Elia Group SA/NV · EURONEXT:ELI
Elia Group SA/NV — Technical Presentation (November 2022)
37 slides from Elia Group SA/NV's technical presentation, Nov 17, 2022
Slide 1: Balancing incentive 2022 Compensation network losses
Balancing incentive 2022 Compensation network losses WG Balancing – Workshop Losses 17/11/2022 1
Slide 2: Agenda
Agenda Introduction + storyline Balancing incentive study Results of the POC Implementation plan Conclusion
Slide 3: Deliverables and research questions of the balancing incentive 2022
In order to meet the target of the balancing incentive 2022, regarding the compensation of the network losses, Elia was asked to fulfill a set of deliverables. Generally said, two research questions were raised by CREG : 1. To what extend is the procurement by Elia on both federal and regional losse
Slide 4: Agenda
Agenda Introduction + storyline Balancing incentive study Results of the POC Implementation plan Conclusion
Slide 5: About the 30/6 study report
About the 30/6 study report The 30/6 study report (available on elia.be) contains the following elements: 1. Analysis of the current forecasting method of federal grid losses 2. Analysis of the efficiency of the current method for compensation of the grid losses (compensation in kind for the federal
Slide 6: Balancing incentive study
Balancing incentive study Introduction
Slide 7: Federal and regional network losses classification
The electricity network for Belgium can be divided in both a federal and regional part, with both of them encompassing different elements resulting in a separate losses classification. “From a mathematical point of view, the power losses are described as the amount of heat per second that develops i
Slide 8: Two-fold compensation of network losses today in Belgium
As a reminder: a two-fold compensation of network losses is today applied in Belgium • Regional losses • Compensation by Elia • By means of LT contracts (yearly/quarterly/monthly & peak/off-peak) • Procurement by Elia through tendering process • Financed through the access tariffs. • Federal losses
Slide 9: Balancing incentive study
Balancing incentive study What is the relevance of developing a short-term procurement component based on short-term forecasting as part of the compensation approach?
Slide 10: Supply gap evolution 2016–2021
The supply gap, made up of the difference between the forecasted losses and the actual losses, varies over time and differs for federal and regional losses. The supply gap is an interesting indicator for assessing the performance of a compensation approach. It represents at a given moment the delta
Slide 11: Historical overview of regional losses compensation and supply gap
A historical overview shows a differentiation between the compensation approach and the supply gap impact for both the federal and regional losses (1). Regional losses One challenge is covering losses during peak period, as they A cautious compensation strategy has been followed, depend on weather c
Slide 12: Historical overview of federal losses compensation and supply gap
An historical overview shows a clear differentiation between the compensation approach and the supply gap impact for both the federal and regional losses (2). Federal losses • With the major objective to ensure the long-term financial neutrality, Elia determines once per year the percentage of the c
Slide 13: Relevance of a short-term procurement component
What is the relevance of developing a short-term procurement component based on short-term forecasting as part of the compensation approach? • One limitation of the current compensation approach is the time granularity while the volatility increases significatively from day to day. • There are sever
Slide 14: TSO benchmarking study by SIA Partners
TSO benchmarking study by SIA Partners confirms the relevance of developing a short- term procurement component based on short-term forecasting as part of the compensation approach Other TSOs found that a short(er)-term forecasting approach in combination with a sufficient dynamic compensation appro
Slide 15: Balancing incentive study
Balancing incentive study To what extend is the procurement by Elia on both federal and regional losses more efficient?
Slide 16: Efficiency of Elia procurement of losses (1)
To what extend is the procurement by Elia on both federal and regional losses more efficient? (1) Firstly, not a straightforward question as any counterfactual (quantitative) analysis It is very hard and remains arbitrary (e.g. which costs to assume for BRP procurement, how to compare with Elia’s pr
Slide 17: Efficiency of Elia procurement of losses (2)
To what extend is the procurement by Elia on both federal and regional losses more efficient? (2) 2. Elia picking up the responsibility for the federal losses would change the market role from BRP to ACH for financing the federal losses 3. Uncertain end consumer effect: • Elia procuring federal grid
Slide 18: Efficiency of Elia procurement of losses (3)
To what extend is the procurement by Elia on both federal and regional losses more efficient? (3) Conclusion – Elia considers that at least for the short to mid-term (≤ 2027) changing the compensation in kind by BRPs to a procurement by Elia is not possible nor recommendable. At least a multi-year a
Slide 19: Further optimizing the losses compensation approach
Balancing incentive study Further optimizing the losses compensation approach
Slide 20: Further optimizing the losses compensation approach
Further optimizing the losses compensation approach Taking into account the above findings and conclusions, on the medium term (≤ 2027): • A more granular approach by means of more degrees of freedom offered through short-term procurement could clearly help to overcome the limitations of the current
Slide 21: Design options 1 and 2 for losses compensation
Further optimizing the losses compensation approach While in option 1, Elia would procure in DA volumes targeting to minimize any supply gap for both regional and federal losses, in option 2 Elia targets only the regional part staying closer to the contours of the responsibilities (and tariff contex
Slide 22: Trade-offs between the two options
Further optimizing the losses compensation approach The two options proposed to further optimize the losses compensation approach for the future imply a trade-off on different dimensions FROM (today) TO - Option 1 TO - Option 2 Regional • LT procurement through tenders of • LT procurement (Y-3 to Q/
Slide 23: Agenda
Agenda Introduction + storyline Balancing incentive study Results of the POC Implementation plan Conclusion
Slide 24: Proof of concept set up for short-term forecasting
A proof of concept (1/7 30/9) was set-up in order to test the creation of a short term forecasting for both regional and federal grid losses. – The proof of concept (POC) has the aim of testing the possibilities for forecasting on short term of both the federal and the regional losses. – Requireme
Slide 25: POC set-up with data sources feeding an AI model
A POC-scale set-up integrated the feeding of several data sources, which were deemed to have high correlation to the system losses, into an AI-model enabling the possibility to create a forecast which would be more granular. Actual (live) data input Prediction output - Solar forecast - Wind forecast
Slide 26: Short-term procurement reduces the supply gap
Overall, for the considered period, ST procurement based on DA forecasting allows to reduce the supply gap both for the regional and the federal losses. SG = Real losses - Forecast losses SG < 0 : Over-procurement SG > 0 : Under-procurement For regional losses, compared to today’s approach, the su
Slide 27: Factors affecting federal losses forecasting
Factors affecting federal losses forecasting – Analysis of a day (31/08) with a larger supply gap than for the other days The higher supply gap observed during the day can be partially attribute to : • Wind forecast error • Total load forecast error • (Limited) solar forecast error • The inability t
Slide 28: Supply gap distribution for design options vs as-is
Comparing the Supply Gap (SG) statistical distribution for both design options and the ‘as is’-scenario, option 1 shows a clear improvement whilst the effects towards the overall system are more limited and less beneficial in option 2. 50% AS IS AS IS AS IS AS IS 50% Opt 1 Opt 1 Opt 1 SG=0MW Option
Slide 29: Impact analysis of design options
Impact analysis: in terms of impact the design options behave differently compared to AS IS, with option 1 outperforming option 2. 3-month overall view Monthly breakdown, SG breakdown • Option 1, allowing to “net” regional and federal supply gap in the forecasting and procurement, results in lower v
Slide 30: Lessons learned from the POC
Lessons learned from the POC • Forecasting regional losses is feasible with limited, and acceptable, forecast error. • Whilst already indicating a clear potential for improvement, forecasting federal losses is feasible, but leaves the question on whether the outcome is sufficiently good to progress
Slide 31: Agenda
Agenda Introduction + storyline Balancing incentive study Results of the POC Implementation plan Conclusion
Slide 32: Estimated implementation timeline
Estimated implementation timeline for the short-term forecasting and DA procurement 2024 Jan Fe March April May Jun Jul Aug Sept Oct Nov Dec 2025 Jan Feb March April May Jun Jul Aug Sept 2023 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 19 23 27 31 35 39 43 47 51 3 Continued study on Forecast POC-model Swimlane 1 IT IT
Slide 33: Robust IT framework development time
Putting in place a robust IT framework requires an estimated development time of 12 months. • The IT framework should provide a tool with a robust IT and underlying data architecture in order to provide the ability to procure the losses in the day-ahead market on a daily basis. • The necessary tooli
Slide 34: Is the legal and regulatory framework fit-for-purpose?
Is the legal and regulatory framework fit-for-purpose? • For the potential addition of the federal grid losses to the Elia procurement Elia considers that at least for the short to mid-term (≤ 2027) changing the compensation in kind by BRPs to a procurement by Elia is not possible nor recommendable.
Slide 35: Purchasing approach via 50HzT Front Office
Purchasing approach: A ‘simple’ buying strategy operating through 50HzT Front Office seems most appropriate given Elia’s role on the matter • DA procurement requires Elia to be active on the DA Spot market, requiring a buying strategy, at least answering following questions: Suggested approach Targe
Slide 36: Agenda
Agenda Introduction + storyline Balancing incentive study Results of the POC Implementation plan Conclusion
Slide 37: Conclusion
Conclusion The incentive description underlying the study, the proof of concept and the implementation exercise raised two questions which were to be answered by Elia to the best of its abilities with the results obtained throughout the process: “ What is the relevance of the development of a short-