Smart Grids, New Downstream & the New Deal for EU Electricity Consumers

Transcription

1 Smart Grids, New Downstream & the New Deal for EU Electricity Consumers Pavla Mandátová, Advisor Retail Markets, EURELECTRIC European Power Generation Summit Prague, 27 th November 2015 EURELECTRIC represents the EU electricity industry all across the electricity value chain ENERGY POLICY & GENERATION ENVIRONMENT & SUSTAINABLE DEVELOPMENT MARKETS DISTRIBUTION NETWORKS RETAIL CUSTOMERS 1

2 2030 Framework for Climate and Energy Agreed Headline Targets % Greenhouse Gas Emissions 20% Renewable Energy 20% Energy Efficiency 10% Interconnection 2030 at least - 40% Greenhouse Gas Emissions at least 27% * Renewable Energy consumption *implies 45% RES in power mix at least 27% (indicative) Energy Efficiency *to be reviewed by 2020, having in mind an EU level of 30% 15% Interconnection 3 A new paradigm for European electricity systems The growth of renewables brings a new reality to power systems Over 150GW of solar and wind installed in 10 years Low carbon generation leading the way (EU 28, 2013) EU Cumulative wind power installed capacity EU Cumulative PV installed capacity The total electricity production in 2014 amounts to 3025 TWh, RES contributing to this total with 28%. Sources: EWEA, Solar Power Europe 4 2

3 A new paradigm for European electricity systems Power systems with broad generation variations from intermittent renewables need both firm capacity ( back up ) and flexibility Source: ENTSO-E, SOAF A new paradigm for European electricity systems What is the role of thermal generation in the transition? Source: EURELECTRIC Fossil fuel fired capacity saw a net decrease (6,768 MW) in Existing capacity is being mothballed/closed down influencing the available firm and flexible capacity. 6 3

4 A future-proof market design A FUTURE PROOF MARKET DESIGN VALUES THE NEEDED ENERGY, FLEXIBILITY AND CAPACITY Energy Efficient dispatch Forward, day-ahead, intraday markets Ongoing market integration Flexibility Short term system adequacy Day ahead, intraday and balancing, ancillary services Ongoing market integration Capacity Long term system adequacy Capacity market National initiatives going towards more integration? 7 A new paradigm for European electricity systems Vast majority of the PV capacity is connected at the medium and low voltage levels = challenge for the distribution system Instability in distribution system (Source: Mainova) Italy: Energy Flows at TSO-DSO boundary (Source: ENEL) 8 4

5 Will the Commission s New Deal for Energy Consumers pave the way to their empowerment? Source: European Commission 9 Retailers already offer new innovative deals to customers Examples of our members activities: 10 5

6 The uptake of decentralized technologies will continue Source: RBC Capital Markets (2015) 11 The degree of differentiation in supply offers varies between Member States Source: ACER (2013) 12 6

7 There is a significant variation in the penetration of time-based electricity prices across the Member States Time-based electricity prices by customer group in Europe 2013 Source: CEPA (2014) 13 What are the key challenges for empowering customers? 1. Efficient energy markets 2. Level playing field between market participants 3. Integrate Distributed Generation and Prosumers in the market 4. Free the power bill 5. Technology enhancement 6. Separate competitive & regulated activities, define behind the scenes processes 7. Design incentive-based regulation for DSOs 14 7

8 1 The completion of the Internal Energy Market is fundamental to cost-efficiently accomplish this transition in power systems All market developments head towards completing the Internal Energy Market Implementation of the Third Energy Package Integration of wholesale markets across all timeframes 15 A level playing field for all resources, in all markets 2 Conventional generation Decentralized generation/ Prosumers Competition in the market On a level playing field To provide energy, flexibility, capacity Renewables Customers participation and empowerment Demand Response Storage 16 8

9 2 Make sure that customers can participate through demand response in all markets Day-ahead/ Intraday markets/ Balancing A capacity market is an additional market place where both demand and supply can compete Example from PJM capacity market in the US Source : PJM «2015 Demand Response Operations Markets Activity Report» (May 2015) 17 2 Design fair market rules for all downstream service providers including explicit demand response Scope of a balance responsible party It is estimated that the BRPs customer portfolio is 100 MWh 100 To keep its balance, the BRP supplies 100 MWh 100 Third party DR Aggregator DR aggregator removes 10MWh of consumption from the BRP s portfolio who sourced 100 to be in balance Consumption Injection 10 These 10 MWh are sold on the wholesale market by the aggregator The BRP faces an imbalance of 10 MWh InjectionConsumption 1. Fair allocation of the shifted electricity between balance responsible parties all market players should bear the same responsibilities (level playing field) 2. Financial adjustment mechanism ensuring that suppliers are compensated for the electricity they source and inject 3. Adequate communication between aggregators and the balance responsible party/supplier. Supplier should not bear undue imbalances. 18 9

10 2 Explicit demand response: functioning and impacts 1 KW Customer A forecasted consumption Hours The BRP/supplier forecasts Customer A consumption and sources the adequate amount of electricity With some exceptions, the Balance Responsible Party is the core of all European wholesale markets. Usually, the BRP of a customer is its supplier. The notion of BRP has been introduced to encourage balance between demand and offer, unbalanced BRPs are penalised. Only electricity blocks can be traded on wholesale electricity markets. An aggregator sells the result of a demand response activation: an electricity block KW Day-Ahead market Customer A consumption after 2 demand response activation 3 Hours The third party aggregator requests Customer A to reduce consumption while the BRP/supplier supplies electricity as forecasted. As a result: The balance responsible party faces an imbalance The supplier does not recover its supply costs Balancing market Intraday market Hours The third party aggregator re-routes this electricity block and sells it on the electricity market. If the aggregator does not pay for this electricity, he is selling something that he did not produce or buy 19 3 How to ensure cost-effective deployment of distributed generation? Purchasing obligation, price linked to wholesale market price Purchasing obligation + guaranteed price (FiT schemes etc) Netmetering* No purchasing obligation, price not regulated * in LV and BE netmetering is applied to smaller prosumers only 20 10

11 4 Increasing taxes & levies in customer s bills hamper their ability to respond to energy prices % of customers with smart metering roll-out: 17 Member States with wide-scale roll-out 22 11

12 5 Will the smart metering infrastructure provide the right basis for creation of new offers? Source: European Commission (2015) 23 6 How to clearly divide the roles and responsibilities in the downstream space? SOURCE: EURELECTRIC Arrange all behind-the-scene processes between market parties and network operators in a seamless way 24 12

13 6 Set up a secure, efficient and transparent framework for data exchange Avoid duplication & splitting of communication channels Ensure data privacy and security Develop measurement and verification requirements, including baselines DSO as market facilitator model by the EG 3, TF Smart Grids of the EC Source: European Commission 25 7 Smart Grids: How to move from demonstration to deployment? Source: Joint Research Centre 26 13

14 7 There is still a potential for better DSO innovation incentives SOURCE: EURELECTRIC Remunerate DSOs system optimisation activities through effective incentive regulation aimed at stimulating innovation (e.g. implementation of active system management solutions) 27 Three no-regret actions to empower customers while enabling innovation in downstream services Make it simple Since retail markets are headed towards greater complexity owing to new opportunities and needs, the system should be kept simple for customers to engage. Make it cheap Competing on a level playing field is the best way to ensure innovation and cost-effective delivery of downstream services. Make it fair New services might entail cost-shifting (cost socialisation) from one consumer group to another if regulation is not properly designed. Avoid the consumer divide

15 THANK YOU! 29 15