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Overview Balance Management project

Ove S. Grande

WS Gardermoen 26 January 11

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The Balance Management Project

Competence building project in the framework of The Norwegian Research Council - Renergi Program.

Project period 2007-2011

Project partners: TSOs (Statnett, TenneT), regulator (NVE), 4 Norwegian producers, GDF Suez, Delft University of Technology, The Norwegian University of Science and Technology (NTNU)

2 Norwegian and 2 Dutch PhDs

PhD funding from The Norwegian Research Council, Next Generation Infrastructure (NGI) NL and GDF Suez, Belgium

http://www.sintef.no/balance-management

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The Balance Management ProjectMotivation

Optimal use of reserves over national borders

Reduce reserve costs

Exploit the favorable properties of hydro power plants as balancing resources

Increased need for reserves due to a growing share of RES with less predictable output.

Market coupling of European day ahead markets and the ongoing integration process in Europe

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Balance management project Results Overview Balancing Mechanisms Northern Europe Analyses of present costs (incl. database marginal costs thermal prod) General market design aspects Potential exchange schemes between the Nordic and the Central

European synchronous systems PhD work:

Market design and regulatory aspects (TU Delft) Market models and simulations (NTNU)

4 seminars / WS: Arnhem, NL, Feda, N, Schiphol, NL, Gardermoen, N

List of publications Dec 10: 4 TRs, 15 papers, database regulation costs thermal production, presentations/lectures

Open documents downloadable at http://www.sintef.no/balance-management

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Balancing Areas in Northern Europe

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Future picture (?): The Nordic synchrounous region and the merged Norhtern Central European control area

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Integration of balance managementMain challenges Use of terminology

Harmonization of market and rules Procurement and prioritization Timing – market gate closure Settlement procedures

Technical Exchange between separate synchronous systems via HVDC –

links Different production technologies Different control strategies

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DefinitionsImbalance

Power Deviation:Difference between production output and consumption that will cause a rise or fall in frequency leading to activation of the primary control

Regional/Area imbalance:Deviations from exchange plan for the defined balancing region/area.

Settlement imbalance: Deviations from exchange plans for the balance responsible parties (BRP), in average over the settlement period (MWh/period) where the settlement period can be 60, 30 or 15 min.

Area Control Error:ACE = ∆Pexc + R∆f

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DefinitionsBalancing control

Primary Control: Automatic droop based frequency control

Secondary Control: Automatic LFC/AGC

Tertiary Control: Manual set point control

Time Control: Manual set point control to eliminate the deviation between synchronous and universal time

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Definitions

Reserves (ETSO reference model)

Frequency Containment Reserves (FCR)Operating reserves necessary for constant containment of frequency deviations (fluctuations) from nominal value

Frequency Restoration Reserves (FRR)Operating reserves necessary to restore frequency to the nominal value after sudden system disturbance occurrence and consequently replace FCR

Replacement Reserves (RR)Operating reserves necessary to restore the required level of operating reserves (FCR and FRR)

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DefinitionsBalancing reserves

Category Nordel Netherlands Germany

Frequency Containment Reserves (FCR)

Frequency Controlled Normal Operation Reserve (FCNOR) Frequency Controlled Disturbance Reserves (FCDR)

Primary reaction Primary Control capacity

Frequency Restoration Reserves (FRR)

Fast Active Disturbance Reserves (FADR) (Manually activated)

Regulation Capacity Reserve Capacity (Emergency Capacity)

Secondary Control capacity

Reserve Replacement (RR)

Reserve Capacity (Emergency Capacity)

Minutes reserves

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Transition from market to physical operation in the Nordic region

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Imbalance settlementDefinitions

Active balancing: Change in production or consumption on a requestfrom the TSO to activate their bid in the balance market.

Passive balancing: Contribution to regulation without having been requested to do so by the TSO.

Two price settlement is used when different prices are used for active and passive balancing.

Single and dual pricing: Only one or both of the up- and down prices within the hour

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Alternatives for imbalance pricing:

Marginal price. The price of the last balancing unit used.

Average price of the energy balance actions. .

Pay-as-bid. Each activation is paid the bid price.

Elspot area price

Incentive component (NL): Added to or subtracted from the imbalance price in the case of upward or downward regulation respectively

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New Nordic model for BM settlement

The Nordic TSOs have harmonised the pricing model based on two separate balances: Balance for production Balance for consumption

The pricing of production imbalances is based on two-price settlement and the pricing of consumption imbalances would be based on one-price settlement.

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Overview imbalance settlement

Settlement period [minutes]

Balance definition

Single/dual BM pricing Payment Mechanism

Norway Sweden Denmark Finland

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Consumption (Total) + Production

Dual (all countries from 2009)

Two prices Marginal price

Netherlands 15 Total Dual One price Marginal price

Germany 15 Total Single Two prices* Pay as bid / Average price

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Balancing costs

Technical report (ADAPT-consulting) : ”Documentation of present cost” covering production and industrial consumption

Spread sheet with cost data for 418 thermal production units (S, DK, GE, NL, B) Plan type Heat delivery Primary and secondary fuel Marginal fuel and CO2 costs Start/stop costs Efficiency

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TR ”Balancing Market Design”

Role of Balancing

Exchange of Balancing Services between control areas

Design Variables

Multi control area Balancing Market design proposals

Performance criteria

Evaluation of multinational balancing market designs

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TR ”Exchange of Balancing resources between separate synchronous systems in Northern Europe”

Background Key principles for balance market integration The France-UK inititiative

Merging of control areas in Northern Central Europe Exchange of reserves to/from the Nordic system

System Characteristics Reserve requirements related to forecast uncertainties Balancing resources – control objects Reservation of transmission capacity Pricing principles Alternative schemes for exchange (6 models proposed)

Modeling of balance market integration in Northern Europe

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Key principles BM integration (ERGEG)

Security of supply

Market based Mechanisms

Effective Competition

Impact of Cross-Border Trade – reservation of transmission capacity

Compatibility of balancing mechanisms

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Balancing: Common merit order list Control criteria: ∆f and ∆t Restrictions: Bottlenecks, other

opertional Automatic secondary control

Balancing resources Hydro, Thermal, reducible loads Optimal choice of regulation objects Reserve requirements Allocation of HVDC transmission capacity

Nordic characteristics

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Optimal choise of control objects

Efficiency of control actions is dependent of geographic location of control object

Example: Loss of 100 MW production in Northern Norway in a situation with full utilization of the grid from north to south can be replaced by 60 MW load reduction in the Stockholm area due to reduction in marginal losses

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Reserve requirements

Update of Nordic requirements referring to congested corridors, not country borders

Dynamic reservation related to wind and consumption forecast uncertainty

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Allocation of HVDC transmission capacity

PATC

timeptu

P[MW]

Day Ahead trade

Intraday trade

Balancing trade PBM

PID

PDA

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Sum upMain contributions Overview of balancing mechanisms in NE Regulation costs ”database” thermal production Evaluation of market design Exchange with a merged N-CE control area – parallel

utilization of HVDC links Alternative exchange schemes between the Nordic and

CE systems

PhD work: Market design and regulatory aspects Modeling and analyses

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