Elia Group SA/NV · EURONEXT:ELI
Elia Group SA/NV — wg10 presented slide
83 slides from Elia Group SA/NV's investor presentation, Sep 13, 2022
Slide 1: WG Adequacy #10
WG Adequacy #10 13 September 2022
Slide 2: Agenda
Agenda ➢ Welcome ➢ Minutes of Meeting WG Adequacy #9 (25.08.2022) ➢ PQ Permit Requirements ➢ Auction Timeline ➢ Assessment of the amount of Market Response in Belgium [E-cube] ➢ CRM: proposal for design evolutions ➢ Tender for Low Carbon Technologies : Design ➢ Next meetings 2
Slide 3: Minutes of Meetings
—€eia Minutes of Meetings
Slide 4: Minutes of Meeting
Minutes of Meeting • WG Adequacy #9 – 25.08.2022 : To be approved • The MoM were sent on 06.09.2022. No comments were received. 4
Slide 5: PQ Permit Requirements
Gia PQ Permit Requirements
Slide 6: Permit requirements (prequalification)
Permit requirements (prequalification) – Origin : Act 28/2/2022 amending E-act; Prequalification criterion introduced in the art 7undecies §12 E- act : “c) if (a) permit(s) is(are) required under regional regulations for the construction and/or operation of the capacity concerned, proof that the cap
Slide 7: Permit requirements (prequalification)
Permit requirements (prequalification) – Context: prequalification (to be distinguished from permitting milestone ! ) – Scoping: permits required under regional regulation for the construction and/or operation of a capacity: – Flanders: bouwvergunning, stedenbouwkundige vergunning, milieuvergunning
Slide 8: Permit requirements (prequalification)
Permit requirements (prequalification) – Proof: mere declaration is not enough: the deliverance of the permit needs to be proven: – Existing CMU: – permit(s) delivered at the last administrative instance (all relevant parts) or certified true copy – Declaration of conformity – if relevant : other do
Slide 9: Auction Timeline
—€eia Auction Timeline
Slide 10: Y-4 2026-2027 Auction Timeline (normal process, excl. fallback)
Y-4 2026-2027 Auction Timeline (normal process, excl. fallback) ELIA CRM Actors Internal preparation auction Due date Financial Security Submission <01/09/2022 01/09/2022 CRM Actors CRM Actors Gate Opening Time Bid preparation 16/09/2022 – 09h00 01/09/2022 – 15/09/2022 CRM Actors Opt-out notificatio
Slide 11: Bid saving & submission
Bid saving & submission Bid preparation ➢ CRM candidates can save bids starting from 01/09/2022 at 09:00 Gate opening time ➢ CRM candidates can submit bids starting from 16/09/2022 at 09:00 Gate closing time ➢ CRM candidates can submit opt-outs, permits and bids until Friday 30/09/2022 • 06h00 Opt-o
Slide 12: Validation results
Validation results ➢ Elia will formally send the results to CREG by 15/10/2022 the latest. ➢ CREG needs to validate the results and formally communicate this validation to Elia by 31/10/2022 at the latest. 12
Slide 13: Publication results by Elia
Publication results by Elia ➢ Deadline for Elia is 31/10/2022 ➢ Communication channels • Publication of the auction report on the Elia.be website • IIP Publication (Inside Information Platform) • Via CRM IT Interface to individual market parties (selected and non-selected candidates) • Send auction
Slide 14: Assessment of the amount of Market Response in Belgium
Assessment of the amount of Market Response in Belgium
Slide 15: Context and introduction
Context and introduction • Given the strong change in market circumstances, Elia has identified that the lower price threshold used in the ‘Assessment of the amount of Market Response in Belgium’ study is no long fit for purpose. • Elia and E-cube propose to only use the higher price threshold to de
Slide 16: Market Response – update 2022
Market Response – update 2022 Working Group Adequacy Brussels, September 8 th, 2022 16
Slide 17: Table of contents
Table of contents 1 Goal, scope & methodology of the MR update – Reminder 2 Results of the EPEX aggregated curves & block orders analysis 3 Results of the Nord Pool aggregated curves & block orders analysis 4 Other analyses 5 Conclusion 17
Slide 18: In 2017, a robust quantitative methodology was established
REMINDER & METHODOLOGY In 2017, a robust quantitative methodology was established based on the aggregated curves, and complemented with a qualitative Q&A to define the details of the activation Residential Tertiary Industrial A Aggregated curves analysis: quantitative approach To provide a robust es
Slide 19: The 2020 updated methodology enables MR from block orders
REMINDER & METHODOLOGY The 2020 updated methodology enables MR from block orders to be accounted for and allows the use of data from multiple NEMOs GENERAL METHODOLOGY FOR THE CURVE ANALYSIS 3. BLOCK 1. NEMO’s DATA 2. PRE- ORDER 4. MR 6. STATISTICAL simple bids COLLECTION PROCESSING ANALYSIS ASSESSM
Slide 20: Historically MR was calculated on a threshold of 150€/MWh & 500€/MWh
REMINDER & METHODOLOGY Historically MR was calculated on a threshold of 150€/MWh & 500€/MWh, but in the current context of high energy prices only the 500€/MWh will be analysed for the winter 21/22 GENERAL METHODOLOGY Market Response volumes valued in the DA market Demand decrease Offer increase • T
Slide 21: We propose to take the 500€/MWh threshold for winter 2021/2022
REMINDER & METHODOLOGY We propose to take the 500€/MWh threshold for the winter 2021/2022 as from end of August 2021 prices were frequently above the 150€/MWh mark making it not relevant anymore BELGIAN DAY-AHEAD PRICE EVOLUTION FROM 15/10/2020 TO 31/03/2022 €/MWh 700 650 600 550 500 500 450 400 350
Slide 22: Intraday prices are also regularly above the 150€/MWh mark
REMINDER & METHODOLOGY Intraday prices are also regularly above the 150€/MWh mark after August 2021 BELGIAN INTRADAY PRICE EVOLUTION FROM 15/10/2020 TO 31/03/2022 €/MWh 450 400 350 300 250 200 150 150 100 50 0 -50 -100 -200 Nov Nov Aug Sep Feb Feb Mar Mar Aprl 2020 2021 2022 Oct Oct Jan Jun Jul Jan
Slide 23: Number of offers >150€/MWh increased by 241% winter 2021/22 vs 2020/21
REMINDER & METHODOLOGY Between winter 2021/2022 and 2020/2021, the number of offers >150€/MWh saw an increase by 241% and 85% for the >500€/MWh OVERVIEW OF BLOCK ORDERS There is a strong increase in the number of offers >150€/MWh and >500€/MWh. This evolution also makes the 500 €/MWh more relevant t
Slide 24: The methodology is based on three restrictions
REMINDER & METHODOLOGY The methodology is based on three restrictions, in line with the past years GENERAL METHODOLOGY Analyses conducted: Restriction of the Focus on the DA prices impact of parameters dataset • 3 analyses were conducted to Among the previous parameters, Though, the DA prices vary a
Slide 25: Table of contents
Table of contents 1 Goal, scope & methodology of the MR update – Reminder 2 Results of the EPEX SPOT aggregated curves & block orders analysis 3 Results of the Nord Pool aggregated curves & block orders analysis 4 Other analyses 5 Conclusion 25
Slide 26: 500€/MWh thresholds after restrictions
EPEX SPOT AGGREGATED CURVES 2021/2022 sees a high increase of average MR volumes for 500€/MWh thresholds after restrictions SUMMARY OF THE TWO CATEGORIES (REFINED AND RESTRICTED DATASET) – EPEX SPOT DATASET Comparison with the refined / restricted results MW 150€/MWh volumes MW 500€/MWh volumes 1,00
Slide 27: 500€/MWh threshold
EPEX SPOT AGGREGATED CURVES Winter 2021/2022 results in high market response volumes at the 500€/MWh threshold MR PER WEEK FOR THE TWO THRESHOLDS AND PER YEAR FOR EPEX SPOT AGG CURVES Offer + demand (MW) 1 700 1 600 1 500 1 400 1 300 1 200 1 100 1 000 900 800 700 600 500 400 300 0 44 45 46 47 48 49
Slide 28: Working with the 500€/MWh threshold has become more relevant
EPEX SPOT AGGREGATED CURVES Working with the 500€/MWh threshold has become more relevant for adequacy in times of high market prices MR PER WEEK FOR THE TWO THRESHOLDS AND PER YEAR FOR EPEX SPOT AGG CURVES Offer + demand (MW) 1 700 1 600 1 500 1 400 1 300 1 200 1 100 1 000 900 800 700 600 500 400 30
Slide 29: EPEX SPOT Block Orders increased significantly between 20/21 and 21/22
EPEX SPOT BLOCK ORDERS The average of EPEX SPOT Block Orders has increased significantly between 20/21 and 21/22, following much higher prices and bigger volumes of traded blocks in 2021/2022 MR FOR EPEX SPOT BLOCK ORDERS FOLLOWING THE DIFFERENT DATA RESTRICTIONS 2020/2021 No Winter Winter/ Restrict
Slide 30: Table of contents
Table of contents 1 Goal, scope & methodology of the MR update – Reminder 2 Results of the EPEX SPOT aggregated curves & block orders analysis 3 Results of the Nord Pool aggregated curves & block orders analysis 4 Other analyses 5 Conclusion 30
Slide 31: MR volumes from Nord Pool aggregates curves are still limited
NORD POOL AGGREGATED CURVES MR volumes from Nord Pool aggregates curves are still limited SUMMARY OF THE TWO CATEGORIES (REFINED AND RESTRICTED DATASET) – NORD POOL DATASET Comparison with the refined / restricted results MW 150€/MWh volumes MW 500€/MWh volumes 150 150 100 100 50 50 0 0 19/20 20/21
Slide 32: Nord Pool block orders MR only for 150€/MWh threshold
NORD POOL BLOCK ORDERS MR for Block Orders from Nord Pool was only of 5MW in 21/22 and only for the 150€/MWh threshold MR FOR NORD POOL BLOCK ORDERS FOLLOWING THE DIFFERENT DATA RESTRICTIONS 2020/2021 No Winter Winter/ Restricted No Winter Winter/ Restricted restriction restriction weekday 1) datase
Slide 33: Table of contents
Table of contents 1 Goal, scope & methodology of the MR update – Reminder 2 Results of the EPEX SPOT aggregated curves & block orders analysis 3 Results of the Nord Pool aggregated curves & block orders analysis 4 Other analyses 5 Conclusion 33
Slide 34: 2020/2021 average MR at 270€/MWh and 417€/MWh strike thresholds
OTHER ANALYSES In 2020/2021, the average MR is respectively 612 MW & 480 MW for the 270€/MWh and 417€/MWh strike price thresholds MR AND STD FOR EPEX SPOT & NORD POOL AGGREGATED CURVES FOR THE DIFFERENT DATA RESTRICTIONS 2020/2021 Winter Winter/weekd Restricted1 Winter Winter/weekd Restricted1 restr
Slide 35: 2021/2022 average MR at 270€/MWh and 417€/MWh strike thresholds
OTHER ANALYSES In 2021/2022, the average MR is respectively 1635 MW & 1160 MW for the 270€/MWh and 417€/MWh strike price thresholds MR AND STD FOR EPEX SPOT & NORD POOL AGGREGATED CURVES FOR THE DIFFERENT DATA RESTRICTIONS 2021/2022 Winter Winter/weekd Restricted1 Winter Winter/weekd Restricted1 res
Slide 36: Ancillary services represent 350 MW in 2020/2021 and 360 MW in 2021/2022
OTHER ANALYSES Ancillary services represent 350 MW in 2020/2021 and 360 MW in 2021/2022 CALCULATION OF ANCILLARY SERVICES To calculate the volume of ancillary services we took the weighted (by demand response) sum of : 2020/2021 2021/2022 1) FCR (Frequency Containment Reserves) 25 MW 45 MW 2) aFRR (
Slide 37: Table of contents
Table of contents 1 Goal, scope & methodology of the MR update – Reminder 2 Results of the EPEX SPOT aggregated curves & block orders analysis 3 Results of the Nord Pool aggregated curves & block orders analysis 4 Other analyses 5 Conclusion 37
Slide 38: Market Response increases significantly in 2021/2022
CONCLUSION Market Response increases significantly in 2021/2022 TOTAL MR IS THE SUM OF MR FROM AGGREGATED CURVES AND BLOCK ORDERS 150 €/MWh Market Response 500 €/MWh Market Response Restricted 2020/2021 Restricted 2020/2021 EPEX SPOT aggregated 917 MW 553 MW curves EPEX SPOT + Total restricted + Tot
Slide 39: The update of the study leads to 959 MW Market Response for 2020/2021
CONCLUSION The update of the study leads to a 959 MW Market Response for 2020/2021 and 1.384 MW for 2021/2022 OUTPUT OF MR VOLUMES Output 2020/2021 Market Response Volume 959 MW 1) Output 2021/2022 Market Response Volume 1.384 MW 2) 1) 150 €/MWh winter peak hours taken as basis (restricted hours) 2)
Slide 40: The historical long-term evolution of total Market Response is around 8%
CONCLUSION The historical long-term evolution of total Market Response is around 8% EVOLUTION OF THE VOLUMES OF MARKET RESPONSE - WINTER MONTHS1) & GROWTH SCENARIOS Growth scenarios Evolution of the volumes of MR (historical CAGR 2) MW 8%/y +1% total market growth 1 664 5% /y +5% total market growth
Slide 41: E-CUBE STRATEGY CONSULTANTS
E-CUBE STRATEGY CONSULTANTS
Slide 42: CRM: proposal for design evolutions
CRM: proposal for design evolutions
Slide 43: Context and goal of the design evolutions
Context and goal of the design evolutions Following feedback during the public consultation of the FR v2 and as a result of additional stakeholder feedback, Elia initiated a design review of the CRM. There are some caveats: - The proposals presented in this presentation form the starting point of a
Slide 44: CRM design elements
CRM design elements Evaluation 1) Review of payback obligation modalities ➢ Addressed 2) Review NRP determination ➢ Addressed 3) CRM should be “winter” product ➢ Addressed 4) Tests for demand response are too strict (in line with SLA, e.g. testing full nominal capacity for 6 hours) ➢ Addressed 5) Fa
Slide 45: CRM design evolutions: Prequalification Processes
CRM design evolutions Prequalification Processes 45
Slide 46: NRP determination
Battery Evolution in Low- Simplification NRP degradation time voltage & process NRP determination AS IS TO BE Historical method Historical method – Based on 12 months historical data – Based on 12 months historical data – Split into periods of 36 hours – No more 36-hour periods – For injection: max.
Slide 47: NRP determination based on Injection data
Battery Evolution in Low- Simplification NRP NRP determination degradation time voltage & process based on Injection data Historical method • Considering quarter hourly values over a period of 12 months*, NRP = 388,34 MW ending 5 WDs before the last day of the month preceding the PQ file submission
Slide 48: NRP determination based on Offtake or Offtake/injection data
Battery Evolution in Low- Simplification NRP NRP determination degradation time voltage & process based on Offtake or Offtake/injection data Historical method • Considering quarter hourly values over a period of 12 months, ending 5 WDs before the last day of the month preceding the PQ file submissio
Slide 49: Battery degradation
Battery Low- Evolution in Simplification NRP degradation voltage time & process Battery degradation More and more (large) batteries are being connected to the grid and show interest to participate in the CRM. Therefore, it becomes relevant to introduce a specific battery degradation parameter to all
Slide 50: Evolution in time of a CMU
Battery Evolution in Low- Simplification NRP degradation time voltage & process Evolution in time of a CMU The rules regarding evolution in time of a CMU specify what to do/what can be done with an already prequalified CMU by the CRM Actor or by ELIA after being engaged in a Transaction or towards a
Slide 51: Low-voltage flex participation to CRM Simplification & process
Battery Evolution in Low- Simplification NRP degradation time voltage & process Low-voltage flex participation to CRM Simplification & process • Strong link with the DSOs; • Idea is to replace templates as much as possible with simple tick boxes, to give more flexibility to candidate in terms of tim
Slide 52: CRM design evolutions: Impact of Derating factor evolutions
CRM design evolutions Impact of Derating factor evolutions
Slide 53: CREG request on derating factor evolution
In its approval of the Functioning Rules V2, CREG has requested Elia to investigate some changes on the derating factor evolution • Scope of change request CREG entails the energy-constrained CMUs ➔ No changes apply for non energy-constrained CMUs. • General For energy-constrained CMUs, principle CR
Slide 54: Summary of impact for energy constrained CMUs of CREG proposal
Summary of impact for energy constrained CMUS of CREG proposal DRF decrease DRF increase Capacity ✓ On fixed contracted capacity (no impact of DRF decrease) ✓ On fixed contracted capacity (no impact of DRF increase) remuneration Availability ✓ In function of Nominal Reference Power ✓ In function of
Slide 55: CRM design evolutions: Pre-delivery Monitoring
CRM design evolutions Pre-delivery Monitoring
Slide 56: On August 31 2023, the first t control 1 will take place
On August 31 2023, the first 𝒕𝒄𝒐𝒏𝒕𝒓𝒐𝒍 𝟏 will take place Prequalification Pre-delivery Delivery August 31 Y-2 Y-1 Auction October 31 Y Pre-delivery monitoring phase 1 Pre-delivery monitoring phase 2 25 months 23 months • Determination of Missing Volume through measurements • Historical data…
Slide 57: Proposal: strengthen link between PQ and Pre-delivery
Proposal: strengthen link between PQ and Pre-delivery 1. Completely align the volumes determination for Prequalification and Pre-delivery • Both for determination based on historical data and pre-delivery test • Main difference: historic data over a 12-month rather than a 15-month period 1. l 2. A n
Slide 58: CRM design evolutions: Availability Obligation
CRM design evolutions Availability Obligation
Slide 59: Market parties' concerns about the availability tests
Market parties have at multiple occasions expressed their concerns about the availability tests • Availability Tests are aimed at CMUs with high occurrences of Unproven Capacity or failed instances of Availability Monitoring • In practice, these will mainly target DSR • Market parties have drawn the
Slide 60: Proposal: restrict the potential moments and duration of an Availability Test
Proposal: restrict the potential moments and duration of an Availability Test • As is: • No clear-cut restrictions in FR, but Elia has committed in slides that it will “avoid days with particularly low risk on adequacy” • A CMU can immediately be tested for its full SLA • To be: • Elia will analyze
Slide 61: CRM design evolutions: Payback obligation
CRM design evolutions Payback obligation
Slide 62: Payback Obligation: reminder of the design choices from the past
Payback Obligation: reminder of the design choices from the past Reliability option has always been a compromise • The first CRM design proposals regarding the Payback Obligation aimed at keeping the CRM as a technology neutral mechanism with limited overall costs and avoiding windfall profits : • A
Slide 63: Payback Obligation: reminder of the main design objectives
Payback Obligation: reminder of the main design objectives The design of the Payback Obligation should find a balance between capturing windfall profits and technology neutrality/openness • The design of the Payback Obligation mechanism should respect certain principles highlighted in European Commi
Slide 64: Current issue: a redesign of the payback obligation might be needed
Current issue: given current prices and repeated feedback from several market parties, a redesign of the payback obligation might be needed new design proposals seem inevitable • Current design • Possible design solution Daily Non-Daily Daily Non-Daily Schedule Schedule Schedule Schedule Energy Sing
Slide 65: The current design does not seem adequate for current price increases
The current design does not seem to prove adequate for the current sharp increases in price (1) • Applying the current Payback Obligation design on historical prices shows that the indexed Strike Price would result in a persistent amount of payback occurrences pre-2021. • The current indexation meth
Slide 66: Proposed exemption on payback obligation for demand response
Several market parties proposed repeatedly an exemption on the payback obligation for demand response capacities. DSR example* : ➔ By nature, DSR does not generate inframarginal rents during moments of extremely high prices as they do not consume, whereas these capacities are subject to a payback ob
Slide 67: Summary of different choices for the strike price indexation
Summary of different choices for the strike price indexation 1) When to apply the indexation of the calibrated strike price? Ex-ante Ex-post Between Auction & 2 nd Delivery Period Between Auction & 1 st Delivery Period During the delivery period ✓ Current design ✓ Cf. Haulogy’s recommendation. ✓ Mon
Slide 68: Different options for the uniform strike price redesign
This leads to different options for the uniform strike price redesign This overview of proposed solutions aims at summarizing considered options Option A: Option B: Option C: Option D: Option E: Option F: As Is Haulogy proposal Ex-post Ex-post Combination of A or B + more indexation DA indexation ba
Slide 69: Formulas of proposed solutions regarding strike price indexation (1/3)
Formulas of proposed solutions regarding the strike price indexation (1/3) Option B : Haulogy proposal with adapted indexation concept • Indexation as of the 1st Delivery Period and proposed fine-tuning of the indexation formula to better cope with structural market evolutions between the calibratio
Slide 70: Formulas of proposed solutions regarding strike price indexation (2/3)
Formulas of proposed solutions regarding the strike price indexation (2/3) Option C : ex-post indexation DA • Ex-post indexation occurring on a monthly basis based on DA prices in order to take into account short term price evolution 𝐸𝑥 − 𝑝𝑜𝑠𝑡 𝑖𝑛𝑑𝑒𝑥𝑒𝑑 𝐶𝑎𝑙𝑖𝑏𝑟𝑎𝑡𝑒𝑑 𝑆𝑡𝑟𝑖𝑘𝑒…
Slide 71: Formulas of proposed solutions regarding strike price indexation (3/3)
Formulas of proposed solutions regarding the strike price indexation (3/3) Option D : ex-post indexation based on fuel and CO2 prices • Ex-post indexation occurring on a monthly basis based on fuel & CO2 prices in order to take into account short term market evolution impacting potentially the merit
Slide 72: Summary and evaluation of the different options proposed
Summary and evaluation of the different options proposed • Possible design solution Daily Non-Daily Schedule Schedule Demand response N/A Payback obligation exemption Other Redesign of Declared calibration of Market Price uniform strike (no change) price. For new contracts, a monthly indexation of t
Slide 73: Low carbon tender for '24 – '25
Low carbon tender for ’24 – ‘25
Slide 74: Proposed solution for W24-25 aims to ensure security of supply at the lowest cost
Reminder: The proposed solution for W24-25 aims to ensure security of supply at the lowest cost while contributing to the energy transition towards a carbon neutral society at the same time. • Attract new in-the-market capacities to cover the need for new 1 MWs in W24-25 to meet the legal reliabilit
Slide 75: Core design principles
Core design principles ✓ Only acquire new capacities that are not/will not be contributing to SoS in ’24-’25 (alignment with Elia’s assumptions in Adequacy & Flexibility Study ‘23) ✓ Alignment with CRM modalities and processes to reduce barriers of entry and improve interoperability ✓ No double remu
Slide 76: Contract Duration & Eligibility
Contract Duration & Eligibility A) Contract duration B) Eligibility criteria New capacities without a contract through the CRM are allowed to bid in for Multi-Year contracts 1) All existing capacities that are already contributing to → Through a combination of an LCT and a CRM contract SoS in ‘24-’2
Slide 77: Eligibility – Definition of new capacities
Eligibility – Definition of “new” capacities Only Additional “New Build” allowed, according to definition CRM General - To make sure that only new capacities, not yet contributing to SoS, are procured - Demand response requires specific definition Specifically for demand response, Additional other &
Slide 78: Overview of remaining main design principles
Overview of remaining main design principles Topic Proposal Compatible with current CRM design Link with CRM process ✓ LCT clearing before Y-4 CRM auction. Yes ✓ LCT prequalified capacities cannot participate in Y-4 CRM auction (’27-’28) Prequalification ✓ No Virtual CMUs. Yes ✓ No Fast Track. Pre-d
Slide 79: Next meetings
—€eia Next meetings
Slide 80: Foreseen timeslots for next meetings
Foreseen timeslots for next meetings • Thursday 13th October 2022 am • Friday 28th October 2022 pm • UPDATE Thursday 17th November 2022 pm • Friday 16th December 2022 pm --------------------------------------------- • Thursday 29th September pm Flexibility Workshop 83
Slide 81: Thank you !
—€eia Thank you !
Slide 82: Back-up slides
—€eia Back-up slides
Slide 83: Battery degradation
Battery Evolution in Low- Simplification NRP degradation time voltage & process Battery degradation Example 1. The Battery degradation parameter (in %) submitted as part of PQ file submission = 5%; NRP = 100 MW; SLA 4 hours; Derating Factor = 50%; Investment File = 8 years; 2. CMU selected in the Au