Implementation Strategic Reserves
Task Force “Implementation Strategic Reserves”
16 April 2014
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
Consolidating feedback and highlighting recent
evolutions, incl. calibration
Elia
2 hours 20 minutes
BREAK
15 minutes
Market design
Structural shortage, imbalance pricing, technical trigger
Elia
50 minutes
Next steps
Impacts on other elements (e.g. ARP contract)
Elia
10 minutes
TF ISR – 16/4/2014
2
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 – 16/4/2014
3
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
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 – 16/4/2014
5
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 transitional calendar, Elia has submitted to the AD Energy an
analysis of the security of supply of the country, the AD Energy has delivered an advice
to the Minister on the need to constitute a strategic reserve and the Minister has
instructed Elia by Ministerial decree to constitute a strategic reserve of 800MW for the
next three years. All these documents have been published on the website of the AD
Energy.
•
The next steps are the finalization of the public consultation on the procedure for
constitution of strategic reserves, foreseen by April 25th.
•
And the submission of the functioning rules of the strategic reserves for approval to the
CREG, also foreseen for April 25th.
TF ISR – 16/4/2014
6
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 800MW needs to be constituted as strategic reserves, for a period of
three years and that this volume needs to be composed from capacity that would
have been out of the market on November 1st 2014, if it weren’t for the mechanism
of strategic reserves.
- Furthermore, demand capacity can only be contracted for one year, which is in
derogation to production capacity, which can contribute to the determined volume
for the three years.
 This is translated into the eligibility criteria, to be discussed in the part on
Tender Design.
- There is a possibility foreseen to increase the determined volume should there be
credible indicators that D3/T2 would not be back to the market before the winter
period.
 No new tender will be organized, but only non-selected offers to constitute
the 800MW can be additionally contracted in this case.
TF ISR – 16/4/2014
7
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 administration,...) This version
already takes into account all comments received during and in between the consultations that took place via the
Taskforces for Implementation of Strategic Reserves.
TF iSR I
17/2
2014
feb
TF iSR III
19/3
mrt
28/2
TF iSR II
TF iSR IV
16/4
apr
TF iSR V ?
10/06 or 19/06
mei
Today
jun
05/5
Call For
Candidates
2014
10/6
Call For
Tender
Consultation process:
•
Any comments are to be sent to Filip Carton no later than 25 April, 23h59;
•
Unless stakeholders clearly indicate that comments are confidential these will be made public via our website;
•
In case there are any comments to be made, they can also be discussed during today’s Task Force;
•
Prior to the call for candidates (actually planned to start on 5 May 2014) a final version will be published on our
website in NL, FR and UK;
TF ISR – 16/4/2014
8
Questions
TF ISR – 16/4/2014
9
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 – 16/4/2014
10
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 – 16/4/2014
11
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
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
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
Outcomes of simulations used as parameters:
LOLE = Loss of Load expected = # hours during which the injection capacity (installed productions and
imports) does not cover the load consumption
 ENS = Energy not Served during those moments
 Probability of activation

Remark: for all parameters we distinguish
• Average values used for example for the determination of the selection scenario
• Extreme values used for the calibration of products: P95
example
• Average values of LOLE
• Extreme values of LOLE (P95 or LOLE95) representing worst case scenario’s of the MC simulations
TF ISR – 16/4/2014
14
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
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 & cumulated duration of activations used in that scenario are based on
average values of MC simulations
For the coming winters simulations show:
•
•
average number of activations for SR:
-
2014/2015: 9
-
2015/2016: 20
-
2016/2017: 28
average value of total cumulated activation duration
-
2014/2015: 30h
-
2015/2016: 63h
-
2016/2017: 77h
TF ISR – 16/4/2014
NB: Those are average values
from simulations and do not
represent a forecast of what
would happen next winter
16
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
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)
581MWh
ENS [MWh for one hour of interruption]
Example
ENS (average MWh/activation duration) 2016/2017
1600
Example: this value means
that the probability that the
average ENS is ≥ 581 MWh
is equal to 35,22%
1400
SDR
1200
1000
800
600
SGR
400
200
0
0
0,1
0,2
0,3
0,4
0,5
0,6
Cumulative percentage
0,7
0,8
0,9
1
35,22%

REM: although SDR is dimensioned for extreme needs, in reality SDR could be used also without SGR, for
instance for short duration needs in function of technico-economical activation criteria
TF ISR – 16/4/2014
18
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?
-
How long will an activation last?
-
What is the time between two activations?
2. Number of activations?
Trade off between needs (taking into
account that a base-band is covered by
another product) and stakeholder’s
possibilities
3. Total cumulated activation duration?
TF ISR – 16/4/2014
19
SDR Activation duration and frequency
Probability of SDR activation during the day
Example for one winter
Assuming 15% SDR
20%
A clear increase in probability to be activated in the
morning and evening:
15%
10%
- Morning peak: 9h-13h covers approximately Prob. 30%
- Evening peak: 17h-21h covers approximately 40%
5%
0%
0
8
24
Historical values
70
Number of occurences
16
2012-2013
60
2011-2012
50
2010-2011
40
2009-2010
30
2008-2009
20
2007-2008
Morning peak without evening peak rarely
happens

SDR is calibrated to cover two peaks/day
10
0
Evening
Morning
M&E
M\E
 Based on stakeholder’s feedback Elia proposed two options:
1.
SLA 4: ( 4hrs max/activation, 4hrs min between 2 activations)
2.
SLA 12: ( 12 hrs max/activation, 12hrs min between 2 activations)
TF ISR – 16/4/2014
20
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
•
100,00%
•
80,00%
60,00%
•
40,00%
20,00%
0,00%
0
10
20
30
40
•
With 40 activations 99,6% of the situations
are covered
Note that those values are independent
from SLA (12/4)
As most of the activations would have a
duration ≤ 4hrs we calibrate 40 activations
as a max for SLA4
As SLA12 is used to cover 2 peaks of 4 hours
this led to 20 activations of SLA12
The cap on the total cumulated activation duration is based on the LOLE95:
-
2014/2015: SR : 95 h
SDR-30 % : 63 h SDR-50%: 71h
-
2015/2016: SR : 165h
SDR-30 % : 73 h SDR-50%: 93h
-
2016/2017: SR : 175h
SDR-30 % : 90 h SDR-50%: 130h
TF ISR – 16/4/2014
Elia proposes a cap of 130 hours in the product design taking into account:
• the evolution of the needs (quid Doel 3 and Tihange 2 ?)
• the potential increase of SDR ratio on one hand
• stakeholder's feedback on the other (+/-100h)
21
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
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 SDR = 1MW SGR
Remaining average LOLE not covered by ration SDR12/SGR
6,00
Average LOLE (h)
5,00
4,00
Taking into account evolutions in
needs and a necessary learning
curve for SDR, Elia proposes 30 %
for the first winter
2014/2015
2015/2016
3,00
2016/2017
2,00
Limit
1,00
0,00
0,00%
5,00%
10,00%
15,00%
20,00%
25,00%
30,00%
35,00%
40,00%
45,00%
50,00%
ratio SDR/SR
•
In case that more than 30% SDR is selected, “long duration needs” would then have to be
covered by SDR activated in series. (example 2 different SDR12 in order to cover an need of
18 hours). This implies that we would have to contract more SDR to cover an equal volume of
SGR (ex: 1,5 times *1MW SDR12 in order to cover 1MW during 18 hours)
TF ISR – 16/4/2014
23
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 – 16/4/2014
24
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
• Scope of the procedure is limited to Strategic Reserves, one element out of a broader “Plan Wathelet”
2. Strategic Reserves
• 2.1 = Introduction to the modified Electricity law of 29 April 1999;
• 2.2 = Reference to planning agreed between the administration for energy, CREG and Elia;
• 2.3 = Explains the consultation of stakeholders via this taskforce;
• 2.4 = The procedure is applicable for the 2014 tendering and thus enters into force prior to the
contract notice (5th of May 2014);
• 2.5 (NEW) = Explaining the hierarchy of documents. If there is a difficulty in interpretation or a
contradiction between the constitutive elements of the relevant laws and regulations, this procedure,
the SGR/SDR contract or the General Terms & Conditions, each document shall take precedence
over the following one in the following order:
-
for the avoidance of doubt, the relevant laws and regulations will always prevail over the both this procedure
and the SGR/SDR contract(s);
this procedure for constitution of strategic reserves;
the SGR/SDR contract(s) signed by ELIA and the supplier(s);
the General Terms & Conditions [i.e. for ancillary services].
TF ISR – 16/4/2014
25
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 November 1st 2014:
-
-
It is stipulated that this volume needs to be constituted from capacity that would have been out
of the market on the 1st of November 2014.
Furthermore, demand capacity can only be contracted for one year, which is in derogation to
production capacity, which can contribute to the determined volume for the three years.
Article two of the Ministerial Decree stipulates that concluding a contract with Elia does not
impede CREG to adapt the functioning rules, which are according to the law of March 26th to
be submitted by Elia for approval to the CREG.
Finally, should there exist reasonable indicators that the nuclear reactors of Doel 3 and Tihange
2 will not be available for the next winter period, there is the possibility that ELIA can be
instructed to contract an additional volume of strategic reserves for a given period, and that this
additional volume is to be contracted from the offers received via the tender which will be
organized via this procedure.
3. Definitions
•
For the avoidance of doubt some definitions have been added.
TF ISR – 16/4/2014
26
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 prerequisite to participate in the call for tender is that candidates must pass a
procedure for admission. All details are described in this chapter 4.2, worth mentioning:
4.2.2 = Certification of SGR
Each Power Plant belonging to one of the three categories identified in art. 7 quinquies §2 of the
law of March 26th, has the obligation to at least submit one offer for the entire capacity of the
Power Plant.
(NEW) The Ministerial decree however, as summarized under point 2.6, stipulates that the
volume of 800MW to be constituted by ELIA as of November 1st 2014, and for the next three
years, needs to be composed out of capacity which will be out of market as of November 1st
2014.
Only those Power Plant(s) that meet the above, legal, criteria will be certified to participate in the
call for tender. Offers submitted based on non-certified Power Plant(s) will be discarded.
Important notice:
•
in no case the participation (or selection) in this tendering should accelerate the announced date of
closure of a Power Plant;
•
it is up to the producers to explicitly motivate the (in)eligibility of the concerned Power Plants at the
call for candidates and/or when submitting an offer;
•
in case of non-respect CREG may apply a penalty.
TF ISR – 16/4/2014
27
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 not acceptable
for all stakeholders, however, the
solution with 2 shedding limits is
not accepted either
2.
Comply with below exclusivity criteria:
-
the same access point(s) may not be used for R3_Dynamic Profile;
the same access point(s) may not be used for ICH;
combination with R1_Load will be subject to specific constraints, amongst others it must be proven that said R1_Load
remains available even during an SDR activation.
3.
Be a (pool of) grid user(s) whose consumption is high during the winter (from 01/11 until 31/03) peak’s
based on historical metering data from 3 previous years:
-
Certification criteria are perceived
Average 15 minutes consumption ≥ Rref + SL
as too severe => Elia is analyzing
During 95% of peak periods* ≥ Rref + SL
the feedbacks and doesn’t exclude
some modifications
During 95% outside peak periods ≥ 0,75 * (Rref+SL)
* Peak periods are defined as 09h00-13h00 and 17h00-21h00 of Working Days
Unlike the call for candidates (that will be closed on 02nd of June 2014) the specific process to certify Rref
and SL will be opened until the end of the tendering procedure (4th of July).
Eventual periods that are not representative (incident, unforeseen maintenance, special holidays like
Christmas) or evolutions of the profile due to new investments may be motivated.
TF ISR – 16/4/2014
28
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(s), the SGR/SDR
contract(s) will take precedence. + (NEW) it’s stipulated that in case the applicable legal and/or regulatory
rules would require so that the contracts could be revised, etc…
Some updates in the terms of reference for SGR:
•
•
•
By concluding an SGR contract the SGR supplier will undertake:
- to provide the SGR service during the 5 months winter period(s);
- to keep his SGR Power Plant(s) out of the market throughout the validity period of the contract.
(NEW) For the avoidance of doubt:
- it is stipulated that the validity of the SGR contract will be for 36 months, from 01/11/2014
until 31/10/2017;
- the SGR supplier will be requested to list the conditions (and prices) under which the SGR Power
Plant(s) can be activated outside the 5 month(s) winter period(s);
Notification (warm-up) - verification & Injection is further clarified
- The notification will always take place 5h30 in advance of the specified quarter-hour.
- The verification will always take place 1h30 in advance of the specified quarter-hour.
TF ISR – 16/4/2014
Elia receives feedback on these
parameters and after analysis will take
these into account to further fine-tune
them in the final procedure
29
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 Plant(s) in the perimeter of the ARP. Any measured offtake (MW)
at the access point of the concerned SGR Power Plant(s) will be treated according to the normal
procedures described in the ARP-Contract;
• (NEW) In the penalties for non-delivered energy we have added a term:
- In case a Forced Outage occurs during a request for activation a forfeit price reduction = 3 day
remunerations will be applied.
Some updates in the terms of reference for SDR:
• The SDR contract will allow 2 products:
-
-
SDR_4:
Duration of an activation: up to 4 hours
Delay between 2 consecutive activations (end-start) : 4 hours
# activations/contract: 40
Cap on cumulated duration of all activations: 130 hours
SDR_12:
Duration of an activation : up to 12 hours
Delay between 2 consecutive activations (end-start) : 12 hours
# activations/contract: 20
Cap on cumulated duration of all activations: 130 hours
TF ISR – 16/4/2014
Elia receives feedback on these
parameters and after analysis will
take these into account to further
fine-tune them in the final
procedure
30
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) throughout validity period of the contract. For the avoidance of doubt:
- It is stipulated that the validity of the SDR contract will be for 5 months, from 01/11/2014 until
31/03/2015;
Elia receives feedback on these
parameters and after analysis will take
these into account to further fine-tune
them in the final procedure
•
Notification (warm-up) - verification & Injection is further clarified
- The notification will always take place 5h in advance of the specified quarter-hour.
- The verification will always take place 1h in advance of the specified quarter-hour.
•
ELIA will correct, on a quarter-hourly basis and for the access point(s) concerned by an SDR
activation, the perimeter of the ARP by replacing the access point(s) offtake by the corresponding day
ahead nomination.
•
(NEW) In the penalties for non-delivered energy we have also added a term:
- A forfeit price reduction (equal to 3 day remunerations) will also be applied in case the shedding
limit is not achieved within the time limits provided by contract.
TF ISR – 16/4/2014
31
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 = Procedure
• 4.4.2 = Composition of the offers
• 4.4.3 = Data to be mentioned in the offer
-
•
(NEW) The SGR supplier(s) must list the conditions (and prices) under which the SGR Power Plant(s) can be
activated outside the 5 month(s) winter period(s);
4.4.4 = Validity of the offers
-
Candidates are bound by their offer until 31/10/2014
4.5 Award criteria
At the latest by 25 July ELIA shall report on the offers received to the CREG and to the Minister, and shall
include in its report a technical- economic proposal for combination of offers.
Important notice: These rules for technical-economical combination of offers are subject to regulatory
approval via the functioning rules for strategic reserves. As such, this chapter can only be considered as a
draft proposal. ELIA reserves the right to change these rules when introducing its official proposal for
functioning rules toward CREG.
TF ISR – 16/4/2014
32
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 strategic reserves (SDR and
SGR) covers at least the 800MW decided by Minster at the lowest possible total cost, taking into account:
Cfr introduction, in case more then 30% of
•
•
•
•
The conditions relating to the bids;
SDR would be selected a competition
factor should be applied.
The results of the certification process;
Minimum 50MW of SDR should be selected;
Maximum 30% of the volume can be selected with SDR, thereby considering 1MW of SDR equal to
1MW of SGR;
•
In order to compare offers, the total yearly cost will be considered;
𝑻𝑪 = 𝑹𝒆𝒔 + # 𝑨𝒄𝒕 ∗ 𝑨𝟏 + 𝑨𝟐 ∗ 𝑨𝒄𝒕𝒅𝒖𝒓𝒂𝒕𝒊𝒐𝒏
-
With:
C: Total cost [€] => calculated for each bid
Res: Reservation cost [€] = Reference Volume [MW] * Reservation Price [€/MW/h] * 3624 [h]
#Act: Average number of expected activations for next winter [n° set at 9 activations for the 2014 tendering]
A1: Fixed activation cost (hot) [€/Activation]
A2: Hourly activation cost [€/h] = Reference Volume [MW] * Variable Activation cost [€/MWh]
Act_duration: Total average length of expected activations for next winter [set at 30h for the 2014 tendering]
TF ISR – 16/4/2014
33
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 notice with the results of the
tender procedure on the website http://ted.europa.eu/
5. Rules regarding disputes
Any remaining dispute regarding the interpretation or implementation of this procedure or subsequent
agreements or operations that might arise therefrom shall be laid before the courts of Brussels.
6. Cancellation of the procurement
ELIA reserves the right to cancel the tendering procedure, before the contract(s) is(are) signed, without the
candidates or tenderers being entitled to claim any compensation.
6. Questions
Questions relating to this tender should be addressed to: Mrs. Pauline Ottoy (pauline.ottoy@elia.be) cc:
Mr. Filip Carton (filip.carton@elia.be)
TF ISR – 16/4/2014
34
Questions
TF ISR – 16/4/2014
35
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 – 16/4/2014
36
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 – 16/4/2014
37
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
MARKET DESIGN
STEP 4 : INJECTION & BALANCING
Two topics in the context of step 4: ‘injection & balancing’
•Criterion for structural shortage
•Impact imbalance pricing
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39
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 (“verification”) to inject SR energy to the system in order
to avoid a risk of “plan de sauvegarde”.
•
•
Preventive action
The economic and/or technical trigger alone should not influence the
imbalance prices.
•
But a warning must be sent to the market in order to announce a risk of high prices
for the coming hours.
•
The imbalance prices should be high when one of those triggers is coupled
with a Real Time Indicator that confirms the structural shortage.
•
Transparent and clear criterion that can be followed by market.
TF ISR – 16/4/2014
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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 the SI starts to
‘crop’ the reserves which are
dedicated for instantaneous
deviations of the SI
 Real Time Indicator that
confirms the structural shortage:
SI ≤– Ibids
 Market parties will be able to follow the situation on the online Elia dashboard
 The activation of SR will be visible in the NRV
 The SI (situation of the zone if no action by Elia) as well as the remaining margin of the system
(Ibids) are clearly indicated on the website
TF ISR – 16/4/2014
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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
“structural shortage”, THEN the imbalance price
should be a proxy of what would have been the
situation without residual energy.
2
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1
2
42
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
DETECTION
No SR trigger
Structural shortage
SI ≤ - IBIDs
Normal imbalance pricing
Corrected price, reflecting
SR trigger situation without SR injection
(econ. or tech.)  Based on ARC
(Available Regulation Capacity)
Strong (single) price signal
>> 3.000 €/MWh
Only when two conditions are fulfilled, a
very high price will occur
TF ISR – 16/4/2014
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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 to have transparent prices and in order to limit (at least for the
first year) developments required a solution is to use (public) Available Regulation Capacity
publications:
TF ISR – 16/4/2014
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Step 4: Injection & Balancing
How much is “>> 3000 €/MWh” in case of structural shortage?
VOLL Estimates
•
•
•
Belgian Planbureau (2004)
High enough as incentive to keep the balance.
But not too high resulting in over-rewarding and
potential gaming
3 methods/proxies with various results
• 2001 Added-value method: 128 M€ / hour of curtailment  9.846 €/MWh
• 2003 US management method:50-88 M€/ hour of curtailment  3.846 €/MWh – 6.769 €/MWh
• 2004 Dutch WTA-method: 57 M€/ hour of curtailment 4.385 €/MWh
Remarks:
 A gradual introduction of a high
• Assuming 13 GW load at hours of structural shortage
price allowing market participants to
• Up to 2001 values (above data are not indexed to 2014: CPI about +30% since 2001)
•
Belgian Planbureau (2014)
• Austrian Blackout simulator: 120 M€ / hour of curtaiment  9.231 €/MWh
• Bbp-method  61 M€ / hour of curtailment  4.962 €/MWh
Remark: Assuming 13 GW load at hours of structural shortage
• 2011 RTE-model: 26.000 €/MWh
•
Revue-E paper by Tirez et al. (2013)
• 25.000 €/MWh, based on a study of RTE based on 2011 data
•
London Economics for OFGEM & DECC (2013)
learn and prepare themselves.
 Price signal should not equal VOLL,
but should conceptually be one step
below VOLL
 A price of 4.500 €/MWh is put
forward in case of structural shortage.
This price increases to 6.000 €/MWh
over the next years.
• Differentiated view:
average VOLL-SME (33.000-39.000 £MWh) > average VOLL-Residential (6.500 – 11.800 £/MWh) > average
VOLL industrials (1.400 £/MWh)
• Load-share weighted average across domestic and SME users for winter, peak, weekday = 16.940 £/MWh
TF ISR – 16/4/2014
45
MARKET DESIGN
STEP 2 : NOTIFICATION
One topic in the context of step 2: ‘Notification’
• Activation rules
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46
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
1. @ min cost
2. @ min market distortions
Taking into account :
 Terms of contract
 Physical System conditions
TF ISR – 16/4/2014
example
47
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 activation.
-
Two consecutive peaks considered as separate if demand for SR
is zero for more than 2h in-between those peaks.
Parameters that will determine the selection of strategic reserves
1.
Profile duration: The duration of the strategic reserves injection,
from first injection until last moment of injection
•
•
2.
3.
Base load or peak?
Take into account sufficient margin in the duration.
Base load power: The minimum power defined by the need for
strategic reserves.
3
2
Profile maximum power: The maximum requested power during
the activation of strategic reserves.
1
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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 MW
c) If the spillover is too big, than a more expensive selection can be considered
2. The peak load will a priori be covered by SDR unless SGR is cheapest:
a) Selection among SDR based on economic merit order
• Should two consecutive activations be needed, then the merit order is made between 2 X SLA 4 or 1 X SLA 12
b) If cost of activation SDR is too high consider additional/other SGR
c) Taking into account remaining SDR activations
3. Final re-evaluation and specific cases:
 If the total profile can be covered by activating a SGR unit or a “puzzle” of SDR units then an economic
optimization should be considered, taking into account the system situations, the period and SDR
remaining activations.
 If the profile duration is small (<< 4h) and /or the maximum needed power is low (< Pmin SGR or PSDR)
• If the selection is done during the day-ahead preparation then a selection with the longest notification time will be
considered.
• No activation at all can be considered
TF ISR – 16/4/2014
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MARKET DESIGN
STEP 1 : DETECTION
One topic in the context of ’step 1: ‘Detection’
•Technical trigger
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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 alarms can be launched by the system and the TSO considers all relevant information needed
about the situation in order to complete the analysis and to confirm that the startup of strategic reserves will be
triggered/necessary (technical trigger).
When the alarming system is launched, the TSO assesses the following information to the extent available:
-
Measured and forecasted weather conditions (temperature, wind, solar,…) in BE, FR, NL & GE
-
Production situation (measured and forecasted) in Elia control area
-
Load situation (measured and forecasted) in Elia control area
-
Availability of slow start units
-
Availability of X-border capacities
-
North Border flow situation (measured and forecasted, N-1, PST, ..)
-
South Border flow situation (measured and forecasted, N-1, PST, …)
-
Potential dynamic stability issues
-
Net position in BE, FR, NL & GE
-
Production situation in FR, NL & GE (renewable production, classical production, FO, maintenance,…)
-
Load situation in FR, NL, GE
-
Prices in BE, FR, NL & GE
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Detection - Technical trigger
Alarming system in DA
S1 : Total Load forecast > Limit Up Free Bids
There is a risk not to have enough flexibility to
compensate residual imbalances
e.g too small forecasting from the ARP’s nominations at the
evening peak
TF ISR – 16/4/2014
S2 : Limit SoS – Total Load Forecast < N-1 criterion
There is a risk not to have enough margin to ensure the N1 criterion
e.g inter-TSO
unavailable, …
reserve
unavailable,
interruptible
52
clients
Back-up slides “Technical trigger”
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53
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 intraday
into real-time, allowing for an alarm and potential consequent technical trigger anytime.
Strategic reserves serve as last resort before launching the defense plan…
For the avoidance of doubt, Strategic reserves also serve as last resort in order to avoid
launching the defense plan (reddingscode) for reason other than structural shortage (e.g.
congestion issues, voltage problems, ...)
TF ISR – 16/4/2014
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Detection - Technical trigger
Alarming system in Day Ahead
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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
-
Information from Elia tools : Wind, solar and non CIPU forecasting tools for all renewables units (CIPU/non
CIPU & TSO/DSO connected) and for all non CIPU units (TSO/DSO connected)
Total Load Forecast: Tool giving the forecasted total load on the TSO and DSO grid
-
Collect and aggregate data sources (TIC / forecasting tools) to estimate total load
-
Collect meteo data
-
Using historical data of total load, historical and forecast meteo data from Meteo Service.
If there is a difference between both curves, it could mean that
-
There is a difference between the Total load forecasted by Elia and the one forecasted by the producer
-
There is a difference between the renewables and decentralized production forecasted by Elia and the one
forecasted by the producer
TF ISR – 16/4/2014
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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 Pmax-Pnom, excluding other specific contracted
products.
Limit Up Security of Supply: a “contracted margin” available to manage imbalances (due to forced
Outages, forecasting errors, …).
Note : available slow start margin is not included in the SoS curve but the TSO has to check the
available possibilities before launching the technical trigger ( cf. information collection between
alarming and launching the technical trigger)
TF ISR – 16/4/2014
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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 complete the analysis and to confirm that the startup of
strategic reserves will be triggered (technical trigger).
Next, the monitoring systems keep on running in intraday into real-time, allowing for an alarm and potential
consequent technical trigger anytime.
A technical trigger can be considered to be called if the alarming system is launched. The
alarming system is launched if :
1.
Load forecast (Elia or ARP) > Limit Up Free Bids (S1)
2.
Limit Up SoS – Load Forecast < N-1 criterion (S2)
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Detection - Technical trigger
Alarming system in Intraday & RT
The monitoring system also integrates the real-time measurements when they
become available.
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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 counterparty for BE curtailed
energy
However, it is to be foreseen that in flagrant, obvious cases of no structural
shortage threat, SR units will not be activated.
2. Quid intraday activations following technical trigger and notification delays?
 Contractual delays will always be respected.
3. Quid pre-notification period?
 The Elia traffic light system already provides a first indication. However, green
light does not mean SR cannot be activated.
 Pre-notification would already influence the market and is therefore not foreseen.
4. Quid transparency technical trigger criteria?
 As suggested by the stakeholder asking the question, the regulatory approved
functioning rules will provide sufficient transparency on this matter.
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Questions
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61
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.
SR notified preventively by dispatching
an inject between 16h and 22h
16h
Available Ibids
SR running but no Structural Shortage
confirmed:
 What would have been the price based on
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16/4/2014
the–Ibids
that would have been activated?
TF ISR – 16/4/2014
22h
SI
SR running and Structural shortage
confirmed in RT
 Prices >>>
62
Back up slide 2: SDR Design
 Capacity reservation
1.
2.
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 during critical periods  a certification based
on historical data will allow to confirm the proposed Rref (Reference reserve power)
•
When the offtake is low, the GU contributes to avoid the structural shortage
Availability:
• Remuneration based on the available volume per quarter hour
-
available volume = min (Nomination, Rref, Pmesured)
An ex post comparison of the available volume and the contracted one could lead to a reduction of the
last one for next winters.
No incentive to
Propose a too high Rref,
over nominate or over consume
contributes
to avoid the problem
Rref
SL
•
Contribution to the economic trigger
-
-
No “firm” SDR volumes can be determined before the economic trigger process. Therefore, For the first
year, SDR volumes are not yet taken into account in the volumes that can be allocated by Belpex in the
economic trigger.
Nevertheless Elia can decide afterwards to use a SDR volume in order to inject the energy sold;
TF ISR – 16/4/2014
63
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 earlier if an alarm is triggered
•
Does the selection still fit the need? If not, new selection
b. Or (earlier) if an alarm (TT) is triggered (when situation is deteriorating)
•
If new profile greater than initial one with at least 50MW
•
If shift to an earlier moment of at least one hour
3. Verification
•
Does the selection still fit the need? If not, new selection / keep warm/ stop
TF ISR – 16/4/2014
64
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 – 16/4/2014
65
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 exact scope is known.
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66