Presentation on theme: "Electricity Balancing Framework Guidelines"— Presentation transcript:
1 Electricity Balancing Framework Guidelines ACER WorkshopLjubljana, 24 October 2011
2 ACERRegulation (EC) No 713/2009 establishes an Agency for the Cooperation of Energy Regulators (ACER)A community body with legal personalityPurpose: “[…] 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-ERegulation (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 GuidelineThe Commission shall request ACER to develop a non-binding framework guidelineFramework guideline to set out clear and objective principles for the development of network codesEach framework guideline shall contribute tonon-discriminationeffective competitionefficient functioning of the marketAfter the Commission’s request, ACER has 6 months to prepare the framework guideline. The EC may extend that period upon a reasoned request from ACER.
5 Network codesThe Commission shall request the ENTSO-E to submit a network code (which is in line with the relevant framework guideline) to ACER within12 monthsThe 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 tradeThe network codes are made legally binding through the comitology process
6 Basic timeline COMITOLOGY 6 Months 12 Months 3 Months Agency prepares Framework GuidelinesENTSO prepares network codesAgency reviews network codesEC requests Agency to submit framework guidelinesEC requests ENTSO to submit network codeENTSO submits network code to AgencyAgency submits network code to EC when satisfied, recommending approval via ComitologyEC defines priorities for network codes
7 Process description Framework Guidelines (FG) − ACER Invitation from the Commission to draft FGPublic consultationAdoption of the FG / Submission to the Commission (6 months)Network Codes (NC) − ENTSO-ECommission requestENTSO-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 Network security and reliability rulesNetwork connection rulesThird-party access rulesData exchange and settlement rulesInteroperability rulesOperational procedures in emergencyCapacity allocation and congestion management rulesRules for tradingTransparency rulesBalancing rulesRules regarding harmonised transmission tariff structures, ITCEnergy efficiency regarding electricity networksGrid connection
10 Project timelineApril 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 group24 October 2011: public workshop to get feedback from stakeholdersDecember / January 2012: finalisation of the draft IIA and FG and approval procedures within ACERFebruary – March 2012: public consultation on draft IIA and FGJune 2012: final IA and FG and approval procedures within ACER
11 Process Sept 2011 - January 2012 February 2012 - June 2012 Identification of problemsExpert GroupIdentification of objectivesIdentification / assessment of policy optionsSept January 2012Workshop to get a first feedback from stakeholdersSelection of optionsDraft Framework GuidelineFebruary June 2012Public consultationFinalisation of the FG
12 Role of the Ad-Hoc Expert Group The Impact Assessment procedure envisages the possibility to use ad hoc expert groupsThe goal of the group is to provide expert support to ACER on developing input for Framework GuidelinesExperts are invited ad personam, not representing companies, but providing their expertiseThe 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 Academics / consultants Ad-Hoc Expert GroupIndustryJavier Alonso PerezChristopher ProudfootNigel T.HawkinsSusane DornickWilliam Chan (consumer side)TSOsJosé Ignacio de la FuenteYves HarmandEmeline SpireLasse SundahlAcademics / consultantsGoran StrbacGerard DoormanRudi HakvoortChristian Hewicker
14 Rationale for the drafting of the FG Very few XB exchanges currently in placeA significant amount of remaining capacitiesHighly concentrated marketsMore potential to exercise market powerIncreased and increasing share of intermittent RES (wind)Increasing integration of DA and ID marketsLow participation of demand responseAim of the FGProvide an adequate framework to foster an effective balancing markets’ integration
15 Your opinion on these objectives? Policy objectivesGuarantee / enhance short-term operational securityDoes 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 efficiencyDoes 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 generationDoes 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)CriteriaOption 1Option 2EffectivenessSecurity of supplyCompetition and economicRenewablesTime of implementationEfficiencyCoherencySustainability
17 Scope: topics and options 1. No EU actionNo requirement to enable cross-border exchanges between control areas2. No exchanges of reservesNo transmission capacity reservation and no exchange of reservesBalancing reserves3. Intermediate stepHarmonisation of minimum-required balancing variables allowing X-borderexchanges of balancing energy (GCT, technical characteristics, etc.)4. Full integrationCommon provision of automatic reserves1. No EU action2. TSO-BSP modelBalancing energy3. TSO-TSO without CMO model4. TSO-TSO with CMO1. No requirementsBalancing responsibility & imbalance settlement2. Minimum harmonisation3. 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 listImplementation deadline?2. TSO-TSO model with Common Merit Order listTransitional arrangements (TSO-TSO w/o CMO)?How to ensure cross-regional harmonization?
21 Market & SettlementShould 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 Transitional Target ModelFinalTarget ModelGate-closure timesEssential vs desired?Market time-unit (1h vs. 15min)Imbalance pricing and settlementBalance responsibilityMerging balancing and redispatching marketsMandatory participationNetting of Area Control Error (ACE)
23 Input to the discussion In the case of cross border exchange of reserves, transmission capacity may need to be reserved. Recent ENTSO-E’s 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 Transitional Target ModelFinalTarget ModelPossibility for reservation of XB capacitiesEssential vs desired?Reserve products (within FG SO)Common reserve dimensioning and requirementsCommon procurementProcurement time-framesOthers?
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 Is it the right ACER’s address?