at CWE level Design of these parameters have significant impact on market outcome 13

14 Congestion Management Difference between ATC & FB method Flowbased Parameters Critical Branches Generation Shift Keys Margins on the CB Impact of FBMC on neighbouring countries ATC determination from FBMC Welfare FBMC < welfare ATC MC CRITICAL BRANCHES

15 Critical Branches (CB) Definition: Existing branches in the regional grid Significantly impacted by the regional cross-border trade Both under normal grid situations as well as outage condition (N-k). General rule: threshold value to include as CB Maximum zone-to-line PTDF-factor is larger than a certain threshold include line as CB: Regional crossborder trade (between two zones) with largest impact on a certain existing line needs to have impact larger than 5% for the line to be considered a CB However, individual TSO has final say in inclusion of CB 15 15

16 Critical Branches (CB) Exchange A C Active constraint Security Domain Market clearing point Exchange A B Binding Critical Branches Physical constraints Critical Branches (chosen by TSOs) 16

17 Critical Branches (CB) Influence of CB on Price CB determines constraints in the Market Coupling algorithm Constraints impact welfare and prices Choice of CB influences the prices 17

18 Critical Branches (CB) FB allocation = Optimisation under constraints corresponding to RAM: RAM = F max - F ref - FRM FAV RAM = remaining available margin F max = maximum allowable flow (thermal line capacity) F ref = physical flow resulting from base case needs to be adjusted for LT nominations FRM = flow reliability margin FAV = Final adjustment value 18 18

19 Congestion Management Difference between ATC & FB method Flowbased Parameters Critical Branches Generation Shift Keys Margins on the CB Impact of FBMC on neighbouring countries ATC determination from FBMC Welfare FBMC < welfare ATC MC GENERATION SHIFT KEYS

20 Generation Shift Key (GSK) Principle GSKs are coefficients determining generation shifts under FB Indicate which units participate to a power shift between zones Describes the contribution of a generation unit node to this power shift Each TSO selects units most likely impacted by market movements, to be part in GSK set GSK serves for calculating zone-to-line PTDF from the node-to-line PTDF PTDF zone-to-line = PTDF node-to-line GSK 20

21 Generation Shift Key (GSK) Principle In practice, contribution of generation unit to power transfer is unknown at calculation time Circular problem GSKs determination = weak point of capacity calculation methods Also valid for NTC, where less transparent GSK should be based on best forecast of the contribution of generation units to a power transfer 21

22 Generation Shift Key (GSK) From node-to-line to zone-to-line PTDF Example for trades between zones A, B and C Under different GSK assumptions PTDF zone-to-line constructed Different impacts on lines analysed All lines are CBs PTDF (node to line) Line L12 0-0,75-0,5-0,25 L23 0 0,25-0,5-0,25 L34 0 0,25 0,5-0,25 L41 0 0,25 0,5 0,75 GSK: x% GSK: (100-x) % 22

23 Generation Shift Key (GSK) From node-to-line to zone-to-line PTDF Interpretation of highlighted PTDF: A 1 MW commercial exchange from zone B to zone A with uniform repartition of GSKs leads to 0,625 MW additional physical flow on line L12 (in direction node 2 to node 1) PTDF zone to line Line B A B C C A L12-0,625-0,375-0,25 L23-0,125 0,125-0,25 L34 0,375 0,625-0,25 L41 0,375-0,375 0,75 GSK: 50% GSK: 50% 23

24 Generation Shift Key (GSK) From node-to-line to zone-to-line PTDF PTDF zone to line Line B A B C C A L12-0,5-0,25-0,25 L23-0,5-0,25-0,25 L34 0,5 0,75-0,25 L41 0,5-0,25 0,75 GSK: 0% GSK: 100% Notice important difference in PTDF due to GSK choice of TSO in zone B PTDF zone to line Line B A B C C A L12-0,75-0,5-0,25 GSK: 100% L23 0,25 0,5-0,25 L34 0,25 0,5-0,25 GSK: 0% L41 0,25-0,5 0,75 24

25 Generation Shift Key (GSK) From node-to-line to zone-to-line PTDF If line L34 is the congested line It makes a large difference whether a trade B C has a PTDF (i.e. impact on flow) of 75% or 50% The selection of GSKs made by TSO B has a large impact on the profitability of A to C exchanges Even more apparent with more complicated example see next slide TSO choice of GSK greatly impacts PTDF zone-to-line which in turn impacts CB choice, prices and CR 25

26 Generation Shift Key (GSK) Impact of GSK choices on transfer between zones Compare power exchange B C to exchange A D on the use of line d x% PTDF (in %) of zonal exchange on line d A D 13,4% B d % 10% 40% 30% 25% 15% 3 40% 30% 25% 20% 15% 10% 25% 30% 10% 15% 20% 6 10% 15% 20% 25% 30% 20% Changing GSKs C 5,0% 26,6% 17,9% 13,6% 0,7% 9,3% With changing GSKs in zone B, PTDF impact of exchange B C changes dramatically 9 20% * Source & background : A. Marien, FB Implementation Challenges, 11 June 2011, Brussels 26

27 Generation Shift Key (GSK) Impact of GSKs on CBs Remember: For a line to be considered a CB, a certain PTDF zone-to-line threshold value needs to be reached If threshold in example is set at 60%, line L34 would be a CB with some GSK choices, and not with other choices Any GSK % in node 2 < 60% line L34 becomes CB Note: normal threshold values in CWE rather around 0-10% GSK choice defines which lines become CB 27

28 Generation Shift Key (GSK) Impact of GSKs on prices PTDF zone-to-line is GSK-dependent (see above) Electricity prices are PTDF zone-to-line -dependent P( C) PTDF P( B) P( C) PTDF P( A) B C on L34 A C on L34 Shadow price With a given P(C) and P(B), P(A) will depend on PTDF B C on L34 Electricity prices are GSK-dependent 28

29 Generation Shift Key (GSK) GSK in CWE FBMC Two issues for GSK determination 1. Which power plants participate? Market driven & flexible plants Gas/oil, hydro, pumped-storage & hard coal Exception: nuclear units if not enough flexible generation 2. How to estimate output level of these plants? Which % of output attributed to power plant Plain method for FR & DE Uniform for Amprion, TenneT GE According to base case % for RTE Linear interpolation method for BE & NL (see next slide) 29

30 Generation Shift Key (GSK) GSK linear interpolation method for BE & NL The GSK for each generator equals the gradient of the line in between the MWs produced at a max import and MWs produced at a max export position Generator MW Dispatch The MWs produced by each generator, according to the import/export position of the Reference Program and the GSK, is reflected in the TSO s D2CF file update D2CF file Max Import GSK Import Position 0 According to Reference Program Export Position Max Export 30

31 Congestion Management Difference between ATC & FB method Flowbased Parameters Critical Branches Generation Shift Keys Margins on the CB Impact of FBMC on neighbouring countries ATC determination from FBMC Welfare FBMC < welfare ATC MC MARGINS ON THE CB

32 Margins on the CB Different types of margins RAM = F max - F ref - FRM FAV Margins: Flow Reliability Margin (FRM) Final Adjustment Value (FAV) Special critical branches Explicit additional constraints in the algorithm Reflect uncertainty 32

33 Margins on the CB Final Adjustment Value (FAV) Represent operational skills ans experience that cannot be introduced in FBMC Non-automated part of the process Link with Remedial Actions (RA) Explicit RA Implicit RA FAV introduced in RAM formula Monitoring by NRAs 33

34 Margins on the CB Final Adjustment Value (FAV) Negative FAV: Increases the RAM Linked to complex remedial actions Positive FAV Reduces the RAM Security reasons 34

35 Margins on the CB Additional constraints that are not normal CBs E.g.: import / export limitation for entire zone To guarantee secure grid operation Avoid market results with stability problems Voltage stability Special critical branches Avoid market results too far away from reference flows 35

36 Margins on the CB Flow Reliability Margin (FRM) TSOs determine FRM on the basis of observations 36

37 Margins on the CB Flow Reliability Margin (FRM) Purpose of FRM Hedge against uncertainties linked to capacity calculation methods (forecast errors, model approximations...) Locational uncertainty as important factor Lower FRM for smaller zones Hedge against uncertainties linked to non-cwe exchanges Hedge against variability of exchanges linked to load-frequency adjustments 37

38 Congestion Management Difference between ATC & FB method Flowbased Parameters Critical Branches Generation Shift Keys Margins on the CB Impact of FBMC on neighbouring countries ATC determination from FBMC Welfare FBMC < welfare ATC MC IMPACT OF FBMC ON NEIGHBOURING COUNTRIES

39 Impact on neighbouring countries General Impact FBMC will often result in different CWE price formation than ATC in case of congestion Other price difference and other CR on all borders, also with non-cwe countries CWE non-cwe borders capacity determination remains input for the base case determination Capacity in neighbouring zones and on interconnections of CWE with neighbouring zones influences CWE CBs 40

40 Impact on neighbouring countries Rough & Advanced FBMC Rough FBMC ATC value with neighbours taken into base case Most constraining case as margin Priority for ATC with neighbours Advantages: No differences in prices on two sides of ATC with neighbours Always intuitive situations on DC cables Advanced FBMC Influence ATC with neighbours included in allocation Algorithm internalises these ATCs No priority for ATC with neighbours vs. CWE FB transaction Advantages: No need for ex-ante capacity split over borders: from priority access to integration in welfare max. More data exchange Proposed for FBMC go-live Can be handled by Euphemia 41

41 Congestion Management Difference between ATC & FB method Flowbased Parameters Critical Branches Generation Shift Keys Margins on the CB Impact of FBMC on neighbouring countries ATC determination from FBMC Welfare FBMC < welfare ATC MC ATC DETERMINATION FROM FBMC

42 ATC determination from FBMC Need for NTC derived from FBMC NTC values derived from FBMC are needed for several purposes ATC value for ID trade ATC value for shadow auctions Fallback mechanism As today 43

43 ATC determination from FBMC ATC calculated from FBMC for ID After the implementation of FB DA, the logical next step will be the development of FB ID Till then, the same basic principle as today: capacity left after DA stage = initial input for ID stage Exchange(A>C) ) FB domain before the DA FBMC Exchange(A>B)

44 ATC determination from FBMC ATC calculated from FBMC for ID 2) FB domain after the DA FBMC Exchange(A>C) 400 3) ID ATC taken from the FB domain Exchange(A>C) Exchange(A>B) 0 Exchange(A>B)

45 ATC determination from FBMC ATC calculated from FBMC for ID Exchange(A>C) Initial value IDATC(A>C) Exchange(A>B) Fixed rule is applied to determine the ATCs from the FB domain Rule chosen from different alternatives available

46 ATC determination from FBMC ATC calculated from FBMC for shadow auctions ATC for (explicit) shadow auctions via CASC in fallback Fallback situation may occur at two different steps in the process: Possible (future) alternatives to cope with incident in pre-coupling Incident Incident Examples: Technical failure of tools Corrupted or missing input data Examples: Market data not generated Algorithm/system fails Technical validations non-compliant Pre-Coupling Coupling Post-Coupling No partial coupling inside CWE 47

47 ATC determination from FBMC ATC calculated from FBMC for shadow auctions Similar approach to the ID ATC computation: start from LT allocations Remaining CB margins equally split between four borders and then transformed into ATC via PTDFs. Iterative process (all CB s margins will not be exhausted simultaneously) stops when the difference between two steps becomes inferior to a given threshold LTA domain DA FB domain ATC for SA domain Stepwise increase through equal split of remaining margins 48

48 Congestion Management Difference between ATC & FB method Flowbased Parameters Critical Branches Generation Shift Keys Margins on the CB Impact of FBMC on neighbouring countries ATC determination from FBMC Welfare FBMC < welfare ATC MC WELFARE FBMC < WELFARE ATC MC

49 Welfare FBMC < welfare NTC ATC domain outside FBMC domain ATC clearing point sometimes out of FB domain On average 1 out of 5 times Some FB CBs would be overloaded by the exchanges generated by the ATC MC solution This can lead to FBMC welfare < ATC MC welfare CWE TSOs explanation Such cases can happen without contradicting the consistency of risk policies applied by TSOs Global risk policies which are strictly equivalent in ATC and FB 50

50 Welfare FBMC < welfare NTC ATC domain outside FBMC domain Link to RA application Different impact in ATC and FBMC «FB clearing point», allowing increased exchanges Extension of the FB domain thanks to «explicit» consideration of RA ATC Clearing point, overloading the FB constraint in red. Extension of the ATC domain thanks to «implicit» consideration of RA 51