Elia Group SA/NV · EURONEXT:ELI

Elia Group SA/NV — Technical Presentation (April 2014)

66 slides from Elia Group SA/NV's technical presentation, Apr 16, 2014

  1. Slide 1: Implementation Strategic Reserves

    Implementation Strategic Reserves Task Force “Implementation Strategic Reserves” 16 April 2014

  2. Slide 2: Agenda TF ISR – 16/4/2014 (9h00-13h00)

    Agenda TF ISR – 16/4/2014 (9h00-13h00) Location: Elia, Keizerslaan 20, 1000 Brussels Topic Presenter Time Approval of draft minutes 3rd TF ISR 16/4/2014 Elia 10 minutes Status and planning update Elia 15 minutes Procedure to constitute the SR Elia 2 hours 20 minutes Consolidating feedback and highli

  3. Slide 3: Agenda

    Agenda START: 9h00 • Approval of draft minutes TF ISR 19/3/’14 9h10 • Status and planning update 9h25 • Procedure to constitute the SR a) Parameter calibration b) Overview of the procedure BREAK: 11h45 Coffee Break 12h00 • Market design ( functioning rules) 12h50 • Next steps END: 13h00 TF ISR – 16

  4. Slide 4: Approval of minutes 3rd TF ISR 19/3/2014

    Introduction  Approval of minutes 3rd TF ISR 19/3/2014 The draft minutes were distributed by e-mail prior to this meeting. No specific comments on the minutes have been received. TF ISR – 16/4/2014 4

  5. Slide 5: Agenda

    Agenda START: 9h00 • Approval of draft minutes TF ISR 19/3/’14 9h10 • Status and planning update 9h25 • Procedure to constitute the SR a) Parameter calibration b) Overview of the procedure BREAK: 11h45 Coffee Break 12h00 • Market design ( functioning rules) 12h50 • Next steps END: 13h00 TF ISR – 16

  6. Slide 6: Update planning 2014/2015

    Introduction Update planning 2014/2015 • The law amending the Law of 29 April 1999 on the organization of the electricity market, which provides for the establishment of a mechanism of strategic reserves has been published in the ‘Belgisch Staatsblad / Moniteur Belge’. • Conform the approved transi

  7. Slide 7: Volumes decided by the Minister

    Introduction Volumes decided by the Minister • The procedure for constitution of strategic reserves as sent for final consultation, has taken into account the Ministerial Decree of April 3rd. As described in point 2.5 of the procedure, art.1 of the Ministerial Decree stipulates that: - A volume of

  8. Slide 8: Update on consultation planning

    Introduction Update on consultation planning Procedure for constitution of strategic reserves  A draft version of this procedure was sent ta all taskforce members and is also available on our website for final consultation by all stakeholders (grid users, producers, the regulator, the energy admin

  9. Slide 9: Questions

    Questions TF ISR – 16/4/2014 9

  10. Slide 10: Agenda

    Agenda START: 9h00 • Approval of draft minutes TF ISR 19/3/’14 9h10 • Status and planning update 9h25 • Procedure to constitute the SR a) Parameter calibration b) Overview of the procedure BREAK: 11h45 Coffee Break 12h00 • Market design ( functioning rules) 12h50 • Next steps END: 13h00 TF ISR – 16

  11. Slide 11: Agenda

    Agenda START: 9h00 • Approval of draft minutes TF ISR 19/3/’14 9h10 • Status and planning update 9h25 • Procedure to constitute the SR a) Parameter calibration b) Overview of the procedure BREAK: 11h45 Coffee Break 12h00 • Market design ( functioning rules) 12h50 • Next steps END: 13h00 TF ISR – 16

  12. Slide 12: Content

    Content Part 1: Introduction Part 2: Parameters used for computation of total cost during selection  Specific scenario of activations Part 3: SDR product design  Nature of SDR  Calibration of parameter Part 4: Ratio SDR/SGR TF ISR – 16/4/2014 12

  13. Slide 13: Content

    Content Part 1: Introduction Part 2: Parameters used for computation of total cost during selection  Specific scenario of activations Part 3: SDR product design  Nature of SDR  Calibration of parameter Part 4: Ratio SDR/SGR TF ISR – 16/4/2014 13

  14. Slide 14: Introduction: Monte Carlo simulation of strategic reserve volume

    Introduction Volume for strategic reserves determined by Monte Carlo simulation. Simulation of available production versus predicted demand Available production - Installed capacity Taken into account - Solar/wind/hydro/import - Maintenance - Forced outages Predicted demand - Multiple timeseries Out

  15. Slide 15: Content

    Content Part 1: Introduction Part 2: Parameters used for computation of total cost during selection  Specific scenario of activations Part 3: SDR product design  Nature of SDR  Calibration of parameter Part 4: Ratio SDR/SGR TF ISR – 16/4/2014 15

  16. Slide 16: Parameters for computation of the total cost

    Parameters for computation of the total cost Specific scenario of activations In order to put all candidates (SDR and SGR) in competition during selection the total yearly cost (reservation and activation) is considered. Therefore a specific scenario of activations is used:  number of activations &

  17. Slide 17: Content

    Content Part 1: Introduction Part 2: Parameters used for computation of total cost during selection  Specific scenario of activations Part 3: SDR product design  Nature of SDR  Calibration of parameter Part 4: Ratio SDR/SGR TF ISR – 16/4/2014 17

  18. Slide 18: SDR is dimensioned to meet needs

    SDR is dimensioned to meet needs • SDR is dimensioned to cope with more rare and extreme situations (peaks of ENS)  SGR is dimensioned to cover a base-band (most of the situations)  SDR is dimensioned for extreme needs (on the top of SGR) ENS (average MWh/activation duration) 2016/2017 Example 160

  19. Slide 19: SDR: product calibration

    SDR: product calibration How can we define the product “Strategic demand reserve” so that it is best fitted to our needs taking into account stakeholder’s possibilities. Product design based on a probabilistic approach 1. Activation duration and frequency - When do we expect activations? Trade off b

  20. Slide 20: SDR Activation duration and frequency

    SDR Activation duration and frequency Example for one winter Assuming 15% SDR Probability of SDR activation during the day 20% 15% A clear increase in probability to be activated in the morning and evening: 10% - Morning peak: 9h-13h covers approximately Prob. 30% 5% - Evening peak: 17h-21h covers a

  21. Slide 21: Number of activations and cumulated duration

    Number of activations and cumulated duration The product calibration is made to cover P95 situations and to provide a maximum flexibility to the operator: Example for one winter assuming 15% SDR Cumulated probability of yearly # of SDR activations • With 40 activations 99,6% of the situations 100,00

  22. Slide 22: Content

    Content Part 1: Introduction Part 2: Parameters used for computation of total cost during selection  Specific scenario of activations Part 3: SDR product design  Nature of SDR  Calibration of parameter Part 4: Ratio SDR/SGR TF ISR – 16/4/2014 22

  23. Slide 23: Ratio SDR/SGR

    Ratio SDR/SGR Rationale: • As SDR is calibrated for “short duration needs” and SGR for longer needs (eg 18h) • The total SR is dimensioned in order to reduce the remaining average LOLE up to 3h • The graph below gives the impact of the ratio SDR/SGR on the remaining average LOLE assuming that 1MW SD

  24. Slide 24: Agenda

    Agenda START: 9h00 • Approval of draft minutes TF ISR 19/3/’14 9h10 • Status and planning update 9h25 • Procedure to constitute the SR a) Parameter calibration b) Overview of the procedure BREAK: 11h45 Coffee Break 12h00 • Market design ( functioning rules) 12h50 • Next steps END: 13h00 TF ISR – 16

  25. Slide 25: Draft procedure for constitution of SR (1/10)

    Draft procedure for constitution of SR  Highlights or comments received (1/10) During the next slides we will go through the procedure for constitution of strategic reserves highlighting updates compared to previous presentations and/or items on which we already received comments 1. Plan Wathelet •

  26. Slide 26: Draft procedure for constitution of SR (2/10)

    Draft procedure for constitution of SR  Highlights or comments received (2/10) 2. Strategic Reserves (continued) • 2.6 (NEW) = The Minister instructed ELIA by Ministerial Decree the 3th of April to launch a tender for 800MW per year of strategic reserves and this for three years, starting as from N

  27. Slide 27: Draft procedure for constitution of SR (3/10)

    Draft procedure for constitution of SR  Highlights or comments received (3/10) 4. Procedure for constitution of SR • 4.1 = ELIA will organize a “competitive negotiated tendering” procedure. The process will thus be very similar to the ancillary services process. • 4.2 = Contract notice. A prerequis

  28. Slide 28: Draft procedure for constitution of SR (4/10)

    Draft procedure for constitution of SR  Highlights or comments received (4/10) 4. Procedure for constitution of SR (continued) 4.2.3 = Certification of SDR - In order to be eligible for SDR one should: 1. Be a (or an aggregated pool of) grid user(s) connected to the ELIA grid; Exclusivity with ICH

  29. Slide 29: Draft procedure for constitution of SR (5/10)

    Draft procedure for constitution of SR  Highlights or comments received (5/10) 4.3 Terms of reference The SDR/SGR contract(s) will further clarify the terms of reference in this chapter. If there is a difficulty in interpretation or a contradiction between this chapter 4.3 and the SGR/SDR contract(

  30. Slide 30: Draft procedure for constitution of SR (6/10)

    Draft procedure for constitution of SR  Highlights or comments received (6/10) 4.3 Terms of reference (continued) Some updates in the terms of reference for SGR: • ELIA will neutralize, on a quarter-hourly basis, all effectively measured injection (MW) at the access point of the concerned SGR Power

  31. Slide 31: Draft procedure for constitution of SR (7/10)

    Draft procedure for constitution of SR  Highlights or comments received (7/10) 4.3 Terms of reference (continued) Some updates in the terms of reference for SDR: • By concluding an SDR contract the SDR supplier will undertake to provide the SDR service during the 5 months winter period(s) throughou

  32. Slide 32: Draft procedure for constitution of SR (8/10)

    Draft procedure for constitution of SR  Highlights or comments received (8/10) 4.4 Call for tender All selected candidates will receive the tendering specifications (= SDR or SGR contract), bidding sheet and bidding instructions. Chapter 4.4 explains all details about this call for tender: • 4.4.1

  33. Slide 33: Draft procedure for constitution of SR (9/10)

    Draft procedure for constitution of SR  Highlights or comments received (9/10) 4.5 Award criteria (continued) The selection of strategic reserves happens on technical-economic basis. The selection of offers is done in a way that ensures that for the winter 2014/2015 the contracted volume for strate

  34. Slide 34: Draft procedure for constitution of SR (10/10)

    Draft procedure for constitution of SR  Highlights or comments received (10/10) 4.6 Contract preparation and signature Some clarification on the process for preparing and signing awarded contracts. 4.7 Contract award notice Once the contracts have been signed, ELIA will publish a contract award not

  35. Slide 35: Questions

    Questions TF ISR – 16/4/2014 35

  36. Slide 36: Agenda

    Agenda START: 9h00 • Approval of draft minutes TF ISR 19/3/’14 9h10 • Status and planning update 9h25 • Procedure to constitute the SR a) Parameter calibration b) Overview of the procedure BREAK: 11h45 Coffee Break 12h00 • Market design ( functioning rules) 12h50 • Next steps END: 13h00 TF ISR – 16

  37. Slide 37: Agenda

    Agenda START: 9h00 • Approval of draft minutes TF ISR 19/3/’14 9h10 • Status and planning update 9h25 • Procedure to constitute the SR a) Parameter calibration b) Overview of the procedure BREAK: 11h45 Coffee Break 12h00 • Market design ( functioning rules) 12h50 • Next steps END: 13h00 TF ISR – 16

  38. Slide 38: Market design: overview

    Market design: overview The following topics are dealt with in the following slides: - Step 4: Injection and balancing • Criterion for structural shortage • Impact imbalance pricing - Step 2: Notification • Activation rules - Step 1: Detection • Technical trigger 38

  39. Slide 39: Market design Step 4: Injection & Balancing

    MARKET DESIGN STEP 4 : INJECTION & BALANCING Two topics in the context of step 4: ‘injection & balancing’ •Criterion for structural shortage •Impact imbalance pricing TF ISR – 16/4/2014 39

  40. Slide 40: Step 4: Injection & Balancing Basic principles

    Step 4: Injection & Balancing Basic principles  Economic trigger: signal coming from BPX in DA, indicating that a volume of SR has to be provided for a certain period. • Such a transaction can be sufficient and solve the (market) problem  Technical trigger: decision Y hours in advance (“verificat

  41. Slide 41: Structural shortage - Real Time Indicator

    Step 4: Injection & Balancing Structural shortage” - Real Time Indicator  Typical scenario of an adequacy problem: Total offtake > total injection (SI≤0) and all units at their max • Reserves (R2 + R3 + interTSO) contracted for residual imbalances and FO 16h 22h SI Available Ibids Situation where

  42. Slide 42: Residual energy - impact on balancing (1/2)

    Step 4: Injection & Balancing Residual energy - impact on balancing (1/2) Situation 1: IF strategic reserves are activated, AND IF there is “structural shortage”, THEN the imbalance price should be very high (>> 3000 €/MWh) Situation 2: IF strategic reserves are activated, AND there is NO “structur

  43. Slide 43: Imbalance pricing in a world with SR

    Step 4: Injection & Balancing Imbalance princing in a world with SR Changes in imbalance pricing depend on two conditions: • Has there been a trigger for strategic reserves? • Is there (in real-time) structural shortage? REAL TIME INDICATOR No structural shortage Structural shortage SI ≤ - IBIDs No

  44. Slide 44: Residual energy - impact on balancing (2/2)

    Step 4: Injection & Balancing Residual energy - impact on balancing (2/2) Situation 2: IF strategic reserves are activated, AND there is NO “structural shortage”, THEN the imbalance price should be a proxy of what would have been the situation without residual energy.  Considering the importance t

  45. Slide 45: How much is >> 3000 €/MWh in case of structural shortage?

    Step 4: Injection & Balancing How much is “>> 3000 €/MWh” in case of structural shortage? • High enough as incentive to keep the balance. VOLL Estimates • But not too high resulting in over-rewarding and potential gaming • Belgian Planbureau (2004) 3 methods/proxies with various results • 2001 Adde

  46. Slide 46: Market design Step 2: Notification

    MARKET DESIGN STEP 2 : NOTIFICATION One topic in the context of step 2: ‘Notification’ • Activation rules TF ISR – 16/4/2014 46

  47. Slide 47: Selection: Basic principles and parameters

    Selection Basic principles and parameters Means Needs = Profile • Available SGR • Pmin -->Pmax variable volume • Available SDR • Nom-SL fixed volume (qh basis) • Max Duration 4h or 12h • remaining activations Technico Economic Selection example 1. @ min cost 2. @ min market distortions Taking into a

  48. Slide 48: Selection: Peak or Base Load Profile?

    Selection Basic principles and parameters Peak or Base Load Profile ? • Profiles longer than 4h are considered as base load and would a priori be covered with SGR. • Profiles shorter than 4h are considered as peak load and would a priori be covered either by SDR … or SGR depending on total cost of a

  49. Slide 49: Activation Rules for strategic reserves

    Activation Rules for strategic reserves 1. The base load will a priori be covered by SGR: a) Selection based on economic merit order ( = the cheapest (combination of) SGR unit ) b) Pmin of a unit can be higher than the base load power if: • Lower total cost of selection and • Spillover is limited to

  50. Slide 50: Market design Step 1: Detection

    MARKET DESIGN STEP 1 : DETECTION One topic in the context of ’step 1: ‘Detection’ •Technical trigger TF ISR – 16/4/2014 50

  51. Slide 51: Technical trigger in DA

    Detection - Technical trigger Technical trigger in DA The alarming system for the technical trigger is primarily based on a “spinning reserve” forecast. Spinning Reserve monitors and forecasts the system flexibility for the Elia Control Area. In case upward margin becoming too small/negative, the al

  52. Slide 52: Alarming system in DA

    Detection - Technical trigger Alarming system in DA S1 : Total Load forecast > Limit Up Free Bids S2 : Limit SoS – Total Load Forecast < N-1 criterion There is a risk not to have enough flexibility to There is a risk not to have enough margin to ensure the N- compensate residual imbalances 1 criteri

  53. Slide 53: Back-up slides “Technical trigger”

    Back-up slides “Technical trigger” TF ISR – 16/4/2014 53

  54. Slide 54: Technical trigger in RT

    Detection - Technical trigger Technical trigger in RT After the day-ahead check, a continuous monitoring takes place… As seen on the previous slide, at the preparation for the next day (around 18h on D-1) a first explicit check is made but the alarming systems keep on running and monitoring in intra

  55. Slide 55: Alarming system in Day Ahead

    Detection - Technical trigger Alarming system in Day Ahead TF ISR – 16/4/2014 55

  56. Slide 56: Alarming system - Definitions of the curves

    Detection - Technical trigger Alarming system - Definitions of the curves Total Production Forecast: Sum of forecasted productions on the TSO and DSO grid - Information from the market : Cross border exchanges DA and ID - Information from CIPU units : Nominations and IDPCR except for renewables - In

  57. Slide 57: Alarming system - Definitions of the curves

    Detection - Technical trigger Alarming system - Definitions of the curves Limit Up Free Bids : a “free margin” available to manage inadequacy between load and production. Based on margin computed each quarter summing all the available coordinable power units in service which can provide I-bids using

  58. Slide 58: Detection - Technical trigger

    Detection - Technical trigger Detection: At the preparation for the next day (around 18h on D-1) a first explicit check is made. In case upward margin becoming too small/negative, the alarms can be launched by the system and the TSO has to consider all information about the situation in order to com

  59. Slide 59: Alarming system in Intraday & RT

    Detection - Technical trigger Alarming system in Intraday & RT The monitoring system also integrates the real-time measurements when they become available. TF ISR – 16/4/2014 59

  60. Slide 60: Market design: Stakeholders feedbacks / questions

    Market design  Stakeholders feedbacks / questions After the 28/2 taskforce some questions where asked regarding the Market design: 1. Quid Economic Trigger in case of Belpex Decoupling procedures without real need for SR to be activated?  The economic trigger will be activated and provide a counte

  61. Slide 61: Questions

    Questions TF ISR – 16/4/2014 61

  62. Slide 62: Structural Shortage

    Back up slide 1 Structural Shortage  When SR are activated but the Structural Shortage Indicator is not reached, Imbalance prices will be reconstituted in order to reflect the situation as if there was no SR running so that the surplus of energy gives not a false impression of a better situation.

  63. Slide 63: Back up slide 2: SDR Design - Capacity reservation

    Back up slide 2: SDR Design  Capacity reservation 1. No fixed capacity obligation but commitment to lower the consumption at any moment under the SL • Purpose: avoid incentive to consume in order to reach a fixed capacity obligation • Candidates are grid users with a traditionally high consumption

  64. Slide 64: Process of selection

    Process of selection Different steps towards an activation: 1. First assessment in DA at ~18h • The result of the assessment can be a profile of needed power • Taking into account lead times of SR units the de notification deadline is defined 2. Second assesment a. At the max notification time or ea

  65. Slide 65: Agenda

    Agenda START: 9h00 • Approval of draft minutes TF ISR 19/3/’14 9h10 • Status and planning update 9h25 • Procedure to constitute the SR a) Parameter calibration b) Overview of the procedure BREAK: 11h45 Coffee Break 12h00 • Market design ( functioning rules) 12h50 • Next steps END: 13h00 TF ISR – 16

  66. Slide 66: Next steps

    Next steps Save the date: 10 June (9h-13h) or 19 June (9h-13h) Goal: - Discuss more practical issues - Consult/inform on “collateral impacts” (e.g. ARP contract) Nature of the meeting: Whether this will be an official Task Force meeting or an ‘information session’ or … is to be determined once the e

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