Welcome to First Hydro
16 July 2010
First Hydro overview
 Approximately 200 employees across four sites
 Dinorwig
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–
–
–
–
largest pumped storage plant in Western Europe
commissioned 1983
total plant capacity 1,728MW
6 reversible pump/turbines
reservoir capacity ~10GWh
 Ffestiniog
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–
–
–
–
UK’s first major pumped storage station
Commissioned 1963
total plant capacity 360MW
4 separate turbines & pumps
reservoir capacity ~1.3GWh
 Electric Mountain visitor centre
 Bala House trading office
 Owned by International Power (75%)/
Mitsui & Co, Ltd (25%) since December 2004
Slide 2
First Hydro
Pumped storage principle
 Pump water overnight
 Generate electricity during the day
 Typical cycle efficiency ~70 - 75%
 Closed hydraulic system
Slide 3
First Hydro
Asset features
Dinorwig mode transition times
 Originally designed and built to
support grid system management
 Extremely high reliability and
availability
<30s
Spin Gen
6m
3m
6m
 Rapid speed of response
– Dinorwig full output in ~16
seconds
– Ffestiniog full output ~60 seconds
<12s
Generate
6m
Shut Down
8m
6m
7m
Spin Pump
<90s
Pump
<30s
<30s
 ~25,000 mode changes per year
 Asset capabilities provide for a
diverse range of trading and
marketing opportunities
90
Typical start-up times (minutes)
85
80
70
60
60
50
40
30
20
10
0
Slide 4
1.5
Dinorwig
2.5
Ffestiniog
CCGT (hot)
Coal (hot)
First Hydro
The role of First Hydro
1. Energy arbitrage - peak/off-peak
– valuable peaking capacity
– enables efficient running of steam plant overnight
2. Reserve provision
– range of timescales (focus on fast)
– but, limited storage
3. Frequency control
– fast response to plant trips, TV pickups etc.
 Roles underpinned by plant reliability and dynamic capabilities
 Buying fuel and selling power exports via the same market
 Diversity of revenue streams
Slide 5
First Hydro
Optimising value
2088 MW Capacity
Energy limited
First Hydro
competitive
advantage
Market
features
Trading
Slide 6
Bilateral, OTC,
Power exchanges
Half-hourly
resolution shape and
standard products
Balancing
Mechanism
Ancillary
Services
Bids and offers
accepted on a
minute-by-minute
basis
System services
procured by National
Grid
Adjusts final traded
positions to match
supply and demand
Facilitate system
security, and power
quality on a secondby-second basis
Ability to deliver any
half-hourly shape,
and notify up to
gate closure
Attractive, fast
dynamics
Wide range of offered
services including
reserve, response,
black start, reactive
Expertise in
prompt/spot trading
Ideally suited to
covering plant trips,
TV pickups etc.
High quality offering,
uniquely dynamic
capabilities
First Hydro
TV pick up: England vs USA 12th June
National Grid
FHC Output over same period:
300
250
DINO-1
DINO-6
FFES-1
FFES-4
150
100
50
22:00
21:45
21:30
21:15
21:00
20:45
20:30
20:15
20:00
19:45
19:30
19:15
0
19:00
MW
200
Time
Slide 7
First Hydro
Dinorwig physical layout
Slide 8
First Hydro
Dinorwig physical layout
Slide 9
First Hydro
Power station/unit cross-sections
Underground cavern
cross section
Generator/motor
Pump/Turbine
Slide 10
First Hydro
Market review
 Significant market volatility
Winter 05/06 and throughout
2008
– Positive impact of additional
storage on utilisation/value
in 2008
 Less stress on system in
2009/10
– Impact of new build and
recession-led demand
reduction
– But, some intraday volatility
– Retain ability to capture
value during ‘system shocks’
Slide 11
First Hydro
Market outlook
EU’s 2020 targets &
UK commitments
 Material levels of
wind generation, new
nuclear
Large Combustion
Plant Directive
 Closure of 11 GW
thermal plant by
2016
Industrial
Emissions Directive
 Limited hours
operation on most
remaining fossil plant
from 2016
Increased EU
market integration
 Greater levels of
interconnection with
EU
Projected New Build
DECC – Updated Energy and Emissions
Projects, June 2010
GB plant mix to
change radically in
next 10-15 years
 Security and balancing challenges
 Premium on flexibility and reliability
 Significant impact of wind intermittency
 Increased reserve requirement
 Increased spot market volatility
 Potential for reforms to market framework
Slide 12
First Hydro
Ancillary services developments
 Demand for reserve services to
increase
– Impact of increased wind generation
– Intermittency increases system risks
across a range of timescales
 Frequency response requirements to
be revised upwards
– To be consistent with increased wind
generation, new generation nuclear
reactors, and large offshore wind
connections
 New providers expected to enter
these markets
– Dynamic demand response
– New OCGT plant
 FH well positioned, with diverse
capabilities
Source Data: National Grid “Future Requirements”
Slide 13
First Hydro
Plant investment strategy
Assess changing
market environment
–
Opportunities and challenges
Preserve competitive
advantage
–
–
–
–
Maintain current levels of
performance
Focus on quality of core
maintenance
Replace or refurbish
ageing/obsolescent equipment
Retain expertise within business
Enhance capabilities
–
–
Improve reliability/availability
Increase quality or range of
products
Invest to maintain
assets
–
Engineering integrity and plant life
Invest to improve
assets
Additional
storage
Slide 14
New
runner
Increased
automation
First Hydro
Dinorwig additional stored energy
 Extension of Marchlyn Mawr
planned 2005/6
 Permissions granted 2006
 Completed October 2007
 Increased storage by
approximately 8%
 Short payback period
Slide 15
First Hydro
Plant automation
% Instructions
 First Hydro despatch is already
extremely accurate
40
35
– 99% of instructions are delivered
within one minute of required time
30
25
 Engineers manually accept
instructions from grid and despatch
the plant
20
15
 Aiming to automate majority of
despatch instructions
10
5
0
60+ 45 30 15 0 15 30 45 60+
Seconds early/late
Based Jan-Jun 2010.
>13000 instructions.
14 not delivered
Slide 16
– Improve despatch precision to
maintain/enhance competitive
advantage
– Target 99% within 15 seconds
 Automate progressively from 2011
to 2014
First Hydro
Turbine runner
 2008 record utilisation; pumping
costs >£100m
 Re-established project to look at
improving cycle efficiency
 Turbine design optimised in
2007/8 via computational and
physical modelling
 Currently replacing a turbine
with completion targeted for Q3
2010
– Unit efficiency gain > 2%
– Short payback period
Slide 17
First Hydro
Summary
 First Hydro remains highly relevant to the UK system
 Future market developments will increase the need for
response and reserve
– Providing critical reserves to support intermittent generation
– Ability to “time-shift” excess wind generation off peak
– Complement new nuclear build
 Historic investment in plant has maintained integrity/longevity
 Current investment program improves market position
– Increases competitive advantage
– Enhances ability to capture current and future value
Slide 18
First Hydro