future energy markets: how and where?

Future energy markets: how and where?

Vaasa Energy Week

22.3.2017, Satu Viljainen

The Nordic power system faces many challenges

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Frequency is the heartbeat of the power system

Control room operators' task is to keep the frequency within predefined limits

Frequency of the Nordic power system is deteriorating

If frequency falls outside the limits, the risk of system collapse increases

Generation structure in the Nordics is becoming more variable and import-dependency increases

Cold winter days with tight demand-supply can be challenging especially in case of failures

NORWAY

P 26 800

C 25 000

B 1 800

FINLAND

P 11 600

C 15 100

B - 3 500SWEDEN

P 27 200

C 27 400

B - 200

DENMARK

P 4 900

C 6 100

B - 1 200

Cold winter day in 1 of 10 winters

NORDIC MARKET TOTALP = Available capacity for market, TSO reserves excluded

*) 70 500

C = Peak demand **) 72 100

B = Balance without power exchange - 1 600

Most of the inertia in the Nordic system comes from thermal power plants

Inertia resists frequency changes - small inertia means higher risk of blackouts

Small inertia

Normal inertia

Frequency

Time

Fault, e.g. tripping of a large production unit

Generation inadequacy has started to cause concerns elsewhere too

Source: Bloomberg news, 17 January 2017

Source: The Sydney Morning Herald, 10 February 2017

A new German word "Dunkelflaute" has entered the electricity market vocabulary this year

Source: Die Welt, 2 February 2017

Everyday challenge in today's markets already: balancing the variable supply and demand

Long-term challenge that remains: how to develop seasonal storage that makes economic sense?

Building more transmission lines will help

But grid expansion can sometimes be extremely challenging – the German example

Montel News, 16 November 2016:

730km of the needed 7,900km has been built since 2009

Issues to solve: how to make the markets work and fit for renewables

Network Codes and Guidelines

Clean Energy Package

Energy transition

18

Ensuring non-distorted price-formation and making use of decentralized knowledge

Increasing trade close to real-time creates opportunities for balance service providers

Both generators and consumption are active in the balancing and reserve power

markets in Finland

Criteria for balance service providers: does it start, how fast does it ramp, how long does it last?

Frequency containment reserve for disturbances,220 - 265 MW

(1200 MW in the Nordics)

Frequency containment reserves for normal operation,140 MW

(600 MW in the Nordics)

Automatic frequency restoration reserve,70 MW

(300 MW in the Nordics)

Balancing power markets, balancing capacity markets, reserve power plants

880 – 1100 MW

Activation During large frequency deviations

All the time During predefined hours

On request

Ramping In seconds In a couple of minutes In a couple of minutes In 15 minutes

Future electricity: cost-efficient, green and secure

Thank you for your interest!Questions?