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Electricity Balancing Framework Guidelines

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Electricity Balancing Framework Guidelines ACER Workshop Ljubljana, 24 October 2011 – PowerPoint PPT presentation

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Title: Electricity Balancing Framework Guidelines


1
Electricity Balancing Framework Guidelines
  • ACER Workshop
  • Ljubljana, 24 October 2011

2
ACER
  • Regulation (EC) No 713/2009 establishes an Agency
    for the Cooperation of Energy Regulators (ACER)
  • A community body with legal personality
  • Purpose to assist the regulatory
    authorities in exercising at Community level
    the regulatory tasks ... and to coordinate
    their actions
  • Fully operational since March 2011

3
ENTSO-E
  • Regulation (EC) No 714/2009 establishes the
    European Network of Transmission System Operators
    for Electricity (ENTSO-E)
  • All transmission system operators shall
    cooperate at Community level through the ENTSO
    for Electricity, in order to promote the
    completion and functioning of the internal market
    in electricity and cross-border trade and to
    ensure the optimal management, coordinated
    operation and sound technical evolution of the
    European electricity transmission network.
    (Article 4)

4
Framework Guideline
  • The Commission shall request ACER to develop a
    non-binding framework guideline
  • Framework guideline to set out clear and
    objective principles for the development of
    network codes
  • Each framework guideline shall contribute to
  • non-discrimination
  • effective competition
  • efficient functioning of the market
  • After the Commissions request, ACER has 6 months
    to prepare the framework guideline. The EC may
    extend that period upon a reasoned request from
    ACER.

5
Network codes
  • The Commission shall request the ENTSO-E to
    submit a network code (which is in line with the
    relevant framework guideline) to ACER within12
    months
  • The network codes shall be developed for
    cross-border network issues and market
    integration issues, and shall be without
    prejudice to the Member States right to
    establish national network codes which do not
    affect cross-border trade
  • The network codes are made legally binding
    through the comitology process

6
Basic timeline
6 Months
12 Months
3 Months
COMITOLOGY
Agency prepares Framework Guidelines
ENTSO prepares network codes
Agency reviews network codes
EC requests Agency to submit framework guidelines
EC requests ENTSO to submit network code
ENTSO submits network code to Agency
Agency submits network code to EC when
satisfied, recommending approval via Comitology
EC defines priorities for network codes
7
Process description
  • Framework Guidelines (FG) - ACER
  • Invitation from the Commission to draft FG
  • Public consultation
  • Adoption of the FG / Submission to the Commission
    (6 months)
  • Network Codes (NC) - ENTSO-E
  • Commission request
  • ENTSO-E prepare the NC in line with the FG (12
    months)
  • ACER reasoned opinion on NC (3 months)

8
State of play
  • ACER deliverables on FG (2011 Work Programme)
  • Electricity Grid Connection (finished)
  • Capacity Allocation and Congestion Management
    (finished)
  • System Operation (on-going)
  • Balancing (to be delivered in mid 2012)

9
Areas for network codes
Grid connection
10
Project timeline
  • April 2011 launch of the balancing framework
    guideline project setting up ACER drafting team
    (NRAs)
  • July / August 2011 publication of an open letter
    and creation of the expert group
  • 24 October 2011 public workshop to get feedback
    from stakeholders
  • December / January 2012 finalisation of the
    draft IIA and FG and approval procedures within
    ACER
  • February March 2012 public consultation on
    draft IIA and FG
  • June 2012 final IA and FG and approval
    procedures within ACER

11
Process
Identification of problems
Expert Group
Identification of objectives
Identification / assessment of policy options
Sept 2011 - January 2012
Workshop to get a first feedback from stakeholders
Selection of options
Draft Framework Guideline
February 2012 - June 2012
Public consultation
Finalisation of the FG
12
Role of the Ad-Hoc Expert Group
  • The Impact Assessment procedure envisages the
    possibility to use ad hoc expert groups
  • The goal of the group is to provide expert
    support to ACER on developing input for Framework
    Guidelines
  • Experts are invited ad personam, not representing
    companies, but providing their expertise
  • The expert group operates in accordance with the
    Chatham House rules, but also takes into account
    the need for a high level of transparency
    (minutes in a summary form to be publicly
    available)

13
Ad-Hoc Expert Group
14
Rationale for the drafting of the FG
  • Very few XB exchanges currently in place
  • A significant amount of remaining capacities
  • Highly concentrated markets
  • More potential to exercise market power
  • Increased and increasing share of intermittent
    RES (wind)
  • Increasing integration of DA and ID markets
  • Low participation of demand response

Aim of the FG Provide an adequate framework to
foster an effective balancing markets integration
15
Policy objectives
  • Guarantee / enhance short-term operational
    security
  • Does the proposed option make short-term
    operational security lower, equal or higher than
    it currently is?
  • Does the proposed option improve market signals
    for investments and security of supply?
  • Competition and economic efficiency
  • Does the proposed option improve competition?
  • Are the overall balancing costs reduced? To take
    into account potential side-effects on the
    market, the overall social welfare should be
    considered.
  • Integration of variable generation
  • Does the proposed option facilitate integration
    of variable generation and encourage renewable
    BRPs to be in balance?
  • Does the proposed option limit or increase entry
    barriers for variable generation?

Your opinion on these objectives?
16
Evaluation criteria
  • Key criteria
  • Effectiveness (achieve the objectives)
  • Time of implementation (pragmatically feasible,
    when?)
  • Efficiency (least cost and highest benefit)
  • Coherency (trade-offs across the economic, social
    and environmental domain)
  • Sustainability (adaptability in case of major
    external changes)

Criteria Criteria Option 1 Option 2
Effectiveness Security of supply    
Effectiveness Competition and economic
Effectiveness Renewables    
Time of implementation Time of implementation    
Efficiency Efficiency    
Coherency Coherency    
Sustainability Sustainability    
17
Scope topics and options
1. No EU action
No requirement to enable cross-border exchanges
between control areas
2. No exchanges of reserves
No transmission capacity reservation and no
exchange of reserves
Balancing reserves
3. Intermediate step
Harmonisation of minimum-required balancing
variables allowing X-border exchanges of
balancing energy (GCT, technical characteristics,
etc.)
Common provision of automatic reserves
4. Full integration
1. No EU action
2. TSO-BSP model
Balancing energy
3. TSO-TSO without CMO model
4. TSO-TSO with CMO
1. No requirements
Balancing responsibility imbalance settlement
2. Minimum harmonisation
3. High harmonisation
18
Input to the discussion
  • It is widely considered that one of the main
    challenges of introducing an EU-wide cross border
    balancing mechanism is the wide variety of
    existing arrangements adopted at national level.
  • Shall the Balancing FG define a common target
    model, as it is done for CACM? Are interim
    solutions acceptable, allowing for a step-by-step
    approach?
  • Should the Balancing FG describe the roles and
    responsibilities of BRPs?
  • What level of harmonization is required to allow
    for an efficient exchange of balancing resources
    to be introduced?

19
Input to the discussion
  • Existing balancing rules often assume that only
    generation sources can provide balancing energy
    and capacity.
  • Demand response is essential to achieve higher
    energy efficiency.
  • How to achieve higher participation of demand
    response in electricity balancing?
  • The target model should enable participation of
    demand in the balancing market on equal grounds.
  • The minimum standards for participating in the
    balancing market should not hamper participation
    of demand response. 

20
Balancing energy Target model
  • Should the FG define the EU target model?
  • What should be the final target model?
  • 1. TSO-TSO model without Common Merit Order list
  • Implementation deadline?
  • 2. TSO-TSO model with Common Merit Order list
  • Implementation deadline?
  • Transitional arrangements (TSO-TSO w/o CMO)?
  • How to ensure cross-regional harmonization?

21
Market Settlement
  • Should the FG define the EU target model for how
    the TSO sell balancing energy?
  • How should the final target model look like
  • No requirements?
  • Minimum harmonisation?
  • High / full harmonisation?

22
Balancing energy harmonization issues
Harmonization Transitional Target Model Final Target Model
Gate-closure times Essential vs desired? Essential vs desired?
Market time-unit (1h vs. 15min) Essential vs desired? Essential vs desired?
Imbalance pricing and settlement Essential vs desired? Essential vs desired?
Balance responsibility Essential vs desired? Essential vs desired?
Merging balancing and redispatching markets Essential vs desired? Essential vs desired?
Mandatory participation Essential vs desired? Essential vs desired?
Netting of Area Control Error (ACE) Essential vs desired? Essential vs desired?
23
Input to the discussion
  • In the case of cross border exchange of reserves,
    transmission capacity may need to be reserved.
    Recent ENTSO-Es position paper advises to leave
    the possibility to reserve interconnection
    capacity open in case an increase of social
    welfare is demonstrated.
  • Should the FG foresee the possibility to reserve
    interconnection capacity (subtracting it from day
    ahead or intraday allocations)?
  • Is it feasible to produce reliable cost/benefit
    analysis to demonstrate the gain of social
    welfare?
  • With balancing being linked to system security,
    how will TSOs guarantee that these reserved
    transmission capacities will be fully firm?  

24
Input to the discussion
  • There are currently different products are used
    to balance the system, some systems rely mainly
    on secondary regulation (automatically activated
    reserve), while others mainly on tertiary
    (manually activated reserves).
  • Should the scope of this FG cover exchanges of
    balancing energy only or reserves (e.g. primary,
    secondary, tertiary) as well?

25
Balancing reserve harmonization issues
Harmonization Transitional Target Model Final Target Model
Possibility for reservation of XB capacities Essential vs desired? Essential vs desired?
Reserve products (within FG SO) Essential vs desired? Essential vs desired?
Common reserve dimensioning and requirements Essential vs desired? Essential vs desired?
Common procurement Essential vs desired? Essential vs desired?
Procurement time-frames Essential vs desired? Essential vs desired?
Others?
26
Input to the discussion
  • Reserve capacity is procured by European TSOs in
    many different ways on the basis of long term
    contracts (up to 3 years) or a few hours before
    real time on the basis of bids and offers
    submitted by the BSPs.
  • Are the different procurement timeframes
    constituting an obstacle for the integration
    process? Can they distort the market operation
    once the resources are exchanged cross border?

27

Thank you for your attention
  • www.acer.europa.eu
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