N' Keith Tovey, M'A' PhD, C'Eng MICE

1
Developments in the Electricity Markets in the
UK the move towards BETTA
???????????? ????????? ??????
Moscow 24th May 2005
N. Keith Tovey, M.A. PhD, C.Eng MICE
Energy Science Director Low Carbon Innovation
Centre University of East Anglia, Norwich
2
Developments in the Electricity Markets in the
UK the move towards BETTA

• Introduction
• Key developments in the UK Electricity Market
• The New Electricity Trading Arrangements NETA
  (2001)
• The British Electricity Trading and Transmission
  Arrangements (BETTA).
• Other Issues
• Conclusions

• ????????
• Key developments in the UK Electricity Market
• ????? ??????? ??????? ???????? ???? (2001)
• ??????????? ??????? ???????? ? ????????
  ??????????????? (BETTA)
• Other Issues
• ??????????

3
Developments in the Electricity Markets in the
UK the move towards BETTA

• Introduction
• Historic structure of Electricity Supply industry
  in the UK
• Fuels used in Electricity Generation
• Transmission issues

• Introduction
• Historic structure of Electricity Supply industry
  in the UK
• Fuels used in Electricity Generation
• Transmission issues

4
The Generation and Distribution of Electricity
has always been different in Scotland compared to
England and Wales (????????? ?????? ??????????
?? ?????? ? ?????? ????????????? ? ??????????????
?/? )
England and Wales (?????? ? ?????) One
Generating Company (CEGB) and 12 Regional
Electricity Suppliers (???? ???????????? ????????
(CEGB) ? 12 ???????????? ???????????).
5
Structure of Electricity Supply in early 1990s
Scotland ?????????

• Scotland
• Vertical Integration
• two companies

England and Wales 12 Regional Supply Companies
also Distributed Network Operators.
6
Changes in Structure of Supplies Companies in
last 4 years

• Electricité de France (EDF) acquire London
  and SEEBOARD

Only in Scotland has their been no change in
ownership
7
Distributed Network Ownership in 2004
Distributed Network Ownership in 2005
PowerGen
Central Networks
Distributed Network Ownership
8
Electricity Generation in the UK
???????? ???????? ??????? ??????
(CCGT) Renewables
Growth has averaged 1.8 over last 20 years
2002 2003 growth was 3
9
Changes in Fuel Use in Electricity Generation
???????? ??????? ?????? (CCGT) ???????? Other
Fuels Imports (France)
Source Digest of UK Energy Statistics 2004
10
Transmission Network in the UK
?????????
Transmission throughout England, Wales and
Scotland became unified on April 1st 2005
?????? ? ?????
Historically transmission networks have been
different in England and Wales compared to
Scotland
11
Developments in the Electricity Markets in the
UK the move towards BETTA

• Introduction
• Key developments in the UK Electricity Market
• The New Electricity Trading Arrangements (2001)
• The British Electricity Trading and Transmission
  Arrangements (BETTA).
• Other Issues
• Conclusions

• ????????
• Key developments in the UK Electricity Market -
  translate
• ????? ??????? ??????? ???????? ???? (2001)
• ??????????? ??????? ???????? ? ????????
  ??????????????? (BETTA)
• Other Issues - translate
• ??????????

12
Developments in the Electricity Markets in the
UK the move towards BETTA

• Key developments in the UK Electricity Market
• Privatisation (1990)
• Deregulation (1999)

• Key developments in the UK Electricity Market
• Privatisation (1990)
• Deregulation (1999)

13
Scotland
England and Wales
14
Effects of Privatisation and Deregulation on
Energy Prices

• Deregulation in Domestic Market
• 1996 - 1998 for Gas
• 1998 - 1999 for Electricity

Domestic Consumers ??????? ???????????
(?????????) ????????? ?????? 1998 7.48p (3.74
Roubles) per kWh gtgtgtgt 2003 5.62p (2.81
Roubles) per kWh Jan 2004 6.20p (3.1 Roubles)
per kWh Oct 2004 7.50p (3.75 Roubles)
per kWh
Source Energy Sector Indicators Department of
Trade and Industry
15
Developments in the Electricity Markets in the
UK the move towards BETTA

• Introduction
• Key developments in the UK Electricity Market
• The New Electricity Trading Arrangements (2001)
• The British Electricity Trading and Transmission
  Arrangements (BETTA).
• Other Issues
• Conclusions

• ????????
• Key developments in the UK Electricity Market -
  translate
• ????? ??????? ??????? ???????? ???? (2001)
• ??????????? ??????? ???????? ? ????????
  ??????????????? (BETTA)
• Other Issues - translate
• ??????????

16
????? ??????? ??????? ???????? ????

• The basic principles ???????? ????????

How does it differ from the Pool?

• Both Generating and Demand Side Bidding Takes
  Place
• Most Electricity is traded outside Balancing
  Mechanism
• favours those who guarantee specific levels of
  generation/supply in advance
• Favours those who can guarantee flexibility in
  output / demand at short notice.

• Both Generating and Demand Side Bidding Takes
  Place
• Most Electricity is traded outside Balancing
  Mechanism
• favours those who guarantee specific levels of
  generation/supply in advance
• Favours those who can guarantee flexibility in
  output / demand at short notice.

17
????? ??????? ??????? ???????? ????

• The basic principles ???????? ????????

• Generators and Suppliers are penalised if they
  deviate from their agreed level of generation /
  supply.
• System security is maintained via the Balancing
  Mechanism
• Renewable Generators e.g. Wind and small CHP
  (10 MW) can be adversely affected.

• Generators and Suppliers are penalised if they
  deviate from their agreed level of generation /
  supply.
• System security is maintained via the Balancing
  Mechanism
• Renewable Generators e.g. Wind and small CHP
  (10 MW) can be adversely affected.

18

• ????? ??????? ??????? ???????? ????
• The basic principles ???????? ????????

• Generation and Supply focuses on
• Balancing Mechanism (BM) Units
• Generating BM Units Demand BM Units
• Trading between Generating and Demand BM Units
• Only the volume traded ( not price) has to be
  notified.

• Generation and Supply focuses on
• ????????????? ???????? (BM) Units
• Generating BM Units Demand BM Units
• Trading between Generating and Demand BM Units
• Only the volume traded ( not price) has to be
  notified.

19
????? ??????? ??????? ???????? (????)

• Gate Closure and Final Physical Notification
• ???????? ??????? ? ????????????? ??????????
  ???????????

• Initial Physical Notification (IPN)
• System Operator checks sufficient capacity is
  available.
• Gate Closure
• Initially 3.5 hours before REAL Time
• later reduced to 1 hour.
• Final Physical Notification (FPN)

• Initial Physical Notification (IPN)
• System Operator checks sufficient capacity is
  available.
• ???????? ???????
• Initially 3.5 hours before REAL Time
• later reduced to 1 hour.
• ????????????? ?????????? ??????????? (FPN)

20
The Balancing Mechanism ?????????????
????????
Summary
3.5 hours
1 hour

• Changes to contract position cannot be made
  after Gate Closure
• Balancing Mechanism provides System Security

• Changes to contract position cannot be made
  after Gate Closure
• Balancing Mechanism provides System Security

21
????? ??????? ??????? ???????? ????

• Generators and suppliers are penalised if they
  deviate from their contract position at the final
  physical notification (FPN).
• The System Operator negotiates with balancing
  Mechanism (BM) units to increase/decrease the
  amount of electricity available to maintain
  system security.
• Separate charges apply for these services.

• Generators and suppliers are penalised if they
  deviate from their contract position at the final
  physical notification (FPN).
• The System Operator negotiates with ?????????????
  ???????? (BM) units to increase/decrease the
  amount of electricity available to maintain
  system security.
• Separate charges apply for these services.

22
????? ??????? ??????? ???????? ????
Charges for imbalance depend on whether BM unit
is deviating in same direction as overall system
or not. Example shows cases where imbalance is in
same direction as system
Charges for imbalance depend on whether BM unit
is deviating in same direction as overall system
or not. Example shows cases where imbalance is in
same direction as system
23
????? ??????? ??????? ???????? ????
Example of System Sell Price (SSP) and System Buy
Price (SBP) Example of System Sell Price (SSP)
and System Buy Price (SBP)
24
????? ??????? ??????? ???????? ????
Variation in System Sell and System Buy
Prices Variation in System Sell and System Buy
Prices
25
Wholesale Electricity Prices since start of NETA
Wholesale Electricity Prices since start of NETA
26
Developments in the Electricity Markets in the
UK the move towards BETTA

• Introduction
• Key developments in the UK Electricity Market
• The New Electricity Trading Arrangements (2001)
• The British Electricity Trading and Transmission
  Arrangements (BETTA).
• Other Issues
• Conclusions

• ????????
• Key developments in the UK Electricity Market -
  translate
• ????? ??????? ??????? ???????? ???? (2001)
• ??????????? ??????? ???????? ? ????????
  ??????????????? (BETTA)
• Other Issues - translate
• ??????????

27
British Electricity Trading and Transmission
Arrangements (BETTA). ??????????? ???????
???????? ? ???????? ???????????????

• Began on 1st April 2005
• Integrates Scotland with England and Wales
• Introduces NETA to Scotland
• Relatively little change in England and Wales
• Prices to consumers in Scotland have fallen

• Began on 1st April 2005
• Integrates Scotland with England and Wales
• Introduces NETA to Scotland
• Relatively little change in England and Wales
• Prices to consumers in Scotland have fallen

28
??????????? ??????? ???????? ? ????????
???????????????

• Before BETTA
• System and Transmission Network Operator in
  England and Wales was National Grid Company
  (NGC).
• System and Transmission Network Operator in South
  of Scotland was Scottish Power
• System and Transmission Network Operator in North
  of Scotland was Scottish and Southern

• Before BETTA
• System and Transmission Network Operator in
  England and Wales was National Grid Company
  (NGC).
• System and Transmission Network Operator in South
  of Scotland was Scottish Power
• System and Transmission Network Operator in North
  of Scotland was Scottish and Southern

29
??????????? ??????? ???????? ? ????????
???????????????

• After BETTA
• National Grid Company become System Operator for
  whole of England, Wales and Scotland.
• NGC now Transmission operator for England and
  Wales
• In Scotland the two companies now hold the
  respective transmission Network Licences

• After BETTA
• National Grid Company become System Operator for
  whole of England, Wales and Scotland.
• NGC now Transmission operator for England and
  Wales
• In Scotland the two companies now hold the
  respective transmission Network Licences

30
??????????? ??????? ???????? ? ????????
???????????????

• After BETTA
• Issues of differences in Transmission Protocol
  had to be resolved including the use of the
  Inter connector
• Charges for Transmission Losses had to be
  addressed

• After BETTA
• Issues of differences in Transmission Protocol
  had to be resolved including the use of the
  Inter connector
• Charges for Transmission Losses had to be
  addressed

31
Generator Connection Charges under BETTA
32
Developments in the Electricity Markets in the
UK the move towards BETTA

• Introduction
• Key developments in the UK Electricity Market
• The New Electricity Trading Arrangements (2001)
• The British Electricity Trading and Transmission
  Arrangements (BETTA).
• Other Issues
• Conclusions

• ????????
• Key developments in the UK Electricity Market -
  translate
• ????? ??????? ??????? ???????? ???? (2001)
• ??????????? ??????? ???????? ? ????????
  ??????????????? (BETTA)
• Other Issues - translate
• ??????????

33

• OTHER ISSUES AFFECTING UK ELECTRICTY MARKETS
• The Renewables Obligation
• The EU Carbon Emission Trading System may affect
  wholesale prices by 5 10 or even more
• Serious issues about energy security will affect
  Electricity Markets in near future
• Availability of gas Decommissioning of
  Nuclear reactors

• OTHER ISSUES AFFECTING UK ELECTRICTY MARKETS
• The Renewables Obligation
• The EU Carbon Emission Trading System may affect
  wholesale prices by 5 10 or even more
• Serious issues about energy security will affect
  Electricity Markets in near future
• Availability of gas Decommissioning of
  Nuclear reactors

34
Developments in the Electricity Markets in the
UK the move towards BETTA

• Introduction
• Key developments in the UK Electricity Market
• The New Electricity Trading Arrangements (2001)
• The British Electricity Trading and Transmission
  Arrangements (BETTA).
• Other Issues
• Conclusions

• ????????
• Key developments in the UK Electricity Market -
  translate
• ????? ??????? ??????? ???????? ???? (2001)
• ??????????? ??????? ???????? ? ????????
  ??????????????? (BETTA)
• Other Issues - translate
• ??????????

35
Conclusions (1) ?????????? (1)

• Little change in company ownership etc. in 2004
  2005
• NETA has been extended to include Scotland as
  from 1st April 2005
• Prices to consumers in Scotland have fallen
• Separation of functions of System Operator and
  Transmission Network Operator

• Little change in company ownership etc. in 2004
  2005
• NETA has been extended to include Scotland as
  from 1st April 2005
• Prices to consumers in Scotland have fallen
• Separation of functions of System Operator and
  Transmission Network Operator

36
Conclusions (2) ?????????? (2)

• Renewables Obligation
• EU Emission Trading Scheme now in force
  wholesale prices could rise.
• Issues of Energy Security and Fuel Mix for
  generation are of concern.

• Renewables Obligation
• EU Emission Trading Scheme now in force
  wholesale prices could rise.
• Issues of Energy Security and Fuel Mix for
  generation are of concern.

37
Developments in the Electricity Markets in the
UK the move towards BETTA

• This presentation is available over Internet at
• www2.env.uea.ac.uk/gmmc/neta/NETA.htm
• Further information on the POOL and NETA
• The Changing Face of the Electricity markets in
  the UK 2003
• Recent Changes in the Electricity Markets in the
  UK 2004
• Available at the same WEB address

• This presentation is available over Internet at
• www2.env.uea.ac.uk/gmmc/neta/NETA.htm
• Further information on the POOL and NETA
• The Changing Face of the Electricity markets in
  the UK 2003
• Recent Changes in the Electricity Markets in the
  UK 2004
• Available at the same WEB address

38
?.?.???? ?.?., ?-? ??????????? ???? ?????????
????????????? ???????????? ????????????
????????? ??????
k.tovey_at_uea.ac.uk
Energy Science Director Low Carbon Innovation
Centre
School of Environmental Sciences University of
East Anglia, Norwich NR4 7TJ
WEB ADDRESS www2.env.uea.ac.uk/gmmc/neta/NETA.ht
m