Analysis of Balancing Markets of Electricity in Europe614429/FULLTEXT01.pdf · Analysis of Balancing Markets ELSA KIENER Master’s Degree Project August 2006 Electric Power Systems

Analysis ofBalancing Markets

ELSA KIENER

Master’s Degree Project

August 2006

Electric Power Systems LabXR-EE-ES 2006:011

Master of Science ThesisStockholm, Sweden 2006

Abstract

During the 20th century, most countries had their electricity production, transport and distributionorganised as vertically integrated monopoly. Since the 90s more and more countries, especially in Europe,have replaced their state monopoly by an open market to manage their electrical power system. Inorder to settle a deregulated market of electricity, countries must adopt new methods and rules fortrading electricity, planning production and managing the balance between electricity production andconsumption of national power systems. In this context new tools are needed, such as software tools andinformation systems.

This master thesis is part of an R&D project, aiming at developing software tools for the imple-mentation of electricity markets, especially the mechanisms of bidding to buy and sell electricity on theBalancing Market. The new software developed by this R&D project is a generic software, based on aflexible model, and it should be adapted to different systems of electricity markets.

The present master thesis report explains the principles and processes of electricity markets, focusingon the auction mechanisms for the purchase of electricity in real time: the Balancing Market. The reportexposes different methods to regulate the stability of electricity network in different European countries(Regulation Services to maintain the balance between electricity production and consumption), andanalyses different systems of Balancing Market in various countries; more specifically, it inludes synthesesof the balancing market systems in Romania, Hungary, Germany, France and the Nordic countries. Fromthe confrontation of those systems, the basis for a new flexible model has been developed.

This report aims to be useful for people who have to work on a project related to electricity market(especially this R&D project) and need to acquire the required knowledge about markets of electricity,regulation services and balancing markets (especially the market systems of Romania, Hungary, Germany,France and the Nordic countries).

Keywords: electricity market, balancing market, regulation services, power system

Acknowledgements

First of all, I would like to thank Benoit Marie and Frederic Lecocq, my supervisors at AREVA T&D,for offering me the opportunity to work and learn a lot on an interesting and challenging topic that hascompleted significantly my academic knowledge, as well as AREVA T&D where I did my master thesisin an excellent working environment and the helpfulness of all staff there.

I would like to thank all the people with whom I worked for my master thesis and who took a lot oftheir time to help me and advise me: Frederic Lecocq (again) for his implication in my master thesis,Michel Benatouil, Sami Ammari and Jean-Christophe Passelergue for their help on AIMMS and MAVIR,Isabelle Michalet for her help and kindness, and Diego Miyake who helped me for correcting my reportand to whom, I hope, my work has been directly useful.

I am grateful to Mikael Amelin, my teacher and supervisor at KTH, who followed my work, tooktime to receive me in Sweden for long discussions, and advised me at any step of my work.

Also I would like to thank Prof. Lennart Soder for agreeing to be my examiner, reviewing my thesisand advising me.

AREVA T&D provided me a great working environment and I would like to thank all my colleaguesin the Market department for their help and kindness.

Finally, I would like to express my deepest regards to all my family and friends in France and Swedenwho gave me support, help and friendship, especially my parents, my brother, my aunt and uncle whohosted me, and my friends from Supelec and KTH who helped me for the preparation and the redactionof my master thesis.

Contents

Table of Contents ix

List of Figures xii

Glossary xv

1 Introduction 11.1 Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.2 Presentation of the Research and Development project . . . . . . . . . . . . . . . . . . . . 1

1.2.1 Context of the R&D project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.2.2 Aim of the R&D project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.2.3 Thesis work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

2 Common Principles of the Markets of Electricity 52.1 Roles of the Market Actors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52.2 Process of Planning before the day of delivery . . . . . . . . . . . . . . . . . . . . . . . . . 6

2.2.1 The Bilateral Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62.2.2 The day-ahead Spot Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

2.3 Process of continuous adjustment before and during the day of delivery . . . . . . . . . . . 72.3.1 The Bilateral Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72.3.2 The Balancing Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72.3.3 ”Gate Closure” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72.3.4 Payment of the regulation power . . . . . . . . . . . . . . . . . . . . . . . . . 7

2.4 Process of Imbalance Settlement after the day of delivery . . . . . . . . . . . . . . . . . . 82.4.1 Definition of the Balance Responsible Player . . . . . . . . . . . . . . . . . . . . . 82.4.2 Imbalance Settlement between BRP and TSO . . . . . . . . . . . . . . . . . . . . . 92.4.3 Imbalance Settlement between BRP and market players . . . . . . . . . . . . . . . 92.4.4 Calculation of the imbalances and their price . . . . . . . . . . . . . . . . . . . . . 9

2.5 Summary of the principles of Markets of Electricity . . . . . . . . . . . . . . . . . . . . . . 10

3 Regulation Services 133.1 Definition of the regulation services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133.2 Automatic Frequency Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

3.2.1 Primary Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143.2.2 Secondary Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

3.3 Manual Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163.3.1 Tertiary Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

3.3.2 Fast Tertiary Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173.3.3 Slow Tertiary Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

4 Balancing Market and Reserve Market 214.1 How to obtain Automatic Control Services? . . . . . . . . . . . . . . . . . . . . . . . . . . 21

4.1.1 Delivery of energy for Primary and Secondary Control: no auction mechanism (inreal-time) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

4.1.2 Participation to primary and secondary reserve with no auction mechanism . . . . 214.1.3 ”Reserve Markets” for primary and secondary control . . . . . . . . . . . . . . . . 22

4.2 How to obtain Manual Regulation Services? . . . . . . . . . . . . . . . . . . . . . . . . . . 234.2.1 Delivery of energy for tertiary regulation: auction mechanism . . . . . . . . . . . . 234.2.2 Participation to tertiary reserve with no auction mechanism . . . . . . . . . . . . . 234.2.3 ”Reserve Market” for tertiary regulation . . . . . . . . . . . . . . . . . . . . . . . . 244.2.4 Participation to the Balancing Market . . . . . . . . . . . . . . . . . . . . . . . . . 244.2.5 ”Adjustment in advance” using balancing bids . . . . . . . . . . . . . . . . . . . . 254.2.6 Constitution of Emergency Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . 25

4.3 Mechanisms of the Balancing Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 254.3.1 Similar phases in Balancing Market . . . . . . . . . . . . . . . . . . . . . . . . . . 254.3.2 Differences in the Balancing Market process . . . . . . . . . . . . . . . . . . . . . . 274.3.3 Congestion Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 304.3.4 Balancing Market across borders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 324.3.5 Bid parameters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 364.3.6 Payment modes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

5 Ancillary Services 415.1 Definitions of ancillary services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 415.2 Procurement of ancillary reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 425.3 Emergency Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

6 Introduction to a ”generic model” for software 436.1 UML Data model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

6.1.1 Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 436.1.2 Auction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 446.1.3 Bid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 446.1.4 Commodity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 446.1.5 Block . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 446.1.6 Product . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 456.1.7 Area and Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 466.1.8 UML Data Model: conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

6.2 UML business requirement model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

7 Conclusion 517.1 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 517.2 Future works . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

A Romania 55A.1 Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55A.2 Overview of Balancing Services and Markets related . . . . . . . . . . . . . . . . . . . . . 55A.3 Details of ”Daily Offer” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56A.4 Details of ”Standing Offer” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59A.5 Details of the Ancillary Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

A.5.1 Details of the business process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

B Hungary 65B.1 Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65B.2 Overview of Balancing Services and Markets related . . . . . . . . . . . . . . . . . . . . . 65B.3 Bid specificities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67B.4 Details of Primary Reserve Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67B.5 Details of Secondary Reserve Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68B.6 Details of Minute Reserve Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69B.7 Details of Hourly reserve market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

C Germany 73C.1 Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73C.2 Overview of Balancing Services and Markets related . . . . . . . . . . . . . . . . . . . . . 73C.3 Bid specificities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75C.4 Details of Primary Reserve Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76C.5 Details of Secondary Reserve Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76C.6 Details of Minute Reserve Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77

D France 81D.1 Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81D.2 Overview of Balancing Services and Markets related . . . . . . . . . . . . . . . . . . . . . 81D.3 Details about Tertiary Reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82D.4 Generation scheduling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83D.5 Balancing Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84D.6 Implicit Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85D.7 Explicit Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86D.8 Exclusive Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87D.9 ”Adjustment in advance” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87D.10 Crossborder tertiary reserve trading at the French borders: . . . . . . . . . . . . . . . . . 88

E The Nordic countries 89E.1 Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89E.2 Overview of Balancing Services and Markets related . . . . . . . . . . . . . . . . . . . . . 89E.3 Details about Regulation Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90E.4 Principles of the electricity markets and Balancing Market in NORDEL . . . . . . . . . . 91E.5 Primary Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93E.6 Emergency procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93E.7 Congestion Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94

F Zonal Model: user case of business requirement 95

G Example of market clearing (MAVIR, Hungary) 99G.1 Schedules of generations and loads . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100G.2 Reserve market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102

G.2.1 Step1: Tendering of products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102G.2.2 Step2: Submission of bids . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102G.2.3 Step3: Bid merit-order (Reserve market) . . . . . . . . . . . . . . . . . . . . . . . . 103G.2.4 Step4: Pre-selection of bids (Reserve market) . . . . . . . . . . . . . . . . . . . . . 103

G.3 Energy Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104G.3.1 Step5: Bid merit-order (Energy market) . . . . . . . . . . . . . . . . . . . . . . . . 104G.3.2 Step6: Selection of bids (Energy Market) . . . . . . . . . . . . . . . . . . . . . . . 105

References 109

List of Figures

1.1 AREVA’s companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.2 AREVA’s divisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

2.1 Spot Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62.2 Participants to the Imbalance Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . 82.3 Timescale of the Electricity Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

3.1 Kirchoff first law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133.2 Reserve for upward and downward regulation . . . . . . . . . . . . . . . . . . . . . . . . . 16

4.1 Merit Order for upward regulation bids . . . . . . . . . . . . . . . . . . . . . . . . . . . . 264.2 Merit Order for downward regulation bids . . . . . . . . . . . . . . . . . . . . . . . . . . . 264.3 Selection of upward regulation bids . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 274.4 Selection of downward regulation bids . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 274.5 ”Gate Closure Illustration” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 284.6 Time interval between instruction and power delivery in E & W . . . . . . . . . . . . . . . 294.7 Time interval between instruction and power delivery for the Minute Reserve . . . . . . . 304.8 Market Splitting example - fig 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 304.9 Market Splitting example - fig 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 314.10 Example of counter-trading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 324.11 Crossborder ”RP-TSO trading” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 334.12 Crossborder ”TSO-TSO trading” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

6.1 UML data model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 476.2 Generic software components . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 486.3 Use case diagram of the business requirements . . . . . . . . . . . . . . . . . . . . . . . . 49

A.1 ”Daily Offer” for a generation unit (Romania) . . . . . . . . . . . . . . . . . . . . . . . . . 56A.2 ”Daily Offer” for a dispatch load (Romania) . . . . . . . . . . . . . . . . . . . . . . . . . . 57A.3 Multiblock bid (Romania) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57A.4 Bid merit order (Romania) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58A.5 Ramp constraint (Romania) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59A.6 Market timescales in Romania . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63

D.1 Implicit Offer in the French system . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84D.2 Implicit Offer in the French system . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86D.3 Explicit Offer in the French system . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86

E.1 Electricity market processes and timescales in the Nordic countries . . . . . . . . . . . . . 92E.2 Common bid list in the Nordic countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93E.3 NOIS view of the common bid list . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94

F.1 User case of business requirements: Zonal Model . . . . . . . . . . . . . . . . . . . . . . . 96F.2 sequence diagram of the scenario ”Zonal Model creation” . . . . . . . . . . . . . . . . . . 97F.3 description of the scenario ”Zonal Model creation” . . . . . . . . . . . . . . . . . . . . . . 98

G.1 Modes of Minute Control and Energy intra-day in MAVIR . . . . . . . . . . . . . . . . . . 100G.2 Set of entities (example) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100G.3 National forecast consumption curve and load curve in France . . . . . . . . . . . . . . . . 101G.4 Bid submission (example) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103G.5 Bid merit order for UP regulation (Reserve market) (example) . . . . . . . . . . . . . . . 103G.6 Bid merit order for DOWN regulation (Reserve market) (example) . . . . . . . . . . . . . 103G.7 Bid pre-selection for UP and DOWN regulation (example) . . . . . . . . . . . . . . . . . . 104G.8 Pre-selection of Minute reserve (MAVIR view) (example) . . . . . . . . . . . . . . . . . . 104G.9 Bid merit order for UP&DOWN regulation (Energy market) (example) . . . . . . . . . . 105G.10 Selected bids for each 15min (Energy market) (example) . . . . . . . . . . . . . . . . . . . 105G.11 Selection of Minute energy (MAVIR view) (example) . . . . . . . . . . . . . . . . . . . . . 106G.12 participations of the generators G2 to the reserve pre-selection and the energy selection

(MAVIR view) (example) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106G.13 participations of the generators G3 to the reserve pre-selection and the energy selection

(MAVIR view) (example) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107G.14 participations of the load L1 to the reserve pre-selection and the energy selection (MAVIR

view) (example) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107

Glossary

• Power system: Set of means of electricity production, transport and distribution (national elec-tricity network)

• Balancing or regulation services: Services regulating the active power injected in the powersystem, ensuring the equality between total production and total consumption. They includeprimary control, secondary control (when it exists) and tertiary regulation.

• Primary control: First automatic response to frequency deviation and active power instability. Itexists in every European country and is part of the Automatic Frequency Controls in the regulationservices. The term ’primary control’ is used in the UCTE.

• Secondary control: Second automatic response (after the primary control) instructed by controlloop systems. Such systems are Automatic Generation Control (AGC) systems that equip specificgenerating units in power plants (e.g. hydro power plants) and they do not exist in Nordic countries,England and Wales. It is part of the Automatic Frequency Controls in the regulation services. Theterm ’secondary control’ is used in the UCTE.

• Tertiary regulation: Correction manually instructed by the TSO (Transport System Operator),following the Automatic Frequency Control. The TSO uses balancing bids (on the BalancingMarket) to select, in real time, the necessary amount of energy that must be delivered for tertiaryregulation. The term ’tertiary control’ is used in the UCTE.

• Upward regulation: Balancing regulation that increases injected active power in the network;this done by increasing generation or decreasing consumption of a balancing entity.

• Downward regulation: Balancing regulation that decreases injected active power in the network;this done by decreasing generation or increasing consumption of a balancing entity.

• Ancillary services: Services that complete the TSOs regulation service: Reserve of active andreactive power, emergency reserve, voltage control (reactive power), losses, black start.

• Emergency services: services (using balancing active power/reserve) that are used when regularregulation services are not sufficient (emergent situation).

• Bilateral Market: Market on which a seller and a buyer of electricity can trade bilaterally(sometimes through the intermediate of a broker). There is no intervention of the TSO.

• Spot Market: Organised market during each working day, where every market player can sell (orpurchase) by auction the rest of electrical power that he has not traded bilaterally. Each electricitybuyer and seller submits buying and selling bids to the power exchange on the day-ahead market,

in order to purchase and sell electricity. The two roles of the Spot Market are to settle the MarketPrice and the production schedule for each hour (or 1/2 hour) of the following day. There is nointervention of the TSO.

• Balancing Market: Organised market supervised by the TSO, where players with dispatchableunits (and/or loads) can make balancing bids (also called regulation bids). With the balancingbids, participants to the Balancing Market other regulation services, i.e. they other to increase ordecrease their power production (or consumption) for a given hour of operation. The balancingmarket opens right after the spot market closure. The submission of balancing bids starts on theday-ahead (and can continue on the intra-day, depending on the country). The TSO selects therelevant bids and call the entities in real time.

• Selling and buying bids: Bids on the Spot Market.

• Balancing bids: Bids on the Balancing Market.

• Spot price: Price set by the intersection of the selling and the buying bids on the spot market.

• Bid price, paid-as-bid: Price indicated in the bid.

• Marginal price: Price of the last selected bid in the merit order.

• Energy fee [currency/MWh]: Price billed for 1 megawatt-hour ordered (by the TSO) anddelivered.

• Availability fee [currency/MWh]: Price to keep 1 megawatt-hour available.

• Utilisation price, energy price [currency]: Price for the payment for energy utilisation, calcu-lated as the product of the measured amount of delivered energy (after utilisation) and the energyfee.

• Availability price, capacity price [currency]: Price for the payment for reserve availabilityor capacity, calculated as the product of the forecasted amount of available reserve and theavailability fee.

• Entity, dispatch entity, balancing entity: generation unit or load that provides balancingpower for up- and/or downward regulation.

• Balancing group: Groups of balancing entities and under the responsibility of a BRP (BalancingResponsible Player).

• Control area: e.g. in Germany, there are 4 TSOs responsible for the balance of 4 different ControlAreas.

• Congestion zone: Term used to call a ’fictive zone’ defined for congestion management (counter-trading method). Such ”congestion zone” is defined by the associated balancing entities (used forthe resolution of the congestion); a corridor with a maximal capacity may be associated (repre-senting the congested interconnection).

• Spot area: zone created for congestion management (market splitting method), defined by anassociated local spot market and a local market price.

• Market splitting: Method to resolve network congestions in advance (based on day-head fore-casts). It is settled during the day-ahead, using the Spot Market and creating ’spot areas’.

• Counter-trading: Method to resolve network congestions in real time (or just before the hour ofoperation, based on short-term forecasts). It is settled during the intra-day, using the BalancingMarket and creating ’congestion zones’.

• Commodity: Element of the generic model which defines ”what is auctioned” on the concernedmarket.

• Product: Element of the generic model which indicates one or several Commodities (specifyingwhat is auctioned on the concerned market), and a time period of availability, which specifies whenthis commodity is available.

• Block: basic pair quantity, price indicating an offered quantity of power or reserve, and theassociated price. One bid may be constituted of one or several blocks.

• UML Information Model or UML Data Model: Static representation of a software model,defining all the static data and actors of the software.

• UML Business Requirement Model: Dynamic representation of a software model, defining allthe dynamic mechanisms and rules of the software.

Abbreviation SignificationTSO Transmission System Operator

ETSO Association of European Transmission System OperatorsBRP Balancing responsible Player

RP Reserve Provider (of balancing reserve)E & W England and WalesNordel Common cooperation organisation of the Nordic countries

(Norway, Sweden, Finland, Denmark)UCTE Union for the Coordination of Transmission of Electricity

EDF Electricite de France(Major company of electricity production and distribution in France)

AREVA French company of which main activities are the ”Nuclear Cycle”and ”Nuclear Power”

AREVA T&D AREVA Transport and Distribution,RTE Reseau de Transport Electrique

(the French TSO and owner of the national transport network)REE Red Electrica de Espana (the Spanish TSO)

MAVIR Hungarian TSO (Areva’s software for the TSO’s information systemis referred to as ”MAVIR system”)

National Grid the English TSOHUF Hungarian Forint (Hungarian local currency)NOIS Nordic Operational Information System

Chapter 1

Introduction

1.1 Background

During the 20th century, most of the countries had their electricity production, transport and distri-bution organised as vertically integrated monopoly (like EDF in France, state monopoly of production,transport and distribution of electricity, from 1946 to 2003). During the 90s some countries opened theirelectricity market (1989 in England, 1995 in Sweden). The Nordic countries have even formed the firstinternational power pool (NordPool).

Since then, more and more countries have replaced their state monopoly by an open market to managetheir electrical power system. It is especially the case in the European Union where, according to the1999 EU Electricity Directive, all the countries have to open their electricity market [14]. Indeed theE.U. aims ideally to build an intern market of electricity common to all European countries.

In a deregulated electricity market, production and distribution are separated from transport. Gen-erally the transport and distribution networks are ‘natural monopolies’ linked to the state. The GridOwner is often the Transport System Operator (TSO) too. Electricity buyers often have the right tofreely choose their energy suppliers (in or out the national borders), and electricity can be traded di-rectly between market participants or trough biddings via a market place. The purpose of deregulatingelectricity markets is to:

• Allow competition between market players and thus encourage reduction of costs. The price ofelectricity is determined by the supply and the demand on the market and not by a single company.

• Ensure the free circulation of electricity between different countries and tend toward a joint powersystem with a common market. One of the major advantages of a common power system is thatsharing energy resources is a way to increase the stability of the power system.

In order to settle a deregulated market of electricity, countries must adopt new methods and rules fortrading electricity, planning production and managing the balance between electricity production andconsumption of national power systems.

In this context new tools are needed, such as software tools and information systems; they are usedfor the management of relations between market participants (suppliers, customers, traders, systemoperators, market operators), for the mechanism of auction, for optimisation and decision, etc. It is inthis framework that the thesis project takes place.

1.2 Presentation of the Research and Development project

1.2.1 Context of the R&D project

The R&D project takes place at the company AREVA T&D, division for electrical Transmission andDistribution of the group AREVA (see figures 1.1 and 1.2), in the service of Automation and InformationSystems. This service is responsible, among other things, for the development of software solutions forEnergy Management Systems as well as Market Management Systems.

2 Introduction

Figure 1.1: Companies included in the group AREVA

Figure 1.2: AREVA’s divisions

1.2.2 Aim of the R&D project

The aim of the R&D project is to develop a software-core application for balancing markets by the endof 2006. This software should implement the rules of electricity balancing market and should be adaptedto different kinds of market systems (for different countries).

Areva has already developed and sold software applications for some customer-countries. For example,AREVA has implemented the national Information System for spot and balancing markets in Romania.AREVA has also developed a piece of software for managing the balancing market, including markets ofreserves and markets of ancillary services, plus the settlement of imbalances of the Hungarian system. Ineach case, the software implemented the rules specific for one country only and its development startedfrom zero.

The software of the R&D project is a core application for balancing markets, which means an appli-cation implementing the main features of Balancing Market common to all countries. If a new productneeds to be developed for a new customer-country, the application-core will be used as a basis - a startpoint - for the development of the new software.

1.2.3 Thesis work

Some parts of this new ”flexible” software are at the state of modeling and software specifications.Indeed, a first step in the development of a software is to find the ”business requirements” based on thecollation and study of information about balancing market rules in different countries.

These study cases of Balancing Market should enable to understand:

3

• Which elements and actors compose the balancing markets, how a market is defined, etc. This willenable to build a ”UML information model”, a model of data.

What? Who? ⇒ UML Information Model

• What actors’ roles are, how they interact with each other; what the rules of balancing markets areand especially the way auctions are used. This will enable to build a ”UML business requirementmodel” including ”use cases” and ”scenario descriptions”.

How? ⇒ UML Business Requirement Model

The thesis work includes:- the study of electricity market rules in different countries, focusing on the rules of balancing markets- the validation of the software engineer’s business model: checking of its consistency with the studiedmarket rules and participating to the building of one of the user cases (zonal model)- the management of the formation of another intern student (arrived in July) who would be involved inthe R&D project (helping him to acquire the required knowledge about markets of electricity, regulationservices, balancing markets, market systems of AREVA’s customer-countries (Hungary and Romania)and principles of the new generic model, which are all explained in the present report).

The thesis report will present the results of the analysis:

• Explanation of the principles of the markets of electricity

• Definition of the regulation services

• Definition of the Balancing Market and the different ancillary services

• Presentation of principles of the generic model developed at AREVA

• In the annexes, presentation of interesting countries with specific rules: Romania, Hungary, Ger-many and France.

• In the annexes, presentation of one of the ”user cases” of the UML business requirement model:the zonal model

• In the annexes, example of balancing market process by using the Hungarian clearing engine(MAVIR)

4 Introduction

Chapter 2

Common Principles of the Marketsof Electricity

From a country to another, there are many differences in the way of managing the balance betweenelectricity production and consumption. This is due to technical differences (various sizes of powersystems, types of connection and generation means) and due to different national rules. However thebalance management in deregulated markets of electricity follows some rules that are common to mostcountries. The principles of electricity markets are explained in this chapter (according to the rulesapplied in most European countries).

2.1 Roles of the Market Actors

• TSO (Transmission System Operator): Operator of the national electrical network. The TSOis often the Grid Owner. He is technically responsible for the national power system (maintain-ing the physical balance between production and consumption, frequency regulation, congestionmanagement, reserve of active and reactive power, etc).

• Imbalance Settlement Administrator: administrator that settles the imbalances betweenscheduled values of power production, consumption, exchange and the actual metered values. Healso calculates prices of imbalances and spreads costs and incomes between market players. In Eu-ropean countries the Imbalance Settlement Administrator is the TSO, except in Austria, England,Wales and Spain [1].

• Power suppliers: market participants that supply electrical power to end consumers; they arethemselves power producers or linked to producers.

• BRP: Balance responsible player; every market player has to choose a balance responsible whichwill be financially responsible for maintaining the balance between production and consumption.The BRP is especially responsible if one of the related players fails to deliver the scheduled power.The cost due to the ensuing imbalance between scheduled power and actually delivered power willbe handled by the BRP.

• Power exchange: market place (or market pool) where electricity is traded between marketplayers. The trading is based on bidding (selling bids versus buying bids); it is used mainly in theSpot Market.

• Traders: market participants that buy electrical power from producers and sell it to customers.

6 Common Principles of the Markets of Electricity

2.2 Process of Planning before the day of delivery

For each day the national production of electricity is planned in advance according to the forecastof national consumption. This planning results from the ex-ante trading of electricity, before or on theday-ahead prior to the day of delivery. The electricity trading between market players can be conductedon different types of market.

2.2.1 The Bilateral Market

On a bilateral market, a seller and a buyer of electricity can trade bilaterally (sometimes through theintermediate of a broker). The trading can be concluded one day, one week, one month, half-a-yearor a full year before the day of delivery. The seller and the buyer decide the amount and the priceof electricity traded. The TSO must be informed of every bilateral contract. The major amount ofelectricity is usually traded bilaterally.

2.2.2 The day-ahead Spot Market

The Spot Market is an organised market during each working day, where every market player can sell(or purchase) by auction the rest of electrical power that he has not traded bilaterally. Each electricitybuyer and seller submits buying and selling bids to the power exchange on the day-ahead market, inorder to purchase and sell electricity. The two roles of the Spot Market are to settle the Market Priceand the production schedule for each hour (or 1/2 hour) of the following day.

After the bid submission, all selling and buying bids (corresponding to the same trading interval) aresorted by price and power quantity (see fig 2.1). The intersection (the ”spot”) of the ”selling curve” andthe ”buying curve” settles the Market Price and the quantity of electricity traded for any given hour ofthe following day. In the same time, the market clearing settles which bids are selected: indeed all theselling bids of which price is higher than the Market Price are selected, while all buying bids of whichprice is lower than the Market Price are selected (see fig 2.1).

Selling bids

Buying bids

Quantity (MW) Traded Quantity

Price ($/MWh)

Market Price

Figure 2.1: Spot Price and traded quantity for a given hour h

After closure of the bilateral market and the (day-ahead) spot market, all the participants shouldhave concluded trading that set their production schedule for each hour of the following working day. Atthis stage, the production schedules are also called initial plans and must be sent to the TSO. At thatmoment, generation plans and load forecasts should match for each hour of the following day. Of course,forecast cannot be perfect, so enventually differences between production and consumption appear moreclearly. Those variations need to be compensated by a continuous adjustment of the national productionand consumption.

7

2.3 Process of continuous adjustment before and during theday of delivery

The production and consumption planned or forecast for each hour of the delivery day must beadjusted in order to ensure their balance. This adjustment can be performed in advance, before the hourof operation, and in real time, during the hour of operation

2.3.1 The Bilateral Market

Market players can change some existing bilateral contracts or create new bilateral agreements accordingto better forecasts; so they can change their production schedule on the day-ahead or intra-day (at leasta certain time before the hour of operation). Then they send their new planning to the TSO.

2.3.2 The Balancing Market

The Balancing Market is an organised market supervised by the TSO, where players with ”dispatchable”units (and/or loads) can make balancing bids (also called regulation bids). With the balancing bids,participants to the Balancing Market offer regulation services, i.e. they offer to increase or decrease theirpower production (or consumption) for a given hour of operation. The balancing market opens after thespot market closure. The submission of balancing bids starts on the day-ahead (and can continue on theintra-day, depending on the country).

Two major specificities of the Balancing Market (compared to the Spot Market or bilateral trading)are:

• the role of the TSO and

• the market clearing occurring in real time.

Indeed the market clearing takes place during the hour of operation; The TSO selects the relevant bidsand call the entities in real time. The TSO uses this real-time auction mechanism for the delivery ofenergy for tertiary regulation, and for the management of network congestions in real time.

Remark: In some countries (e.g. France, Hungary), the balancing market can be used to performadjustment in advance: the TSO can select balancing bids before the hour of operation, based on short-term load forecasts. Then the selected bidders must change their production/consumption plans. Therest of the unused balancing bids are kept for the adjustment in real time. This is not a normal regulationservice, but a sort of ”up dating” of the production schedule, using balancing bids.

2.3.3 ”Gate Closure”

The ”Gate Closure” (term used in the ETSO reports [1, 3]) is rather useful for the understanding ofthe adjustment process: the ”Gate Closure” is the time when participants reach their final productionschedule, after bilateral trading, Spot Market and adjustment of the schedules. After the ”Gate Closure”,the participant cannot modify their generation schedule any more. So the ”Gate Closure” marks themoment when ”the TSO takes control of the system” [3]. From that moment, the participants (associatedto loads and/or generation units) undertake the increase or decrease of production and consumption levelssupervised by the TSO (and not by the participants themselves).

After the ”Gate Closure”, the final plans for production (and consumption) are sent to the TSO; thisis also called ”final physical notification”.

2.3.4 Payment of the regulation power

Once the market player who submitted a regulation bid (on the day-ahead) is selected and called by theTSO (on the intra-day), he is bound to the TSO for payment of the regulation.


- If the regulation is upward, generally the TSO must pay the entity that generates power, while- If the regulation is downward, generally the entity that consumes power must pay the TSO.

2.4 Process of Imbalance Settlement after the day of delivery

Before the actual delivery of electrical power, ”all market players commit themselves to ensure thescheduled supply and demand” [5]. ”Ensuring the scheduled supply” means that the producers mustgenerate and the buyers must purchase the scheduled supplied power. ”Ensuring the scheduled demand”means that the loads must consume and the sellers must sell the scheduled demanded power.

In case some market players fail to fulfill their commitment, imbalances between the scheduled sup-ply/demand and the actual supply/demand will appear. These market players will have to pay the costsfor the imbalances. The process to spread incomes and costs due to imbalances among market players isexplained below.

2.4.1 Definition of the Balance Responsible Player

Before trading on any electricity market (spot or balancing markets), every market player has to choosea Balance Responsible Player. The Balance Responsible Player (BRP) is financially responsiblefor maintaining the balance between production and consumption in the power system. In particular,the BRP is financially responsible for the imbalances between scheduled supply/demand and actualsupply/demand.

For instance, if one of the producers the BRP is responsible for fails to deliver the scheduled productionplan, the cost due to the ensuing imbalance will be handled by the BRP. The BRP will pay the cost tothe TSO.

The participants to the imbalance settlement (TSO, BRP, other participants) are represented by thefigure 2.2.

Large industries Other players

Distributors

TSO

Balance Responsible Player 1 Balance Responsible Player 2

10 MWh/h 10 MWh/h

Market players

15 MWh/h

20 MWh/h5 MWh/h

10 MWh/h

End Consumers

Figure 2.2: Participant to the Imbalance Settlement [5]

9

2.4.2 Imbalance Settlement between BRP and TSO

There is always imbalance settlement between the TSO and all the BRPs. Every hour or half-an-hour,the TSO registers the power flow at each point of the electrical network. For each hour of operation,the power measurements are compared to the power schedules in order to calculate imbalances for eachBRP. Depending on the country, different imbalances may be calculated.

Example:Imbalance1 = ScheduledProduction−ActualProduction

If ’Imbalance1’ is positive, the BRP is responsible for an excess of generated power, and if the ’Imbalance1’is negative, the BRP is responsible for a deficit of generated power. Depending on the regulation typeand the sign of the imbalance, the BRP pays or receives money from the TSO.

2.4.3 Imbalance Settlement between BRP and market players

In some case there may be an imbalance settlement between a BRP and market players he is responsiblefor. This really depends on the case and it is not always true.Using the same example, a positive ’Imbalance1’ means that the player has generated too much power orfailed to consume enough power and a negative ’Imbalance1’ means that the player has failed to generateenough power or consumed too much power. Depending on the regulation type and the sign of theimbalances, the BRP shares the incomes and costs between the market players under his responsibility.Besides cost for imbalance settlement may be part of electricity price (e.g. for residential consumers).

2.4.4 Calculation of the imbalances and their price

The value of the imbalances is a means to assess if the market players have managed to fulfil theircommitment and to quantify how far they have deviated from their schedule. Imbalance calculationdepends on the country and should be explained for each case.

Examples of imbalances:

Imbalance1 = ScheduledProduction−ActualProduction

Imbalance2 = ForecastedLoad−ActualConsumption

Imbalance3 = ScheduledNetGeneration−ActualNetGeneration(= Imbalance1− Imbalance2)

Imbalance4 = ScheduledTrading −ActualTrading

The price of the imbalances is based on the spot market price and the price for upward and downwardregulation. It also depends on the country. According to the ETSO report [1], ”there are two types ofimbalance price mechanisms:- Dual imbalance pricing: a different price is applied to positive imbalance volumes and negativevolumes.- Single imbalance pricing: a single imbalance price is used for all imbalance pricing.”

Remark: The scheduled plans of an entity should correspond to the final plans (sent to the TSObefore the hour of operation), plus the participation to regulation services in real-time. Indeed, if an entityis chosen to deliver regulation power, its schedule must be changed at the last moment, therefore theentity responsible respects his commitment toward the TSO. The actual power delivery (or consumption)is measured after the actual operation, each hour or each half an hour, depending on the country.


2.5 Summary of the principles of Markets of Electricity

1. Planning of generation and forecast of consumption, before the actual day of delivery:

- Direct bilateral contract between market players.

- Bidding on the day-ahead Spot Market (Public pricing).

2. Adjustment of generation and load to ensure the balance between production and consumption inreal time:

- Re-declaration of production plans (based on short-term forecasting).

- Bidding on the short term Balancing Market (with bid selection and activation in real time).

3. Imbalance settlement, after the day of delivery to spread the expenditures and incomes betweenthe market participants.

The general processes of the markets of electricity and their timescales are illustrated by the figure 2.3.

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Chapter 3

Regulation Services

3.1 Definition of the regulation services

The balance regulation is the regulation of the total power injected in the electrical network. Indeed,to work properly, the national power system must ensure the balance between production and consumptionof electricity. This means that, at every moment, the amount of electrical energy injected at each node ofthe electrical network must equal the amount of consumed and transmitted electrical energy (see fig 3.1).

Pinjected Ptransmitted

G

L

Pconsumed

Node i

Figure 3.1: Power Balance at one node - Kirchoff first law

From a global viewpoint, the total power system is stable if the overall production P equals the overallconsumption C of the system:

P − C = 0

In a synchronous power system, the variation of the active power ∆P changes the value of the systemfrequency (i.e. the signal frequency that is set by the rotor speed of the synchronous machines generatingelectricity in the network). In Europe, the nominal value of the system frequency is:

f0 = 50Hz

Unexpected variations of power causing network instability must be corrected in real time by a succes-sion of balance controls: primary control, secondary control and then tertiary regulation. Here is anillustration of the regulation process:

• Step 1: The power system looses its stability because of an unexpected imbalance between produc-tion and consumption:

P − C 6= 0

14 Regulation Services

Immediately after the detection of the instability, an automatic correction injects the neededamount of regulation power in order to adjust the balance between generation and load:

P − C + ∆Pregulation = 0

This is the primary control, which corrects the power instability within seconds. Generally theprimary reserve should be entirely delivered in 30 seconds. Since the amount of injected powerchanges, the system frequency shall deviate from its nominal value:

f = f0 + ∆f = 50Hz + ∆f

Depending on the countries, the maximal frequency drop ∆f (if the whole primary reserve is used)is comprised between -0.1Hz and -0.8Hz.

• Step 2: After 30 seconds following the disturbance, the secondary control can take place. This isanother automatic response to the frequency deviation instructed by control loop systems. Thepurpose of the secondary control is to restore the primary reserve used for the primary control andto restore the system frequency to its nominal value 50 Hz. Generally the secondary reserve shouldbe entirely delivered within about 15 minutes.

• Step 3: If the automatic correction is not sufficient, the tertiary regulation is used (after the sec-ondary control). The tertiary regulation is a regulation manually instructed by the TSO (TransportSystem Operator). The characteristic timescale is longer (from 5-15 minute to more than 1 hour),which corresponds to slower ”dispatch units and loads” (e.g. thermal plant, pumping load). Thetertiary control also restores the secondary reserve and the system frequency to its nominal value,50Hz.

The balance regulation needed to recover the P-C balance is performed by different control mecha-nisms characterised by their roles and especially their times of response. Two groups will be noted inthis report:

• The ’Automatic Frequency Control’ or ’Automatic Control’ including the automatic ’Pri-mary Control’, and the ’Secondary Control’- when it exists.

• The ’Manual Regulation’ or ’Tertiary Regulation’ including all the different kinds of regula-tion manually instructed by the system operator and following the automatic control.

The authors of the ETSO report, ”Balance Management in Europe” [1], distinguishes three groupsof countries concerning the balance regulation.

- E & W: England and Wales- Nordel: common power system of the Nordic countries (Norway, Sweden, Finland, Denmark).- UCTE: Union for the Coordination of Transmission of Electricity.

3.2 Automatic Frequency Control

3.2.1 Primary Control

• Definition: The Primary Control is the first automatic response to frequency deviation and powerinstability.

• Purpose: The purpose is to recover the active power balance (P=C) and to stabilise immediatelythe frequency, maybe at another value than 50 Hz.

• Timescale: The delivery of primary control energy should begin right after the disturbance andends within 30 seconds.

• Usage: The Primary Control is used in every country but with some differences displayed in thetable 3.1.

15

UCTE Nordel England and WalesLocal names for Primary Primary Regulation Primary FrequencyPrimary Control Control comprising ”Frequency Response, Secondary

Regulation Reserve” Frequency Response& ”Momentary & High FrequencyDisturbance Reserve” Response

Frequency drop ∆f = −0.2Hz ∆f = −0.1Hz ∆f = −0.8Hz∆f that triggers (for Frequencyactivation Regulation Res.)of the entire ∆f = −0.1Hz · · · − 0.5HzPrimary Reserve (for Momentary

Disturbance Res.)Total quantity 3000MW 600MW Amount of Prim.of Primary Reserve (= ”worst case” ( total quantity & Second. Reserves

if 2 large sets of Frequency is not fixed,of 1500MW Regulation Res.) but optimisedsuddenly + 100MW every 1/2hdisconnect) (total quantity according to

of Momentary the demandDisturbance Res.)

Table 3.1: Major differences in the Primary Control between UCTE, Nordel and GB [1]

3.2.2 Secondary Control

• Definition: The Secondary Control is the second automatic response (after the primary control)instructed by control loop systems. Such systems are Automatic Generation Control (AGC) sys-tems that equip specific generating units in power plants (e.g. hydro power plants) and they donot exist in every country.

• Purpose: The purpose is to restore the primary reserve used for the primary control and to restorethe system frequency to its nominal value 50 Hz.

• Timescale: The delivery of secondary control energy should begin after 30 seconds after the dis-turbance and ends within 15 minutes.

• Usage: In Europe, such Secondary Control exists only in countries within UCTE (see table 3.2).

Remark: What replaces the secondary control in Scandinavia and Great Britain?- E & W [1] have the ”Secondary Frequency Response” and ”High Frequency Response”, which are

automatic and are part of the Primary Control. Thus ”secondary frequency response” will be referredto as Primary Control.

- Nordel [1] have the ”Secondary Regulation”, which is a manually instructed activation of reserve(made of un-synchronised and synchronised energy capacity). Since the Nordic Secondary Regulationis ”manual” it will be referred to as Tertiary Regulation. Like the (automatic) Secondary Control, the(manual) Secondary Regulation is used to restore the primary reserve and the system frequency to itsnominal value. Besides, it should also compensate for demand forecast errors and short-term plant loss.

UCTE Nordel England and WalesLocal names for Secondary Control linked to Does not exist Does not existSecondary Control (AGC) control loop systems

Table 3.2: Secondary Control exists only in UCTE [1]


3.3 Manual Regulation

3.3.1 Tertiary Regulation

• Definition: The tertiary regulation is a correction manually instructed by the TSO (TransmissionSystem Operator), following the Automatic Frequency Control. A significant feature is that theenergy delivery is always based on market mechanisms. Indeed there exists a significant differencebetween Manual Regulation and Automatic Frequency Control: for the Manual Regulation, actualdelivery of regulation power requires selection and call of balancing bids in real time (by the TSO)on the Balancing Market, while for the Automatic Control, the actual delivery of regulation poweris automatic. The TSO always uses balancing bids (on the Balancing Market) to select, in ”realtime”, the necessary amount of energy that must be delivered for tertiary regulation.

• Purpose: In general, the purpose is to cater for plant loss and significant load forecast errors. Italso restores the secondary reserve (in UCTE only) and the primary reserve (in other countries)and can restore the frequency to 50Hz.

• Timescale: In some countries, e.g. France, there is just one term of ”tertiary regulation”.Otherwise, a distinction is made between fast tertiary regulation (required for ”short-termimbalances”[3]) and slow tertiary regulation (required for ”long-term imbalances”[3]). Varioustimescales in different countries are displayed in table 3.3.

• Usage: The manual regulation exists in every country but under different forms. Each kind oftertiary regulation has its specific characteristics and, sometimes, different functions. Though, thebasic function of the tertiary regulation is to deliver Regulation Power when needed; this means thata frequency drop triggers an upward tertiary regulation (i.e. an increase of generated power ora decrease of consumed power in the network), while a frequency increase triggers a downwardtertiary regulation (i.e. a decrease of generated power or an increase of consumed power in thenetwork). The figure 3.2 illustrates the notion of reserve for upward and downward regulations; e.g.a generating unit has a generation schedule. In addition this unit has the possibility to increaseits generation until a certain available amount: this is the reserve for upward regulation. In thesame way, it has the possibility to decrease its generation down to a certain limit. This is thereserve for downward regulation.

Figure 3.2: Reserve for upward and downward regulation (generation unit)

17

Some other functions of tertiary regulation are explained in the following paragraphs.

3.3.2 Fast Tertiary Regulation

The Fast Tertiary Regulation is manually activated right after the Automatic Control services (ifnecessary). It is characterised by a small response time: generally less than 15 min for full delivery [1].Fast reserves are supplied by generation units that can start up quickly (e.g. hydro power plants) andgenerators that are already synchronised with the network.

Remark: Only few countries (UK, Italy) have a very ”fast acting reserve” for tertiary regulation,within 5 min. For example, the Italian TSO compensates plant losses with (very fast) hydro reserves,and in Great Britain very ”fast acting reserves” may be used for special consumption perturbations dueto so-called ”TV pickups”1. [1]

- Minute reserve : this is a special fast tertiary reserve used in Germany and Hungary. This reserveis delivered on the base of 15 min blocks and not according to a classic profile (with 1 minute resolution)[1]. The delivery of Minute Reserve starts at the beginning of the next 15 min block after instructionand lasts during the whole 15 min (see fig. 4.7).

It is also characterised by two prices: one price for the availability of the capacity offered (also called”availability fee”) and one price for the amount of energy actually delivered (also called ”energy fee”).

According to the Code of Commerce of the Hungarian Power System (2006)[15], ”the necessary ’oneminute’ reserve equals to the highest value of:

1. power of the largest unit in operation

2. highest power in operation connected on the same section of bar-buses

3. 5% out of the total power generated in the system”.

3.3.3 Slow Tertiary Regulation

The Slow Tertiary Regulation is the last activated resource (still manually). It has a long responsetime around one hour or more [2]. One of its roles is the restoration of the fast tertiary reserve. Unitsfor slow tertiary regulation need more time to react than for the fast tertiary regulation (e.g. thermalplants or generators that are not yet synchronised with the network [2]).

Some countries have a very large park of hydro-power plants (e.g. Norway), hence they generallyonly use fast tertiary regulation.

- Hourly reserve : This is a slow tertiary reserve in Hungary, which aims to restore the MinuteReserve, restore the P-C balance and cater for large perturbations. The processes to deliver HourlyReserve and Minute Reserve are similar: same bid form, two prices, payment of reserve availability -with ”availability fee” - and then utilisation - with ”energy fee”. In Hungary, the minimum amount ofoffered Hourly Reserve is 10 MW per bid.

- Supplemental Fast Reserve : Type of tertiary reserve in France (time for full delivery is about30 min); ”manually instructed energy capacity for replacement of fast reserve” (according to the ETSOreport [1]).

- Decremental Reserve : Type of tertiary reserve in France (time for full delivery is about 30 min);”manually instructed downwards energy capacity for frequency control during load valleys” (accordingto the ETSO report [1]).

1According to the ETSO report, ” ’TV pickups’ produce generally predictable large rates of change of demand coincidingwith television adverts during and after popular shows in the UK” [1]


- Reserve at Peak : Type of tertiary reserve in France (time for full delivery is about 30 min);”manually instructed energy capacity for replacement of fast reserve and supplemental fast reserve”(according to the ETSO report [1]).

- Delayed Reserve : Type of tertiary reserve in France (time for full delivery is about 8 hours);”cold start energy capacity for replacement of Reserve at Peak” (according to the ETSO report [1]).

- Standing reserve : Type of tertiary reserve in England & Wales (delivery time is about 20 min);”manually instructed non-synchronised energy capacity that can be synchronised quickly, or demandthat can be reduced to compensate for demand forecast errors and short term plant loss” (according tothe ETSO report [1]).This can be compared to a specific tertiary bid in Romania called ”Standing Offer”; a ”StandingOffer” is a pair of bids containing a ”Start-up Offer” and a ”Stand-by Offer”, characterised by a”Start-up price” and a Stand-by price”.

Start-up price means ”price at which a participant is willing to start his production unit that is notsynchronised with the national power system, or for a consumer the price at which he is ready to startthe reduction of the consumption of his ’dispatch load’”, according to the Technical Code of Romaniannational grid [12].

Stand-by price means ”price per hour that a participant is willing to let his production unit bein a state that allows it to be synchronised with the national power system on instruction of the TSO”(”stand-by price of loads is equal to zero”), according to the Technical Code of Romanian national grid[12].

The TSO indicates the dispatch intervals during which he wants slow tertiary regulation, i.e. heindicates the starting time for the start-up and the period for the stand-by.

- Contingency reserve : Type of slow tertiary reserve in England & Wales used for ”warming, hotstandby and fast start”; delivery time is about 1 hour for ”warming and hot standby reserves” and 5minutes for ”fast start reserve” (according to the ETSO report [1]).

- ”Low Frequency (LF) demand tripping”: ”All countries have Low Frequency (LF) demandtripping (at approximately 49Hz) to protect their network. However some countries have developed thisconcept into a commercial service. In Finland, 600MW of demand reduction is provided by industrialusers, such as steelworks, which is triggered by a LF relay. In E & W this type of service also existsalong with some dispatch demand reduction, and a recent scheme to stagger the switch on and switchoff of some domestic heating load which is controlled by radio teleswitch signals. In Norway, demandreductions in large industries and other end users is provided through a market of options. Bidderswith such options are obliged to deliver bids in the Balancing Market.” (quoted from the ETSO report [1])

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Minimum time for full delivery of tertiary reserve after manualinstruction from the TSO

< 5min < 15min < 30min < 1hour > 1hour

Nordel tertiary fast tertiary slowreserve called reserve called”Secondary ”SecondaryRegulation” Regulation”

E & W very fast regulating standing Contingencyreserve reserve reserve reserve -

warming&hot standby

Germany Minute Hourlyreserve reserve

Hungary secondary Minute Hourlyreserve reserve reserve(for automaticcontrol)

Romania secondary Fast tertiary Slow tertiaryreserve reserve reserve(for automaticcontrol)

France tertiary fast supplemental replacementreserve fast tertiary reserve,

reserve, reserve”decremental at peakreserve”

Table 3.3: Examples of tertiary regulation reserves in different countries, ordered by timescale (quotedfrom the ETSO report [1]


Chapter 4

Balancing Marketand Reserve Market

4.1 How to obtain Automatic Control Services?

4.1.1 Delivery of energy for Primary and Secondary Control: no auctionmechanism (in real-time)

The actual delivery of energy for primary and secondary control is automatic. Therefore there is noauction mechanism in real time.

4.1.2 Participation to primary and secondary reserve with no auction mech-anism

The present paragraph refers to fashions to participate to primary and/or secondary controls that do notimply auction mechanisms. This means that pre-defined generators commit themselves to make availabletheir reserves for primary and/or secondary control, during a given time period of a given day, withoutany bidding.

They are relevant for automatic control because of commercial agreements or compulsory par-ticipation. Then, depending on the countries, they may be paid or not for the automatic controlservices.

Primary reserve:

The participation to primary reserve may be mandatory. Participants to Primary Control may not bepaid (e.g. in Norway, Netherland, Spain, Austria, Switzerland [1]), otherwise there is a remuneration forreserve supply (e.g. in France and Great Britain [1]).

In some countries (e.g. Sweden, Denmark [1]), the constitution of reserve for primary control is basedon commercial agreements and participation to primary reserve is voluntary.

Secondary reserve:

According to the ETSO report [1], in many European countries participation to secondary reserve isnot mandatory and based on commercial basis; a counter-exemple is France, where Secondary Control

22 Balancing Market and Reserve Market

is mandatory for large generators (though remunerated).

Examples:France : participation to primary and secondary control is mandatory and automatic, especially forlarge generators. Though this participation is remunerated ”on a cost reflective basis” [1].Romania : entities are obliged to participate to the bid submission and to offer the maximum quantityof primary, secondary and tertiary reserve. However only the constitution of primary reserve does notimply auction mechanisms.

4.1.3 ”Reserve Markets” for primary and secondary control

The participation to primary and secondary control may be based on bidding (e.g. Germany, Romania,Hungary, Spain). This means that availability of reserve (for primary and/or secondary control) is soldby auction to the TSO. The market period can be daily, monthly, 6-monthly or yearly (see examplesbelow).

For a better understanding the bidding of primary and secondary reserves will be called ’PrimaryReserve Market’ and ’Secondary Reserve Market’. Since the Balancing Market period is daily,if the reserve market period is bi-annual, the two markets will be distinct. However, for a daily reservemarket, there may be no distinction between ’Reserve Market’ and ’Balancing Market’: for example, inRomania the same balancing bids are used for the delivery of energy (for tertiary regulation) and for theavailability of secondary reserve and tertiary reserve.

Payment for availability of reserve:

Since Primary control and Secondary Control are automatic, primary and secondary reserves are generallysold for their availability and not their utilisation. Therefore selected bidders are paid for ensuringavailability of reserve at the required moment, even if no regulation energy is actually drawn fromthe reserve (like in Romania). Besides, bids for reserve are sorted and selected according to their”availability price”; this is the price of the availability of the reserve based on ”capacity provided orcontracted” [3].

This payment of availability for primary and/or secondary reserve is referred to as ”Payment forholding the service when requested” in the ETSO report [1].

Payment for utilisation of reserve:

In some countries the quantity of primary and secondary reserve actually drawn may also involve aremuneration. This is the payment of reserve utilisation related to the ”utilisation price”, which isbased on the measurement (or approximation) of the power [MW] or the energy [MWh] quantity actuallydelivered [3]. For example, in Hungary and Germany the utilisation of secondary reserve is remunerated(based on power measurement), while in the Nordic countries the utilisation of primary reserve (locallycalled ”frequency regulation reserve”) is remunerated (based on energy measurement).

There are two cases:- the bid selection for the constitution of secondary reserve may be only based upon the ”availabilityprice” of the reserve, in spite of the double remuneration of reserve availability and utilisation.- or the bid selection for the constitution of secondary reserve is based upon an optimisation between”availability price” and ”utilisation price” of the reserve.

In conclusion, bids for reserve of primary and/or secondary reserve may include a single price(”availability price”) or two prices (”availability price” and ”utilisation price”).

Examples:Romania : Primary reserve is constituted as a mandatory service, without any bidding. Secondaryreserve is also mandatory but involves bidding; indeed market participants are obliged to submit bidsfor secondary reserve on the daily balancing market. Bids for secondary reserve have one price.

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Hungary : Primary reserve market is based on a 6-month market period; bids for primary reserve haveone price (an availability price). Secondary reserve market has 2 horizons: a bi-annual market (6-monthmarket period) and a daily market. Bids for secondary reserve have two prices (an availability price+ an utilisation price). So far, the Hungarian system uses only availability price for the selection of”secondary” bids. Then participants are paid for their reserve availability (even if it is not used) and forthe quantity of ”secondary power” actually used.Germany : Primary reserve market is based on a 6-month market period; bids for primary reserve haveone price (an availability price). Secondary reserve market is based on a 6-month market period. Bids forsecondary reserve have two prices: an availability price + an utilisation price. According to the ETSO’ssource and EON’s source [1, 20], it is not clear whether the selection of ”secondary” bids is based uponavailability price only or upon availability and utilisation prices. Then participants are paid for theirreserve availability (even if it is not used) and for the quantity of ”secondary power” actually used.Spain : There is a reserve market for Secondary Control on the day-ahead (daily market); then thereis ”payment for reserve availability and for secondary energy” utilisation [1], thus bids may have twoprices: an availability price + an utilisation price (payment at the marginal price).Belgium : Secondary reserve is 6 monthly and yearly tendered. Payment for the ”reservation of energyreserve and activation fee on a monthly basis” [1].

4.2 How to obtain Manual Regulation Services?

4.2.1 Delivery of energy for tertiary regulation: auction mechanism

The delivery of tertiary energy is instructed manually by the TSO and always requires auction on theBalancing Market. The market period is daily, and the participants with ”dispatchable” units (and/orloads) submit up- and downward regulation bids to the TSO on the day-ahead. These balancing bidsare sorted according to a merit order.

Payment for utilisation of reserve:

During intra-day (in fact during the hour of operation), the TSO selects and calls balancing bids in realtime, when tertiary regulation power is needed. The participants are remunerated for the quantity ofenergy actually delivered (with a measurement or an approximation of the quantity), which correspondsto the ”utilisation price”. The utilisation price is calculated as the product of the energy quantityand the ”energy fee”.

Therefore, it can also be said that the payment is based on the ”energy fee” and the bid merit orderis set according to the same ”energy fee”.

N.B.: ”utilisation price” can be replaced by ”energy price”.

4.2.2 Participation to tertiary reserve with no auction mechanism

If an entity contributes to the tertiary reserve, this means that a related bidder has taken part to thebidding for tertiary regulation on the Balancing Market. In some countries there is no Tertiary ReserveMarket, in other words there is no pre-selection of balancing bids before the time of delivery; so whenthe TSO selects the bids (in real time) for the actual delivery, he has the choice between all the possiblebalancing bids and he pays only for the quantity of energy delivered.

Besides, to ensure that there are enough adjustment bids on the balancing market, the TSO caneither make bilateral contracts with bidders or force them to submit their bids.

Examples:Romania : in Romania participants to the Balancing Market for tertiary regulation are obliged to sub-mit the maximum of their available power, and they are not paid for this availability.


France : there is no reserve market in France for any kinds of tertiary reserve (”fast reserve”, ”supple-mental fast reserve”, ”decremental reserve”, ”reserve at peak” or ”delayed reserve”), and only balancingbids (submitted on the daily Balancing Market) are used. For the ”fast reserve” and ”supplementalfast reserve”, there are 2 ways to ensure participation to Balancing Market: trough annually negotiatedcommitment to submit balancing bids, or by direct daily submission.

4.2.3 ”Reserve Market” for tertiary regulation

If there is a Tertiary Reserve Market, this means that the TSO pre-selects the balancing bids (andbidders) before the time of delivery. Then during intra-day, only the chosen bidders will have to ”keepsubmitted” their balancing bids. In a way, the TSO constitutes first the tertiary reserve and then heselects the ’best energy’ for real-time regulation.

Payment for availability of reserve:

In that case, bids should have two prices: an availability price for the payment of availability of tertiaryreserve and an energy price for the payment of energy actually delivered. This payment of availabilityfor tertiary reserve is referred to as ”Payment for availability of service” in the ETSO report [1].

Usually a TSO pre-selects tertiary reserve according to availability price only and remuneratesthe pre-selected bidders at that price. However in some countries (e.g. Germany), a TSO can pre-selectstertiary reserve according to both availability and energy prices.

Then the TSO selects the quantity of regulation energy according to the energy price and pays theselected quantity of energy at the energy price.

Examples:Romania : Market participants are obliged to submit balancing bids for each of their dispatch entityand for every hour of the following day. In a way, the Romanian TSO ensures a tertiary reserve but doesnot pay for the reserve availability. Then the balancing bids are used for tertiary regulation in real-time,as ususal (i.e. tertiary energy is selected and remunerated at the energy price).Hungary : Tertiary reserve (for fast & slow regulation) is constituted by auction on the daily BalancingMarket thanks to balancing bids. Balancing bids have two prices: an availability price + an energyprice. On the day-ahead, tertiary reserve (fast & slow) is pre-selected according to the availability priceand remunerated at that price. During intra-day, tertiary energy (fast & slow) is selected for delivery,according to the energy price and remunerated at that price.Germany : Tertiary reserve (for fast & slow regulation) is constituted by auction on the daily BalancingMarket thanks to balancing bids. Balancing bids have two prices: an availability price + an energyprice. According to the EON’s source [20], 3 of the 4 German TSOs pre-select the necessary tertiaryreserve according to the availability price only, whereas the 4th German TSO pre-selects the necessarytertiary reserve according to a combination between availability price and energy price. Then, in anycase, pre-selected tertiary reserve is remunerated at the availability price, and during intra-day, tertiaryenergy is selected for delivery, according to the energy price and remunerated at that price.England & Wales: ”(Very) Fast Tertiary reserve” is monthly tendered. ”Standing reserve” is annuallytendered. There is first payment of reserve availability (through reserve markets), and then payment ofreserve utilisation (through Balancing Market).

4.2.4 Participation to the Balancing Market

As said previously, the TSO can ensure that there are enough adjustment-bids on the balancing market.To do so, the TSO can force bidders to take part to the Balancing Market or make contracts for theparticipation to bidding, such as:- bilateral contracts between TSO and participants, or- contracts auctioned by the participants and selected by the TSO, with monthly or annual tendering.

25

4.2.5 ”Adjustment in advance” using balancing bids

In some countries (e.g. France, Hungary), the balancing market can be used to perform ”adjustment inadvance” of the generation schedules: the TSO can select balancing bids before the hour of operation,based on short-term load forecasts. Then the selected bidders must change their production/consumptionplans. The rest of the unused balancing bids are kept for the tertiary regulation in real time. This isnot a normal balancing service, but a somewhat ”up dating” of the production schedule, usingbalancing bids.

4.2.6 Constitution of Emergency Reserves

Emergency Reserves, utilised only in case of emergency, must be always available to the TSO. Theconstitution of Emergency Reserves is similar to primary or secondary reserve. It may either be basedon bilateral contracts, or provided on commercial basis, with daily, monthly or annual tendering.

In Hungary emergency reserve can be procured by reserving some Minute Reserve bids and put themapart from the tertiary regulation.

4.3 Mechanisms of the Balancing Market

First of all, the balancing market is characterised by the TSO’s role. Generally, the TSO is re-sponsible for tertiary regulation (dispatching) and congestion management (re-dispatching); thedelivery of tertiary energy (for dispatching or re-dispatching) always involves the Balancing Market andbid selection in real time. The process of bidding on the Balancing Market is dictated by the use fortertiary regulation and it has similar phases in every country. However, process details vary (differentgates, different timescales, etc).

Besides, the tertiary regulation takes various forms from a country to another, which makes thebidding and the form of the balancing bids change too. In addition to the Balancing Market, the TSOmay also manage markets of reserve, or more generally markets of ancillary services.

4.3.1 Similar phases in Balancing Market

The main phases of the bidding for the tertiary regulation are almost the same in every country. Themarket period is daily because the participants start to submit balancing bids on the day-ahead of the delivery day. Then, during the current period of operation, when balancing power (for up-/downward tertiary regulation) is needed, the TSO selects balancing bids in real time. Consequentlythe chosen market players dispatch their units (and/or loads) to provide the required balancing power.

The main steps of the bidding process are explained below:

1. Submission (by market players)*. Verification*. Validation*. Modification—– Perturbation signal ⇒ need of regulation power ————

2. Selection (by the TSO)*. Exclusion

3. Call

4. Execution

- Activation/deactivation ⇒ manual delivery of regulation power

- Cancellation ⇒ no delivery


Phase 1: Submission

The submission of balancing bids starts on the day-ahead, after the Spot Market closure. For betterprecision, the phases of Verification and Validation are indicated: the TSO checks and validates thebids he receives. Then there is the phase of possible Modification: generally market participants canchange their bids (or re-submit new bids) until the submission gate closure; the last version of a bid willbe the one registered. Sometimes, bid modification (by participants or the TSO) may occur after thesubmission gate closure; this really depends on the way the auctions are organised.

For example, in France the bids can be (re-)submitted all day long until a certain time prior to thecorresponding hour of operation. In fact new bids are taken into account by the system at a ”rollingGate Closure” every 2 hours. In Contrast, in Romania the ”Gate Closure” for generation schedules andthe official gate closure for bid submission is on the day-ahead; but participants have the right to ”revise”their bids (creating ”Revised Offers”) until the intra-day [11].

Phase 2: Selection

During the corresponding hour of operation, if a perturbation occurs in the power system and theproduction-consumption balance is lost, the TSO must correct it with regulation power. For the tertiaryregulation, the TSO needs to use the balancing bids (or regulation bids) submitted on the correspondingBalancing Market.

The balancing bids must be sorted according to a merit order. Upward-regulation bids and downward-regulation bids are sorted separately by price and offered quantity. Upward-regulation bids are sortedby increasing price and downward-regulation bids are sorted by decreasing price (see fig 4.1 and fig 4.2).

Bid 1Bid 2

Bid 4 Bid 3

Bid 3

Price

Quantity ∆Pup-regulation

Bid 1 Bid 2

Bid 4 Bidder 1

Bidder 3

Bidder 2 Price

Quantity ∆Pdown-regulation

Bidder 4

Bidder 4

Bidder 4

Bidder 4

Bidder 4

Figure 4.1: Merit order of upward-regulation bids (for a given hour of operation)

Bid 1Bid 2

Bid 4 Bid 3

Bid 3

Price

Quantity ∆Pup-regulation

Bid 1 Bid 2

Bid 4 Bidder 1

Bidder 3

Bidder 2 Price

Quantity ∆Pdown-regulation

Bidder 4

Bidder 4

Bidder 4

Bidder 4

Bidder 4

Figure 4.2: Merit order of downward-regulation bids (for a given hour of operation)

Then, the TSO selects all bids of which aggregated quantity of power is equal to the required regula-tion power (see fig 4.3 and fig 4.4). In case of upward-regulation, the selected bids are the first cheapestbids, and in case of downward-regulation, the selected bids are the first bids with the highest offered price.

Depending on each country, offered quantity is totally or partially accepted by the TSO (see fig. 4.4and 4.3).

For example in Romania, the amount of energy provided by ”dispatch units” and accumulation-pumping plant can be accepted partially, while the quantity of energy offered to be consumed by”dispatch loads” (except accumulation-pumping plants) must be accepted totally by the TSO [11].

27

Price

∆PDOWN-regulation

Down-regulation power quantity

Down-regulation marginal price

Price

∆PUP-regulation

Up-regulation power quantity

Up-regulation marginal price

Figure 4.3: Selection of upward-regulation bids (partial acceptance)

Price

∆PDOWN-regulation

Down-regulation power quantity

Down-regulation marginal price

Price

∆PUP-regulation

Up-regulation power quantity

Up-regulation marginal price

Figure 4.4: Selection of downward-regulation bids (total acceptance)

Therefore the TSO has to check whether partial selection of power quantity is allowed or not.

For better precision, the phase of bid exclusion can also be noted: the TSO may need to excludesome balancing bids from the merit order because- such bids may not satisfy required conditions, e.g. they increase risks of network congestion,- or they may be used for other purposes than tertiary regulation, e.g. they may be required for congestionmanagement or emergency management- or there may be a separation between bids for fast and slow tertiary regulation, e.g. in Hungary, bidsfor Minute reserve may be excluded by the TSO in order to be used as bids for Hourly reserve.

Phase 3: Call

Once the TSO has selected the relevant bids, he calls the participants that made the bids.

Phase 4: Execution

Once a bid is called, the regulation power is activated by the entity. The ”dispatch” units/loadsmust generate/consume the required amount of regulation power a certain time after TSO’s instruc-tion (the time interval between instruction and power delivery depends on the type of tertiary regulation).

4.3.2 Differences in the Balancing Market process

In spite of similar phases for any Balancing Market, there are many differences regarding details of theprocess; simply because countries organise their markets of electricity differently.


Different ”Gate Closures”

Each country creates rules to set the market organisation. Generally, gates serve as landmarks to definethe different steps of the process; there are as many different types of gates as there are different systems(e.g. one or several gates for generation scheduling, bid submission, modification, TSO’s orders, etc).

The concept of ”Gate Closure” is given in the ETSO reports [1, 3]: As explained in paragraph 2.3.3,the ”Gate Closure” indicates the moment when participants cannot change their generation scheduleanymore and the TSO takes over the balancing management.

Participants need to know their final generation schedules in order to send updated balancing bidsto the TSO. Therefore , generally, the moment of the ”Gate Closure” coincides with (or at least is closeto) the end of the period for bid submission (and maybe bid modification) on the Balancing Market.After the ”Gate Closure”, the participants are not allowed to change their production schedule for thecorresponding period of operation. (see fig 4.5)

Gate Closure Corresponding

period of operation

Real time adjustment

(Regulation Services)

Balancing bids

Planning modification Time

interval

Figure 4.5: Illustration of the ”Gate Closure”

The definition of the ”Gate Closure” varies from a country to another, and the definition of the periodof operation changes as well. There may be one or several ”Gate Closures” (with the correspondingperiod of operation) per day.

According to the ETSO report [1], The ”Gate Closure” may occur:

• on the day-ahead: e.g. in Hungary and RomaniaExample: in Romania the bidding process closes officially on the day-ahead at 19:00, however itmay be possible to ”revise” some offers during intra-day)

• at a rolling time (following the different periods of operation) during intra-day:- every 15 minutes: e.g. in Netherlands- every 30 minutes: e.g. in England and Wales- every hour: e.g in Sweden (hence the period of operation is called ”hour of operation” [9])

• at ”fixed windows” during intra-day: e.g. in Germany, Spain and FranceExample: in France, there are 12 gates for re-declaration of generation schedules, hence 12 ”GatesClosures” (1 gate on the day-ahead at 22:00 and 11 gates in intra-day at 00:00, 02:00, 04:00, 06:00,08:00, 10:00, 12:00, 14:00, 16:00, 18:00, and 20:00).

These ”Gate Closures” coincide with the 13 gates that punctuate the process of bid submission.The first gate is on the day-ahead at 16:00; every balancing bids submitted before 16:00 (d.a.) aretaken into account by the system at this first gate. Then the other gates are the same 12 gates (1gate on the day-ahead at 22:00 and 11 gates in intra-day at 00:00, 02:00, 04:00, 06:00, 08:00, 10:00,12:00, 14:00, 16:00, 18:00, and 20:00); every balancing bid submitted after 16:00 (d.a.) are takeninto account at the first gate following the submission.

Besides the period of operation starts after a certain time interval after the corresponding GateClosure (see fig 4.5).

29

According to the ETSO report [1], the time interval between ”Gate Closure” and the beginning ofthe next period of operation may be:

• 1 min: e.g. in Sweden (for a given ”hour of operation”, [08:00-09:00], Swedish participants mustsettle and send their final generation schedules (corresponding to [08:00-09:00]) to the TSO at07:59)

• 1 hour: e.g. in Netherlands, England, Wales and Norway (for a given ”hour of operation”, [08:00-09:00], Norwegian participants must settle and send their final generation schedules (correspondingto [08:00-09:00]) to the TSO at 07:00)

• 2 hours: e.g. in France (for a given ”fixed window” gate, all the balancing bids taken intoaccount (at this gate) and which offer regulation power for the next period of operation (2 hoursafter) cannot be changed until the period of operation and will be directly used for the real-timeregulation)

• 1 day: if the Gate Closure occurs on the day-ahead, like in Romania or Hungary

Different ”time interval” between instruction and power delivery

The time interval between instruction and power delivery depends on the type of tertiary regulation: fewminutes for (very) fast reserve, about 15 min for Minute Reserve, 1/2 hour or 1 hour for slow reserve. Aswell, time for full delivery varies: 5 min for very fast reserve (in Italy & GB), 15 min for Minute Reserve(in Germany & Hungary) or 8 hours for ”delay reserve” (in France).

Two examples are given in the ETSO report [1]:

- Example 1: England and WalesThe TSO can issue an instruction at any time (when necessary) during the current period of operation,respecting a resolution of 1 min; the power will start to be delivered 2 minutes after the instruction (seefig 4.6).

2min

Instruction Delivery

Period of operation

Gate Closure

Figure 4.6: Time interval between instruction and power delivery: ”1 minute resolution” case (in E &W)

- Example 2: Germany and HungaryThe local fast tertiary reserve is called ”minute reserve”; the ”minute reserve” is delivered in blocks of15 minutes. Hence, if the TSO wants to order delivery of ”minute reserve”, he must order the regulationduring the first half of the current 15 min block; the power delivery will start in the next 15 min block(see fig 4.7).”


15min 15min

Instruction Delivery

Figure 4.7: Time interval between instruction and power delivery: ”minute reserve” case (in Germanyand Hungary)

4.3.3 Congestion Management

When the capacity of a line is smaller than the volume of energy that needs to be transmitted, acongestion appears in the power system. Two main methods can be used to manage congestions in thenetwork:

• the market splitting method, and

• the counter trade method.

- Market splitting

The Market Splitting method is settled during the day-ahead Spot Market and is used to resolve forecastcongestions. [9]

1. First, the TSO divides the power system into Spot Areas.- a Spot Area is a distinct geographical area delimited by interconnections that have limited capacity.Such interconnections are well known for becoming ”bottlenecks” easily (e.g. interconnections atnational borders) or they are forecast one day (or more) in advance. A spot area delimited by nationalborders is a fix area and a spot area within a country can be dynamic. For example, Nordel is dividedinto 6 or 7 spot areas: one fix spot area in Sweden, Finland and Western Denmark, and 2 or 3 dynamicspot areas in Norway.- A spot area is also a ”price area” with a specific spot market and hence a specific spot price.

2. Secondly, the task of the TSO is to force the utilisation of the entire capacity of the interconnectionbetween the two spot areas:The two spot areas have different prices, thus there is a low-price area and a high-price area. TheTSO adjusts the price of the low-price area (i.e increases it), by forcing to include the interconnectioncapacity in the traded quantity. Then the TSO calculates the price of the high-price area (and decreasethe price) by including the capacity in the traded quantity. The method is illustrated by an example ofmarket-splitting (see fig. 4.8 and fig. 4.9).

Low-price Area

Buying volume = Selling volume <=> G1 + Pcapa = D1

Buying volume = Selling volume <=> G2 = Pcapa + D2

High-price Area

Pcapa G1

D1

G2

D2

Figure 4.8: Example of a transmission capacity taken in account in the buying and selling volumes

31

Figure 4.9: Adjustment of the spot prices by including the transmission capacity [9]

3. Finally, the Market Splitting is an iterative process. Indeed, if the TSO forecasts potentialcongestions, he must determine dynamic ”spot areas” corresponding to potential congested and non-congested zones. The clearing of the corresponding spot markets should solve the potential congestedzones. If some zones are still considered as potentially congested, the Market Splitting runs once again,until there is no potential congested zones left. [14]

- Counter-trade

The Counter-trade method is settled during the operational hour, or just before, using the BalancingMarket (and short term forecasts). It is used to solve congestions that can appear anywhere in thenetwork, at anytime. [9]

In the Counter-trade method, the power system is divided in fictive zones that will be called”congestion zones” in this report, in order not to confuse with ”Control Areas”.

The ”congestion zones” can be defined by the associated balancing entities (used for the resolutionof the congestion); a corridor with a maximal capacity may be associated (representing the congestedinterconnection).

In contrast, the ”Control Areas” can be seen as areas under the control of one local TSO with”specific ancillary services and balancing arrangements” (quoted from the ETSO report [3]). The notionof Control Areas is mainly used in Germany, where there are 4 local TSOs and hence 4 Control Areas.Balancing Market participants must specify the Control Area of their balancing bids.

The ”congestion zones” can be determined before the operational hour (thanks to short-termforecasts), so the Counter-trading can be performed before and during the hour of operation.

1. First, the TSO receives information of a congestion and determines:- the geographical localisation of the congested line- the moment when the congestion should appear- the forecasted duration of the congestion.

2. Secondly the TSO determines two zones, called ”congestion zones”, linked to each other by thecongested line. Those zones are characterised by the set of dispatch entities connected to.

3. Then, the TSO orders an increase of production (trough upward-regulation) in the ”congestionzone” with a lack of production and a decrease of production (through downward-regulation) in thearea with an excess of production. This is thus the counter trading.To do so, the TSO selects the balancing bids for tertiary that are linked to the entities of the concerned


congestion zones. Those bids are marked as ”congestion management bids” and are separated from theusual balancing bids. The ”congestion management bids” are sorted and chosen according the followingconditions:- the upward regulation bids are related to the dispatch entities of the ”congestion zone” with a deficitof generation;- the downward-regulation bids are related to dispatch entities of the ”congestion zone” with a surplusof generation;- the aggregated power volume of the selected bids for upward-regulation and for the downward-regulation have the same value and this value is equal to the difference between the needed powertransfer and the actual capacity limit of the transmission. 1

In some countries, like Romania, the ”congestion management bids” are bids for slow tertiary regu-lation in priority, and then, if it is not sufficient, bids for fast tertiary regulation. [11]

Besides, it may be important for the price settlement to distinguish bids used only for the congestionmanagement and regulation bids.

An example of counter-trading is given in the figure 4.10.

Zone 1

Zone 2 Pcapa

G1

D1

G2

D2

G1 = 0MWh/h D1 = 100MWh/h Deficit of generated power in Zone1: G1-D1+Pcapa = 0-100+20 = -80MWh/h

G2 = 200MWh/h D2 = 100MWh/h Excess of generated power in Zone2: G2-D2-Pcapa = 200-100-20 = 80MWh/h

Pcapa = 20MW < 100MW

Price

∆Pup 80MWh/h

Price zone1

The TSO orders upward-regulation in the zone 1 in order to increase the generated power up to 80MWh/h.

Price

∆Pdown 80MWh/h

Price zone2

The TSO orders downward-regulation in the zone 1 in order to decrease the generated power down to 80MWh/h.

Figure 4.10: Example of congestion management by counter-trading

4.3.4 Balancing Market across borders

The TSO is responsible for the network stability in its own specific area - generally the national territory.Neighbouring countries interfere in the balancing management of another TSO often in order to help for

1This condition is true when there is only a problem of congestion (like in the example); but if congestion managementis combined to balancing management (tertiary regulation), then this condition may not be fulfilled.

33

an emergent situation, for example by modifying exchanged schedules.In most European countries, the national TSO has only access to the Balancing Bids from entities

in its own area. However, in some countries the tertiary regulation may be ensured by entities locatedin different areas. In that case, there is a somewhat Crossborder Tertiary Regulation, with a real timeauction mechanism involving balancing entities from different areas. The ETSO reports (Nov. 2005,June 2006) [2, 3] describe two main models of ”crossborder tertiary reserve trading”:

• the ”RP-TSO trading”: direct trading of tertiary reserve from an external ”Reserve Provider”(RP) to a TSO (see fig. 4.11)

• the ”TSO-TSO trading”: trading of tertiary reserve between different TSOs (see fig. 4.12)

Control Area 2

TSO1

Reserve Provider

Imbalance Settlement

Arrangements 1

TSO2

Reserve Provider

Market Area Balance Area

Control Area 1


Arrangements 2

ETSO role model terminology

Control Area 2

TSO1

Reserve Provider


Arrangements 1

TSO2

Reserve Provider


Control Area 1


Arrangements 2


Control Area 2

TSO1

Reserve Provider


Arrangements 1

TSO2

Reserve Provider


Control Area 1


Arrangements 2


Figure 4.11: Illustration of the crossborder ”RP-TSO trading” (from ETSO report [2]


Control Area 2

TSO1

Reserve Provider


Arrangements 1

TSO2

Reserve Provider

Control Area 1


Arrangements 2



Control Area 2

TSO1

Reserve Provider


Arrangements 1

TSO2

Reserve Provider

Control Area 1


Arrangements 2


Figure 4.12: Illustration of the crossborder ”TSO-TSO trading” (from ETSO report [2])

These two models are illustrated by three cases of Crossborder Tertiary Regulation in Europe:- ”RP-TSO trading” between German control areas within the German block


- ”TSO-TSO trading” with a common list of balancing bids between Nordic countries (Norway,Sweden, Denmark and Finland) within the Nordic joint system NORDEL- ”TSO-TSO trading” at the French borders.

1. ”RP-TSO trading” between German control areas:

In Germany there are reserve markets for all primary, secondary and tertiary reserves. Balancing re-serves are purchased from ”Reserve Providers” through 6 month tendering (for primary and secondaryreserves) and daily tendering (for - tertiary - Minute Reserve).

The German grid is supervised by 4 local TSOs. Each TSO is responsible for the balance managementof its own Control Area(s) and each Control Area is associated to a specific Balancing Market. Anypower supplier is physically connected to a Control Area; of course local TSOs trade with their local powersuppliers, but TSOs can trade directly with an external ”Reserve Provider” from anotherControl Area too.

According to the ETSO report [2], a ”Reserve Provider” can provide balancing reserve to any ofthe 4 TSOs. His physical location on the German network does not impose which Control Area hehas to supply; however the power supplier needs to have technical pre-qualifications to enter one of theBalancing Markets (so apparently a dispatch entity could not enter a market if it increases problems ofnetwork congestions).

A participant (related to a ”Reserve Provider”) can submit ’reserve/balancing bids’ to any local TSO,in respect of technical requirements. The corresponding bids must indicate toward which Control Areathe regulation power (or reserve) goes (but, apparently, it is not necessary to indicate which physicaldispatch entity will provide the reserve) [20].

If needed, a local TSO can buy tertiary reserve from an external ”Reserve Provider”, but otherconcerned TSOs2 are also involved, because their exchange schedules will be adjusted.

Steps of the crossborder activation of tertiary reserve [2]:

1. the external RP has submitted balancing bids to a TSO

2. the TSO buying reserve chooses and calls the external RP

3. the external RP ”starts providing reserves” (i.e. supplies regulation energy in real time)

4. the variation of exchanged power between the two Control Areas due to crossborderreserve trading is not considered as an imbalance between metered and scheduled exchange; onthe contrary it is included in the adjustment of schedules. So the exchange schedules (of the’buying TSO’ and the ’TSO connected to the external RP’) are adjusted automatically on bothsides of the border.

5. the Imbalance Settlement of the external RP is performed by the TSO connected to the RP.

2. ”TSO-TSO trading” between Nordic countries (common bid list):

The Nordel power system comprises Sweden, Norway, Finland and Western Denmark. Each country isreferred to as ’subsystem’ and has its own national TSO. The Nordic system aims to perform a globalbalance management with a common electric system and a common Balancing Market, in contrastto Germany where each Control Area has its own Balancing Market.

However, there are significant constraints of capacity limitations at national interconnections whichcannot be avoided. It is why the Nordic electric system is firstly divided into pre-defined spot areas(also called ”Elspot areas” from the name of the Nordic Spot Market, ”Elspot”): 1 fix spot area inSweden, Finland and Western Denmark, and 2 or 3 dynamic spot areas in Norway. Then, the Nordicsystem is often divided again into congestion zones in order to solve network congestions during the

2concerned TSOs: TSO buying reserve, TSO responsible for the Control Area where the ”Reserve Provider” is physicallyconnected, TSO responsible for the Control Block where the Control Area is included

35

real time adjustment.

1. For the day-ahead Spot Market (called ”Elspot”), buyers and sellers submit bids through acommon power exchange, called Nord Pool. But because of congestion management at interconnections(Market Splitting), there often exist several spot areas, hence several Spot Markets with specific marketprices.

2. After the Spot Market closure (at 12:00 day-ahead), the aspect of ”shared market” is emphasizedwith the common market place called ”Elbas”. Elbas is used for schedule adjustment after the SpotMarket closure. It is a market place where any participants (coming from anywhere in Scandinavia,except Norway) can submit bids to buy and sell power, via an Internet interface. ”Elbas” is not asecond Spot Market: indeed the clearing of selling and buying bids generates bilateral trades and henceadjustment of participants’ schedules.

3. Aside from Elspot and Elbas, there is a common Balancing Market, which is used only fortertiary regulation and congestion management (Counter-Trading). The specificity of this NordicBalancing Market is that all balancing bids from Norway, Sweden, Finland and Western Denmark aregathered and sorted in a common merit-order list (or ”bid ladder”).

The model of ”crossborder tertiary reserve trading” in Scandinavia is the ”TSO-TSO trading”:precisely, participants submit balancing bids to their local TSO and then the local TSO sends thebalancing bids to the ”super TSO” (which is constituted of the Norwegian TSO (Statnet) and theSwedish TSO (Svenska Kraftnat)). The ”super TSO” selects balancing bids from the ”bid ladder” (jointlist) for congestion management and tertiary regulation in all the Nordic system. The local TSOs receiveorders from the ”super TSO” and then activate their local dispatch entities. The whole process foractivation takes about 10-15 min [2].

In fact, the congestion management (counter-trading) is performed in priority, before the tertiaryregulation. Besides, balancing bids used for congestion management (in real time) are notified in thejoint list and separated from balancing bids used for tertiary regulation. It is also important to knowthe location of the balancing power.

4. The variation of exchanged power between the two Elspot areas due to crossborder reservetrading is not included in the schedule adjustment. It will be taken into account during ImbalanceSettlement between TSOs, as an imbalance between metered and scheduled exchange power betweentwo TSOs.

3. ”TSO-TSO trading” at the French borders:

The French TSO ”RTE offers the possibility, whenever the intra-day cross-border arrangements at neigh-bouring TSOs allow so, to integrate offers from interconnected areas into the Balancing Mechanism”.The mechanism is opened to participants from Switzerland, Spain, England and Germany.” [2]

According to the ETSO report [2], if an external ”Reserve Provider” wants to enter the FrenchBalancing Market from a given interconnection, he has to define a special bid: this bid will not indicatethe real dispatch entity but an ”Interconnection Balancing Unit”, which is not a physical dispatchunit.

”Technical conditions of the bids (which are bidders responsibility) depend on :

• the technical characteristics of the physical means used by the bidder to source his bid.

• the intra-day cross-border arrangements for entry/exit of energy defined by the neighbouring TSO.

When the French TSO activates a bid:

• on the French side, RTE schedules the corresponding exchange program

• on the neighbouring TSOs side, it is the bidder’s responsibility to make sure that his bid is scheduledby the TSO


• in case the two schedules do not match, the bid cannot be delivered; in this case, under the lines ofthe Balancing Market rules, the bidders responsibility is engaged, as is the case when a generatingunit does not deliver energy corresponding to the agreed activated bid.” [2]

Example 1: at the border between France and Spain [10]:- The bid is submitted by the external participant before 16:00 on the day-ahead.- RTE calls the bid before 17:30 on the day-ahead. The schedule is adjusted in advance.- RTE (French TSO) and REE (Spanish TSO) check that the offer has been correctly delivered.

Example 2: at the border between France and England:The use of the link between France and GB is remunerated (and reserved on capacity auction). Thecrossborder reserve trading between France and GB is used for two services: [2]

1. ”Emergency exchange: this service is permanently available but may only be called in case oflast resort before load shedding. The emergency exchange is paid at a fixed price.

A TSO can only refuse the service if he is himself in such a position that he should himself curtailcustomers to be able to supply. The volume offered is 1000 MW in each direction (FR to UK orUK to FR)

2. Balancing services: this service allows RTE and National Grid to exchange energy in order tosolve a congestion or to balance their respective systems. The price is based on the imbalancepricing for each system (e.g. in France it is based on the highest hourly price of the French PowerExchange + 50 euros).

This service is available as long as it is not declared unavailable. The volume offered is 500 MW ineach direction. This volume is limited by Intra-day Transfer Limits (intra-day limits of availablecapacity) defined intra-daily from end of day ahead on. A TSO may ask more than 500 MW butacceptation by the other is not mandatory. A TSO uses this service after using his local balancingmechanism in case there are no available bids/offers able to solve his problem.”

4.3.5 Bid parameters

In the different Balancing Markets and Reserve Markets, the balancing bids are defined by specificparameters, which must be transmitted between bidders and TSOs. From the cases of studied countries,the following parameters appear to be the most necessary:

1. Bid ID

2. Bidder ID

3. Type of the bid or identification of what is auctioned

4. Quantity of regulation power (or reserve) (MW, MWh)

5. Direction: upward or downward regulation?

6. Price of the offered quantity

7. Time period of availability that explicits when the balancing service is available (i.e. whenregulation power shall be delivered or reserve shall be available)

8. Market period when the balancing service is tendered

9. Identification of the dispatch entity or zone where the reserve is provided (or the zone towardwhich the regulation power goes)

10. Technical conditions

37

(1): Identification of the bid (number, code)

(2): Identification of the bidder (number, code)

(3): The type of the bid is a complex parameter that defines what is auctioned on the BalancingMarket. The terminology depends on the country and there are many various possibilities:- All countries trade bids for tertiary regulation; in that case, the auctioned product is obviously anamount of energy (available for a possible manual activation). But the type of bid will indicate if it isfor fast or slow tertiary regulation (and maybe for up- or downward regulation).- There exist also special kinds of bids for tertiary regulation (e.g. ”Standing Offers for Start-up andStand-by” of slow tertiary units/ in Romania; Minute Reserve and Hourly Reserve in Hungary andGermany, etc)- In some countries, such as Germany, Romania and Hungary, market players can make bids for thetertiary regulation but also for the constitution of tertiary reserve as well as primary reserve andsecondary reserve.In the R&D project, the notion of ”commodity” is used to indicate what is tendered by the participantto the TSO: primary reserve, secondary reserve, fast and slow tertiary reserves, tertiary regulationpower, etc.

(4): The quantity of regulation power or available reserve can be:- the maximal available quantity (less can be activated),- the net quantity (the entire quantity must be activated, or nothing),- the minimum quantity (at least such amount must be guaranteed to be available).A unique quantity may be offered per bid (e.g. in Hungary there is only one amount of secondaryreserve both upward and downward regulation in one bid), or several quantities: e.g. in Hungarytertiary bids contain two quantities of tertiary reserve, one for upward regulation and one for downwardregulation; in Romania balancing bids are multiblock bids that can contain from one to ten differentquantities corresponding to secondary and tertiary reserves offered by the same entity for the same time.

(5): The direction of the regulation (up- or downward) is often explicitly mentioned, but notalways: e.g. in Romania, balancing bids include the schedule of generation (or consumption) and thebalancing reserves both for up- and downward regulations; the TSO is responsible for which directionthe bid will be called.Besides, the direction may have implicit indications: e.g. a positive price or power quantity forupward-regulation and a negative price or power quantity for downward-regulation.

(6): The price of a bid is fixed by the bidder. The sign of the price (as for the power quantity)depends on the conventions adopted in the country:e.g. in France, upward-regulation bids have only a positive price (because the TSO always paysparticipants for generating more power), while downward-regulation bids have either a positive or nullprice (if the participant pays - or not - the TSO), or a negative price (if the TSO pays the participant).Like the power quantity, there may be one or several prices per bid:- the same price or two different prices for up- and downward regulation;- a price for reserve availability (”availability or capacity price/fee”) associated to a price for energyutilisation (”utilisation price” or ”energy fee”), like in Hungary and Germany;- several prices increasing proportionally to the quantity of regulation power (e.g. in Romania balancingbis are multiblock bids that contain from one to ten pairs of {Quantity; Price}).

(7): The time period when balancing power shall be possibly delivered may be referred to as”Dispatch Interval”, which is the time interval when the concerned unit (or load) is dispatched by theTSO; for example ”Dispatch Intervals” may last 15 min (fast tertiary regulation) or 1 hour (slow tertiaryregulation); e.g. in Romania it is compulsory for every market participant to submit one balancing bid,for each of his dispatch entities, on every Dispatch Interval of the following day. In some other countries,


like Sweden, bids for tertiary regulation indicate the ”hour of operation”.The time period for energy delivery, or reserve availability, may be defined using different timescales

that are superposed: e.g the balancing service must be available every Monday at [06:00 - 22:00], from01.01.06 (starting at 01:00) to 01.03.06, during winter. In that case, periods of high activity and lowactivity are often distinguished (e.g. in Hungary):- ”Peak period” or ”on-peak period”: every working day at [06:00-22:00]- ”Valley period” or ”off-peak period”: every working day at night [22:00-24:00] and [00:00-06:00], andevery non working day [00:00-24:00].

There are two ways to indicate the time period when regulation power shall be delivered or reserveshall be available:- either the bid includes the time period in its declaration (e.g. in Romania, France, Nordic countries,etc)- or the bid is submitted on a pre-defined ”product” (e.g. in Hungary and Germany).A ”product” indicates the type of service tendered (reserve, balancing energy, etc) and the time periodwhen this service will be delivered. Instead of noting the period of delivery in the bids, market participantssubmit bids on the ”product” they want.

The time period is not a precise date, but a time interval (15 min, 1h or more) that appearseveryday or on specific days, hence using superposition of timescales. In Hungary, the bids for PrimaryReserve are submitted on products corresponding to ”on-peak periods” and ”off-peak periods”. Bidsfor Secondary and Tertiary Reserves are submitted on products corresponding to every hour of any day(including working and non-working days). However, the selection of tertiary regulation power is basedon 15 min blocks and not hourly blocks(!).

(8): Market period is the period when the bids can be submitted and are available. There existdaily tendering (from the day-ahead to the intra-day), weekly, monthly, bi-annual or annual tenderingdepending on the type of bids (i.e. bids for reserve markets or balance regulation, etc).

For example in Hungary the market of secondary reserve has two market periods: secondary reserveis tendered during 6-month, during which bids are submitted for the first time, and in addtion there isa daily tendering during which bids may be re-submitted.

(9): Generally bids indicate from where the balancing services come from by notifying either thedispatch entity or the aggregated set including the entity where the providing entity is connectedto. Besides knowing the resource area is especially important when the TSO must manage networkcongestions (Spot areas and congestion zones). It is also important in case of crossborder reserve trading(e.g. in the Nordic system, the ”super TSO” must manage the balance of Sweden, Norway, Finlandand Denmark all together). The German system is a special case: Germany has 4 TSOs responsible forthe balance of 4 different ”Control Areas”; balancing bids (and reserve bids) can be submitted on anyControl Area, whatever the providing entity (but only if technical conditions are respected).

(10): Technical limits, e.g. maximum and minimum production or consumption and ramp limit.

4.3.6 Payment modes

According to the ETSO report (Nov. 2003) [1], there exist two modes to pay balancing services:

• ”Payment for availability of reserve” based on the availability fee. This mode of paymentis used to remunerate availability of primary, secondary and tertiary reserve. the payment foravailability is calculated as the product of the forecasted amount of available reserve and theavailability fee. The ETSO report distinguishes:- the ”payment for availability of service”: for example when tertiary reserve must be available,i.e. when balancing bids are pre-selected for submission on the Balancing Market, or when dispatchunits and loads must be synchronised to the network and be ’ready’ for fast tertiary regulation.- the ”payment for holding the service when requested”: for example when primary or

39

secondary reserve are selected to be available at a given time in case there is an automatic powerdelivery.

• ”Payment for actual delivery of energy based on energy fee”. The payment for energyutilisation is calculated as the product of the measured amount of delivered energy (after utilisation)and the energy fee.

The way to calculate the price of the regulation power varies from a country to another. The regulationpower can be remunerated at the bid price. Each entity pays for consuming power (or gets paid forproducing power) at the price indicated in the initial bid.

Otherwise, the price of the regulation power is the marginal price. In case of upward-regulation,the marginal price is the highest price of all selected bids; so the entity earns the maximum. In case ofdownward-regulation, the marginal price is the lowest price of all selected bids; so the entity pays theminimum. (see fig. 4.3)


Chapter 5

Ancillary Services

The TSO’s service of Frequency Control (upward and downward regulation of active power) is completedby other services, the Ancillary Services:- Reserve of active and reactive power- Emergency reserve- Voltage Control (reactive power)- Losses- Black startand also the management of network congestions.

Generally the reserves of active and reactive power necessary for ancillary reserves are contracted.But in some countries some of them are constituted on auction. In this case, the markets of reserve forancillary services, or ”ancillary” markets, are considered as markets associated to the Balancing Market(like reserve markets). So bids offering active power or reactive power for ancillary services may beconsidered as additional types of bids.

5.1 Definitions of ancillary services

The regulation services can be roughly defined as the services of variation of active power in orderto tune the global value of the system frequency, and to ensure the active power stability. The regulationservices and their reserves are completed by ancillary services:

• Reactive Power: entities propose to vary reactive power components in order to tune the localvoltage value and cater for local voltage conditions.

• Black start: when there is an islanded part in the electric network (i.e. no electricity runs in thatpart), generators help to start up the islanded part by energizing it (i.e. injecting active power init).

• Transmission Losses: to compensate the transmission losses, generators and loads can mod-ify their power output; the ensuing costs of the ”difference in metered production and meteredconsumption” must be paid by an account: the account for transmission losses.

• Congestion Management: resolution of the power congestion on the transmission system.

• Emergency services: services to resolve emergency situation, usually requiring emergency re-serves.

42 Ancillary Services

5.2 Procurement of ancillary reserves

In most countries, the procurement of ancillary services to the TSO is contracted. However insome countries the TSO purchases some of the ancillary services through bidding. More precisely theconstitution of the ”ancillary reserves” (i.e. reserves of reactive power, reserves of active power foremergency or for black start) is based on market mechanisms.

In Romania, market participants are obliged to submit offers for the constitution of inductive andcapacitive reactive power reserve. The TSO must determine the period of procurement first, and then hehas to publish the amount of reserve needed at a certain time before the beginning of the ”ProcurementPeriod” [11].

The tendering period for ancillary reserves can be daily, weekly, monthly, biannual or annual tender-ing.

5.3 Emergency Services

The emergency procedures cater for lacks of offers. The procedures are requested according to anorder of priority. [4]

1. First, before the ”emergency mode”, the TSO may ask new balancing bids to the participants,following the normal process (submission, sorting, selection). Then when there is no more balancingbids, the ”emergency mode” can start. [France] [10]

2. The TSO may use special ”emergency offers” that appropriate participants have submitted theday-ahead [France]. Emergency reserve may be used in the same way, with bidding used for theconstitution of the reserve [Hungary]. e.g. Hourly Reserve in Hungary.

3. The TSO orders directly to the appropriate entities modification of generation schedule, start-upor shut-down of generation units. [Romania] [11]

4. The TSO modifies the cross-border transaction. [Hungary] [16]

5. The TSO asks for international help from the neighbouring TSOs. [in all countries]

6. The TSO manually disconnects relevant loads, lines or power plants.

7. The TSO requests ”emergency services” that do not respect technical conditions (maximum andminimum load, peak and valley period capacity increase and decrease or entity schedules). e.g.The maintenance rescheduling. [Romania, Hungary] [11, 15]

8. The TSO may own his own emergency reserve that he can activate quickly in order ”to take thepressure off the grid”. For example, the Swedish TSO owns gas turbines that are started-up onlyfor emergency procedures. [9]

Chapter 6

Introduction toa ”generic model” for software

The analysis of different countries has revealed that systems of Balancing Market vary from a countryto another, thought there are common elements. From the confrontation of those systems, a new genericmodel has been developed. This generic model is the model on which the new software will have tobe based. It should be adapted to different types of market systems, especially the Hungarian andRomanian systems (indeed Areva has already developed software solutions for Hungary and Romania,which have two market systems dramatically different).

To simplify, the representation of this generic model is considered with two parts:- a ”static representation”, called UML Data model, which sets all the static data that is part of themodel, and- a ”dynamic representation”, called UML business requirement model, which sets the rules andthe dynamic mechanisms that rule the model.

6.1 UML Data model

The UML data model specifies which elements, actors and notions constitute the generic model. Thepresent section presents only some key-elements that enable the new generic model to be flexible.

6.1.1 Market

The ”Market” is a generic notion that corresponds not only to a Balancing Market for tertiary regulation,but also to any types of markets:

• reserve markets,

• balancing markets (associated to reserve selection or not) or

• markets of ancillary services;

by extension the notion ”Market” should even be able to model a spot market or a capacity market.The considered market is then specified in its attributes: e.g. name of the market, dates of validity

of the market, if it takes place on the day-ahead or in intra-day.

44 Introduction to a ”generic model” for software

6.1.2 Auction

The ”Auction” is the element of the model that makes the notion of ”Market” becomes real: an”Auction” is an instance of ”Market”. In other words, ”Auction” is used to create a real bidding,defined by the type of bids, number of bids (and number of blocks per bid), the corresponding periodof tendering (yearly, bi-annual, monthly, daily market period), etc. For a given market, there may beseveral market periods (i.e. tendering periods), and for each market period an auction is created.

6.1.3 Bid

As seen in the chapter 4, there are various types of bids corresponding to different balancing and ancillaryservices and the related markets. The key-element ”Bid” is used to define bids in electricity markets.The intrinsic attributes of the ”Bid” and the other associated key-elements of the flexible model are usedto model any kind of bids.

6.1.4 Commodity

To ensure the flexibility of the model, the type of balancing service is not defined in the ”Bid” attributesbut in another key-element called ”Commodity”. In other word, the ”Commodity” defines what isauctioned:

• e.g. balancing power for tertiary regulation,

• primary, secondary or tertiary reserves,

• local types of tertiary reserves (minute reserve, hourly reserve, etc),

• ancillary services such as reserves of reactive power, reserves of active power for emergency or forblack start, etc.

6.1.5 Block

Basically, a balancing bid offers a certain quantity of balancing power (MW) at a certain price (cur-rency/MWh). In this generic model, the basic pair {quantity, price} is represented by a ”Block”(key-element of the flexible model). As seen in the part 4, bids can offer one or several power quantitiesand one or several prices:

• in Hungary :- bids for Primary Reserve have two quantities (one for upward regulation and another for downwardregulation) and one price (availability fee)- bids for Secondary and Tertiary Reserves have one quantity (the same for up- and downwardregulations) and two prices (availability fee and energy fee)

• in Germany, bids for Primary Reserve have one price (availability fee), while Secondary and TertiaryReserves have two prices (availability fee and energy fee)

• in Romania, regulation power for fast & slow tertiary regulation, as well as reserve for secondaryregulation are daily tendered all together, at the same time, in the same balancing bids. Thebalancing bids include different amounts of reserve offered for upward regulation and downwardregulation and the bids are submitted together with the declaration of generation (/consumption)schedule (for every units and loads). The balancing bids are referred to as ”multiblock bids”, whichcontain from one to ten blocks ({quantity, price} pairs) with different prices varying proportionallyto the different amounts of regulation power.

45

In the flexible model, bids do not include the power quantity(ies) and price(s) in their attributes, butthey are associated to one ”Block” or more, in which each quantity and price are defined.

6.1.6 Product

In the Generic Model bids are submitted on pre-defined ”Products”. Basically, a ”Product” indicatesone ”Commodity”, which specifies what is tendered on the concerned market, and a time period ofavailability, which specifies when this commodity is available.

This kind of basic product, {1 commodity; 1 time period}, exists in the Hungarian and the Germansystems. Examples of those systems help to understand the form and utilisation of a basic product.

• Example 1: In Germany products are defined by- the type of balancing service (e.g. ’primary’, ’secondary’ or ’minute reserve’ for upward ordownward regulation)- the time period when the balancing service must be available (e.g. every working day - Mondayto Friday -, from 01.01.06 (starting at 01:00) to 01.03.06, during winter)- the time of day during which the balancing service must be available (e.g. [06:00 - 18:00]).

The ’time period of validity of the product’ is the ’time period of availability for the corre-sponding balancing service’ (e.g. period for reserve availability of energy delivery). For example,if the product is valid every Monday in May at [06:00-14:00], this means that the correspondingreserve must be physically available every Monday in May at [06:00-14:00].

The following table 6.1 presents some examples quoted from the EON customer specifications [20]):

Product ”global period” start Day type Time period Commodity Time of dayP1 from 01.01.01 Mon.-Fri. Summer Tertiary 06:00-18:00P2 from 01.01.01 Sat./Sun. Summer Tertiary 06:00-18:00P3 from 01.01.01 Mon.-Fri. Winter Tertiary 07:00-17:00P4 from 01.01.01 Sat./Sun. Winter Tertiary 06:00-18:00P5 from 01.01.02 Mon.-Fri. Entire year Primary 06:00-18:00P6 from 01.01.02 Sat./Sun. Entire year Primary 06:00-18:00

Table 6.1: Examples of ’products’ in Germany

Example 2:In Hungary, a product is a pair {commodity, time period}. The time period is not a precise date,but a time interval (15 min, 1h or more) that appears everyday or on specific days.

- The bids for Primary Reserve can be submitted on 4 different primary products constitutedeach of several hours: the time period corresponds to ”on-peak period” (i.e. busy period with highpower production and consumption) or ”off-peak period” (i.e. period with a lower activity, e.g.nights or holidays).

Product 1 ⇔ {’Primary’; [00:00-06:00] every working day (corresponding to off-peak period)}Product 2 ⇔ {’Primary’; [06:00-22:00] every working day (corresponding to on-peak period)}Product 3 ⇔ {’Primary’; [22:00-24:00] every working day (corresponding to off-peak period)}Product 4 ⇔ {’Primary’; [00:00-24:00] every non working day (corresponding to off-peak period)}

- The bids for Secondary Reserve can be submitted on 24 different secondary products correspond-ing to each hour of a day (without any distinction between working and non-working days):

Product 1 ⇔ {’Secondary’; [00:00-01:00]}


Product 2 ⇔ {’Secondary’; [01:00-02:00]}... Product 24 ⇔ {’Secondary’; [23:00-24:00]}- The bids for Minute Reserve (fast tertiary reserve) can be submitted on 24 different minuteproducts corresponding to each hour of a day:

Product 1 ⇔ {’Minute’; [00:00-01:00]}Product 2 ⇔ {’Minute’; [01:00-02:00]}... Product 24 ⇔ {’Minute’; [23:00-24:00]}

Apparently the products in Hungary and Germany seem to be useful especially for the definitionof complex time periods (of availability) based on the ”superposition of different timescales”. Besides,only one commodity is included in one product.

In contrast, the ”Product” used in the Generic Model can include several commodities; thisfeature ensure the flexibility of the Model. This is explained by the example of Romania.

• Example 3: In Romania, the same (multiblock) balancing bid is used to offer secondary reserveand tertiary (fast&slow) reserve for the same ’dispatch interval’ of the following day. This processcan be modeled such as:- On one hand a multi-commodity product is tendered on the Romanian Balancing Market(daily market period). This product contains several commodities (i.e. secondary reserve andtertiary (fast&slow) reserve) and one period of validity (the corresponding ’dispatch interval’ ofthe following day).- On the other hand, the market participant submit a (multi-block) balancing bid on the desired(multi-commodity) product.

6.1.7 Area and Resources

Balancing bids are submitted either on a dispatch entity or a aggregated set of entities, where thesupplying entity is connected to. Therefore the flexible model include two key-elements:

• the ”Resource”, which defines balancing entities (dispatch generation units and loads),

• the ”Area”, which defines a set (or aggregate) of entities.

Besides, the key-element ”Area” is not only used for the bid submission. Indeed, it is a generic notion,which represents different kinds of areas, such as:- balancing groups: groups of balancing entities and under the responsibility of a BRP (BalancingResponsible Player).- congestion zones: zones created for congestion management (counter-trading method), defined bythe associated balancing entities (used for the resolution of the congestion); a corridor with a maximalcapacity may be associated (representing the congested interconnection).- price areas or Spot Area: zones created for congestion management (market splitting method),defined by an associated local spot market and a local market price.- Control Areas: e.g. in Germany, there are 4 TSOs responsible for the balance of 4 different ”ControlAreas”, and bids must indicate toward which Control Area the regulation power (or reserve) goes.

6.1.8 UML Data Model: conclusion

A simplified version of the UML Data model (with the elements associated) is shown in the figure 6.1[22].

The market process represented by the Data Model is as followed:

47

1

Market

Auction

1

n

‘Auction’ is an instance of ‘Market’

for one given market period

is tendered on

1 n

Bid

Product Commodity

Block

n n

is composed of

1

is composed of

n

applies to

n

0..1 1

is submitted on

n

Area

Resource 0..n

n

contains

n

0..1

is submitted on

0..1 n

is submitted on

Figure 6.1: Simplified UML data model

• Given a ”Market” of a certain type: e.g. Balancing Market, reserve market (of primary, secondary,tertiary, emergency or ancillary reserves), or other. This market is characterised by one or severalmarket periods (daily, monthly, 6-monthly or yearly tendering).

• For each market period, one ”Auction”, ”instance” of the given ”Market”, is created.

• For a given ”Auction” (and a given market period), one or several ”Products” are tendered bythe TSO on the ”Auction”. The tendering period may be daily, monthly, 6-monthly or yearly,depending on the corresponding ”Market Period”.

• A ”Product” specifies what is tendered on the ”Auction”, the ”Commodity”: active power forregulation services or ancillary services, reactive power, primary, secondary or tertiary reserves,etc. In the generic model, a ”Product” is ’multi-commodity’, which means that one ”Product” caninclude one or several commodities.

In addition, the ”Product” indicates its period of availability, which is the time when thecommodity (or the set of commodities) must be available or delivered; for example such a productmay have to be valid at [06:00-07:00], every Monday and Tuesday, from 01/12/2006 to 01/02/2007,in winter).

• While ”Products” are tendered on the ”Auction” by the TSO, ”Bids” are submitted by the othermarket participants in order to buy (or sell) some ”Products”. The ”Bid” indicates the priceand the quantity offered for a given product. In the generic model a ”Bid” is ’multi-block’,which means that one ”Bid” can include one or several quantities and one or several prices. Each”Block” specifies one pair of {Quantity, Price}.


6.2 UML business requirement model

The UML business requirement model defines market actors’ roles, their interaction with each otherand the dynamic of the market system in general. A simplified version of the UML business requirementmodel (with the elements associated) is given in the figure 6.3 [23].

The main components of the software are (see fig. 6.2):- Interfaces between the system and the market participants and between the system and the TSO- A Data Base- A Clearing Engine that manages the selection of bids, including their reception by the system andthe publication of results. The clearing engine is implemented with a software tool called AIMMS thatenables to use optimisation algorithms under constraints.

Balancing Market System

Participant INTERFACE

Operator INTERFACE

DATA BASE

Clearing Engine

: Market Participant

: Market Operator

Figure 6.2: System overview of the generic software components

The software must implement the functions that are useful for the functioning of all balancing markets(see fig. 6.3).

• System Administration: definition of data and parameters.

• Definition of the market components (market type, products, gates)

• Bidding (in Participant Interface): function that enables participants to submit bids.

• Resource Schedule Management: function that enables participant to send information to the TSOregarding the evolution in time of production plans, load forecasts, technical power limits, etc.

• Study Case: the TSO can make ”Study Cases”, which means different things:- The TSO formulates a Need that may be a real-time need of regulation energy or a forward needfor the constitution of reserves or the updating of schedules, etc.- Management of congestions on the electrical network (definition of congested zones, determinationof capacity limit of the energy transfer between the zones).

• Bid Selection: the bid selection can be manual (by the TSO) or automatic (by the clearing engine)

• Emergency Procedure: procedure to manage emergent situation on the network (alarm manage-ment, emergency offers, planning modification, international assistance, etc)

• Imbalance Price Calculation

The definition of areas is modeled in a part called ”zonal model”, which is based on the definition ofareas for congestion management (counter-trading and market splitting). The ”zonal model” is shownin the annexe F.

49

System administration

Market definition

« includes »

Bidding

Study case

Bid selection

Emergency procedures

Imbalance price calculation

: System administrator

: Market Participant

: TSO

Figure 6.3: Simplified use case diagram of the business requirements


Chapter 7

Conclusion

7.1 Summary

This master thesis aimed to analyse various systems of electricity markets (focusing on bal-ancing markets) that were relevant for the development of Areva’s generic software. The genericsoftware should be adapted to different countries, mainly in Europe; especially the Romanian andHungarian systems, which are two well known customer-countries of Areva and are dramatically different.

The second chapter introduces the general principles and the consecutive processes of markets ofelectricity, which are common to all countries:

1. Planning of generation and forecast of consumption, before the actual day of delivery:

- Direct bilateral contract between market players.

- Bidding on the day-ahead Spot Market (Public pricing).

2. Adjustment of generation and load to ensure the balance between production and consumption inreal time:

- Re-declaration of production plans (based on short-term forecasting).

- Bidding on the short term Balancing Market (with bid selection and activation in real time).

3. Imbalance settlement, after the day of delivery to spread the expenditures and incomes betweenthe market participants.

The third chapter defines the Regulation Services. Two types of regulation services exist in everyEuropean country:

• automatic frequency control, which caters for imbalance between production and consumptionand stabilises immediately the system frequency, and which takes place automatically in real time.

• manual regulation, which caters for larger imbalances (plant losses, large errors of load forecasts)and which is manually instructed by the TSO in real time. A major feature of the manual regulationis the real time selection of bids offering balancing power on the Balancing Market.

The report uses the names of the regulation services used in the UCTE: the Primary andSecondary controls constituting the automatic frequency control, and the Tertiary Regulationcorresponding to the manual regulation.

The two first chapters give a basic definition of the Balancing Market: The Balancing Marketis an organised market supervised by the TSO, where players with ”dispatchable” units (and/or loads)can make balancing bids (also called regulation bids). With the balancing bids, bidders offer regulationservices, i.e. they offer to increase or decrease their power production (or consumption) for a given hourof operation.

The Balancing Market has two basic purposes:

• the delivery of balancing power for tertiary regulation and

• the management of network congestions in real time.

52 Conclusion

Two major specificities of the Balancing Market (compared to the Spot Market or bilateral trading)are:

• the role of the TSO and

• the market clearing occurring in real time.

The fourth chapter is a long chapter that presents the different aspects of the Balancing Marketand the associated markets of reserves. The presentation of all the different means to obtain automaticfrequency controls and manual regulation reveals that the Balancing Market may be associated toreserve markets, which are also supervised by the TSO. Such markets are part of the TOS’s balancingmanagement and must be treated by the generic model of Areva.

N.B.: When they exist, markets of primary and secondary reserves are generally independent

of the Balancing Market, which is only used for tertiary power. However the market of tertiaryreserve is generally included in the Balancing Market because the same balancing bids are usedboth for the constitution of tertiary reserve (bid pre-selection) and the delivery of power (bid selec-tion in real time). Moreover in some countries, e.g. Romania, the same balancing bids offer tertiarypower and secondary reserve; in this case the Balancing Market includes the market of secondary reserve.

The third section of the fourth chapter (”Mechanisms of the Balancing Market”) tries to presentsimilarities and differences of the Balancing Market (and associated reserve markets) between the dif-ferent studied countries. Areva’s generic model must be flexible enough to include such similarities anddifferences.

1. Phases of the Balancing Market: bid submission, verification, validation, possible modificationby the bidders, then selection (or exclusion), call and execution by the TSO

2. Some significant differences in the process: different ”Gate Closures” and different time intervalsbetween TSO’s instruction and power delivery

3. Definition of two methods for the management of network congestions: Market splitting(on the day-ahead, using Spot Market) and Counter Trading (during intra-day, using BalancingMarket)

4. Examples of trading of tertiary reserves across borders, using Balancing Market and marketclearing in real time: examples of the German control areas, the common Nordic system(using a common list of balancing bids) and the French borders.

5. List and analysis of the necessary parameters that define balancing bids (and reserve bids).

6. The different modes of payment for the remuneration of balancing reserve and power delivery.

The fifth chapter defines the Ancillary Services, which complete the regulation services. Some-times the constitution of the reserves (of active and/or reactive power) for some of the ancillary servicesrequires reserve markets supervised by the TSO. When they exist, such markets are part of the TSO’sbalancing management and must be treated by the generic model of Areva.

The sixth chapter is an introduction to the Generic Model of Areva. The representation of thisgeneric model is considered with two parts:- a ”static representation”, called UML Data model, which sets all the static data that is part of themodel, and- a ”dynamic representation”, called UML business requirement model, which sets the rules and thedynamic mechanisms that rule the model.

A ”Data view” of the generic model is explained more precisely. What can be briefly recalled is theprocess such as defined in the data view:

53

• Given a ”Market” of a certain type: e.g. Balancing Market, reserve market (of primary, secondary,tertiary, emergency or ancillary reserves), or other. This market is characterised by one or severalmarket periods (daily, monthly, 6-monthly or yearly tendering).

• For each market period, one ”Auction”, which is an ”instance” of the given ”Market”, is created.

• For a given ”Auction” (and a given market period), one or several ”Products” are tendered bythe TSO on the ”Auction”. The tendering period may be daily, monthly, 6-monthly or yearly,depending on the corresponding ”Market Period”.

• A ”Product” specifies what is tendered on the ”Auction”, the ”Commodity”: active power forregulation services or ancillary services, reactive power, primary, secondary or tertiary reserves,etc. In the generic model, a ”Product” is ’multi-commodity’, which means that one ”Product” caninclude one or several commodities.

In addition, the ”Product” indicates its period of availability, which is the time when thecommodity (or the set of commodities) must be available or delivered.

• While ”Products” are tendered on the ”Auction” by the TSO, ”Bids” are submitted by the othermarket participants in order to buy (or sell) some ”Products”. The ”Bid” indicates the priceand the quantity offered for a given product. In the generic model a ”Bid” is ’multi-block’,which means that one ”Bid” can include one or several quantities and one or several prices. Each”Block” specifies one pair of {Quantity, Price}.

7.2 Future works

The generic model is based on the study of countries that were well known by Areva (mainly becausethey have been their customers). Further investigations of other countries would have certainly beenwelcome.

Some aspects of the balancing management and electricity market have been left aside of the genericmodel: for example the ‘Imbalance Settlement’ is an important step in the market process, but it changesquite a lot from a country to another. Therefore further investigations are necessary to find the flexibilitybetween the different ways to settle imbalances.

Anyway the electricity market rules change faster or slower in every country, especially now,when electricity markets are starting to open. This issue raises two points:

• Firstly, all the source documents have been taken with caution. Some of them may already be tooold, some information may be inconsistent and in general it is preferable to check the validity andconsistency of data with different documents (when it is possible).

• Secondly, the syntheses of the studied countries (like those in the appendixes) would rather bechecked and even updated in the next years. By extension, if the electricity market systems inEurope shall change significantly, this generic model might become obsolete; so new models andnew information systems shall be developed again.

54 Conclusion

Appendix A

Romania

A.1 Glossary

Daily Offer: balancing bid for upward- and downward-regulation (secondary, fast tertiary and slowtertiary regulation) in association with the scheduled power output of the concerned dispatch unit/load,for a certain dispatch interval. Daily Offers are daily tendered on the balancing market.Standing Offer: balancing bid for a specific slow tertiary reserve, including an offer for the Start-up ofthe concerned dispatch unit/load and an offer for the Stand-by of the concerned dispatch unit/load.Multiblock bid: Bid containing several price-quantity pairs; in other words, the bid does not sell justa single power quantity at a single price, but several power quantities, positive (for up-regulation) andnegative (for down-regulation), at several prices (proportional to quantity).Available Margin: ”Quantity of Balancing Energy corresponding to the Secondary Control that adispatch unit can make available for the TSO, at its command, during a dispatch interval”.Available Balancing Energy: ”quantity of balancing energy that can be made available by entitiesfor the next delivery days.”

A.2 Overview of Balancing Services and Markets related

Romania has the most particular balancing market in Europe and is quite different from othersystems. The Romanian system with rules as defined here has been in operation since 2005.

1. First particularity (bid types): the bidding of regulation power for fast & slow tertiary regulation,as well as for the reserve for secondary control are daily tendered all together, at the same time, inthe same balancing bids. These bids are called ”Daily Offers”. There exist another kind of bidsspecific for slow tertiary entities (not yet synchronised to network), called ”Standing Offers”.

2. Second particularity (bid declaration): each balancing bid includes the scheduled amount of gener-ation (or load) and the available amount for both upward and downward regulation. Above all, abalancing bid is not just a pair of a single power quantity [MW] with a single price [currency/MWh];Indeed ”the rules require that participants make only one offer with several price-quantity pairsfor the entire capacity of the generation unit” [3]. So participants can propose several values ofregulation power amount [MW] with different prices [currency/MWh] proportionally to quantities.These kinds of bids are called ”multi-block bids”.

56 Romania

3. Third particularity (bid submission): all the bids have to be submitted on the day-ahead, and theparticipation to the bidding is compulsory and closely verified by the TSO. The participants areobliged to submit one bid for each of their ”dispatch entity” (separately for units and loads) andfor every ”dispatch time interval” (one hour) of the delivery day. The TSO does not propose any”product” - set of {time interval; ”commodity” } - like in Hungary.

The ”Gate Closure” is day-ahead; though balancing bids can be up-dated during intra-day (creationof ”Revised Offers”).

The regulation services and their markets related are described in the table A.1.

A.3 Details of ”Daily Offer”

The ”Daily Offer” is the main type of balancing bids in the Romanian system. Each participant hasto submit one Daily Offer for each of his dispatch units (or loads) and for each dispatch interval of thedelivery day. Participants offer the entire capacity of the unit (or load) in each ”Daily Offer”.

- For a dispatch generation unit, a ”Daily Offer” comprises:

• the scheduled generation quantity of the generation unit for a given dispatch interval,

• + the possible amounts of upward-regulation power (increase of generation that the unitcan undertake for the secondary control, fast and then slow tertiary regulation),

• + the possible amounts of downward-regulation power (decrease of generation that theunit can undertake for the secondary control, fast and then slow tertiary regulation)

(see figure A.1)

Available Margin for Secondary Control

Fast tertiary

Fast tertiary

Downward-regulation

Upward-regulation

Qschedule Generation Quantity

Price

Qmax Qmin

Slow tertiary Slow

tertiary

Figure A.1: ”Daily Offer” (generation schedule + up/downward-regulation power) that a dispatch unitcan propose for one dispatch interval

57

- For a dispatch load, a ”Daily Offer” comprises:

• the scheduled consumption quantity of the load for a given dispatch interval,

• + the possible amounts of downward-regulation power (increase of consumption that theload can undertake for the secondary control, fast and then slow tertiary regulation),

• + the possible amounts of upward-regulation power (decrease of consumption that the loadcan undertake for the secondary control, fast and then slow tertiary regulation)

(see figure A.2)

Available Margin for Secondary Control

Fast tertiary

Fast tertiary

Upward-regulation

Downward-regulation

Qschedule Consumption Quantity

Price

Qmax Qmin

Slow tertiary Slow

tertiary

Figure A.2: ”Daily Offer” (consumption schedule + up/downward-regulation power) that a dispatchload can propose for one dispatch interval

In the Romanian system ”Daily Offers” are referred to as ”multiblock bids”, which are sets of severalprice-quantity pairs (see figure A.3) that participants offer (for one unit or load and for one givendispatch interval). A Daily offer contains from 1 to 10 price-quantity pairs .

Qschedule

Downward-regulation Upward-regulation

QmaxQmin

Generation Quantity

Price

Figure A.3: Multiblock bid

58 Romania

- Selection of ”Daily Offers”:

The TSO must assess the necessary quantity of regulation power for a given dispatch interval. Then hecompares all the concerned Daily Offers. To do so, the relevant ”blocks of regulation power” (i.e. offeredamounts of regulation power calculated from the schedule value) are extracted from the ”Daily Offers”and sorted all together according to a merit order, as shown in figure A.4 [13]. The price of the selectedquantity is the Marginal Price for secondary reserve and the Bid Price for the fast and slow tertiaryregulation [3].

Price

Quantity ∆Qup-regulation

Bidder 1

Bidder 2

Bidder 3

Bidder 4

∆Q1 ∆Q2 ∆Q3 ∆Q4

Figure A.4: Bid merit order

Before the hour of operation, the TSO selects a band of Secondary Reserve (for up- and downwardregulation) in each ”Daily Offer”. This ”band” is called Available Margin. ”The selection is doneeven though the need of balancing energy has not yet been determined” [14], and is based on price foravailability of reserve. The chosen participants will be paid for the total amount of selected SecondaryReserve and not for the amount of energy delivered. This band of Secondary Reserve (specific to onehour of operation) will be used automatically in real time, when secondary control is needed. The unusedrest of the band is then kept for a potential tertiary regulation.

The Tertiary Reserve is not selected in advance. When the Secondary Control occurs, the TSO knowshow much Fast Tertiary Regulation will be needed. The TSO selects the required amount of energy forfast tertiary regulation in real time, based on price for utilisation of reserve. The fast tertiaryenergy is delivered on a 15 min basis (like ”Minute Reserve”1). The chosen participants will be paid forthe total selected amount of energy delivered for Fast Tertiary Regulation.

Then, if needed, the TSO selects energy for slow tertiary regulation, of which delivery is on anhourly basis. The chosen participants will be paid for the total selected amount of energy delivered forFast Tertiary Regulation.

Of course the tertiary power is used for balance management purpose, but also for congestion man-agement.

- Constraints for ”Daily Offers”:

• compulsory participation to bidding for all participants with generation units and accumulation-pumping loads.

• All participants with ”dispatchable” units and/or accumulation-pumping loads are obliged to sub-mit the entire capacity of each of their units and accumulation-pumping loads (compulsory par-ticipation for generation units). In contrast, participants with ”dispatchable” loads (other thanaccumulation-pumping loads) can submit the entire consumption capacity of their loads or nocapacity at all (voluntary participation for loads).

• The TSO is allowed to select partially the offered quantity of ”dispatchable” units or accumulation-pumping loads. On the contrary, the partial acceptance of consumption quantity from ”dispatch-able” loads (other than accumulation-pumping loads) is forbidden.

1According to the ETSO report [3], the Fast Tertiary Reserve in Romania is a kind of ”Minute Reserve”

59

• Technical constraints: ”maximum-minimum stable level of production” [3]:

• Ramp Constraint: the accepted quantity of regulation energy must include all the quantity of theselected quantity-pair for the ”Requested Interval”, plus the quantity needed before and after the”Requested Interval” [12], see figure A.5.

Quantity that must be delivered before and after the Requested Interval

Requested Interval Time

Quantity

Figure A.5: Illustration of the ramp constraint (Romania)

A.4 Details of ”Standing Offer”

Each participant with dispatch units/loads specific for slow regulation has to submit a ”StandingOffer” for each of his ”slow” dispatch units and loads and one or more dispatch intervals of the nextdelivery day.

A Standing Offer is a pair of bids containing a ”Start-up Offer” and a ”Stand-by Offer”:Start-up price, Stand-by price.

- Start-up price means ”price at which a participant is willing to start his production unit thatis not synchronised with the national power system, or for a consumer the price at which he is readyto start the reduction of the consumption of his ’dispatch load’”, according to the Technical Code ofRomanian national grid [12].

- Stand-by price means ”price per hour that a participant is willing to let his production unit bein a state that allows it to be synchronised with the national power system on instruction of the TSO”(”stand-by price of loads is equal to zero”), according to the Technical Code of Romanian national grid[12].

The TSO indicates the dispatch intervals during which he wants slow tertiary regulation, i.e. heindicates the starting time for the start-up and the period for the stand-by.

A.5 Details of the Ancillary Services

First the TSO must determine the period of procurement of reserve used to supply ancillary services.The ”Procurement Period” may be a limited interval equal to some days, some hours or some dispatchintervals (e.g. ”business days, non-working days and legal holidays, day or night hours, high or lowdemand hours or other types of intervals” [11]) within a longer period (a day, a week, a month, a seasonor a year.

Then before the beginning of each Procurement Period, the TSO must determine the amount ofreserve for ancillary services that need to be procured during the corresponding Procurement Period andpublishes it.

60 Romania

- Reserves of active power for Secondary Control, Fast and Slow Tertiary Regulations

The market participants are obliged to tender Secondary, Fast Tertiary and Slow Tertiary reservesevery day (daily process). Only the Secondary reserve is explicitly auctioned with the Daily Offers andremunerated for being available; whereas the Fast and Slow Tertiary reserves are implicitly included inthe Daily and Standing Offers and are not remunerated for their availability but for their use. The TSOaccepts offers as explained previously (see A.3).

- Reserves of reactive power for Voltage Control

The market participants are obliged to tender inductive and capacitive Reactive Power Reserves. Ifthe Reactive Power Reserve is produced in ”secondary zone”, the TSO purchases the required reserveseparately for inductive and capacitive power, and pays the producers. [11] If the Reactive Power Reserveis produced in ”primary zone”, the TSO request the required reserve without paying the producers. [11]

A.5.1 Details of the business process

The business process is explained below and illustrated in the figure A.6 (Market timescales in Romania).

1. Submission of Daily Offers and Standing Offers (the day-ahead): 17:00 (day-ahead)

The participation to the balancing market is compulsory: every market participant has to submitDaily Offers for any of his dispatch units/loads, plus Standing Offers in case of (non synchronised)slow tertiary units/loads. Each Daily Offer corresponds to each dispatch interval of the followingday.

The participant can submit their Daily Offers (and Standing Offers) until 17:00 the day-ahead,which is the time of the Spot market closure. It is important to note that the Daily Offers give theadjustment bids in addition to the planned production and consumption of each units and loads.Therefore, when the Daily Offers are submitted at 17:00, the TSO receives the initial physicalnotification. After 17:00 the Balancing Market opens. The entire balancing energy of the powersystem should be available.

2. Verification of the validity and the participation (the day ahead): [17:00 - 19:00](day-ahead)

The TSO must check the validity of each offers and send the confirmation of validation to eachparticipant. Since the participation to the bidding is compulsory, the TSO must also verifyif some of the participants have failed to submit their offers. Then the TSO must recall thefailing participants to oblige them to submit their missing offers. If the failing participantsdo not answer, then the TSO ”creates” himself the missing offers. (These ”new offers” are”based on the Standing Technical Data, the Availability Declarations and the Approved Physi-cal Notifications; the price of all the quantity of this ”new offers” is equal to the spot market price).

3. Day-ahead ”Gate Closure”: 19:00(day-ahead)

The process of bid submission, verification and modification is a day-ahead process. Romania is anexample of system with a day-ahead ”Gate Closure” (see paragraph 4.3.2): the last physical notifi-cation coincides with the ”transmission of validated Daily Offers to the Settlement Administrator”and takes place at 19:00 day-ahead.

If all the participants submit all their offers, after the approval of the last physical notification onthe day-ahead, the TSO can forecast the Available Balancing Energy of each entity, for everydispatch interval of the following day, separately for every kind of regulation (up/down, fast/slowtertiary, secondary).

61

4. Revision of Daily Offers after the day-ahead ”Gate Closure”: [19:00(day-ahead) - 24:00(intra-day)]

The participants can modify their Daily Offers after 19:00 day-ahead, and during the intra-day. Thenew Revised Offers must undergo the procedure of verification and validation by the TSO, to finallyreplace the former Daily Offers. This process must end (a certain time) before the correspondingdispatch interval of the delivery day.

With the new Revised Offer, the TSO must up-date the value of the regulation reserve needed foreach dispatch interval.

5. Selection of ”secondary reserve” and Secondary Control: just before the dispatch interval(intra-day)

At least one hour [according to [11]] (or 20 min [according to [14]]) before the corresponding dispatchinterval, the TSO selects the reserve that will have to be available for the secondary control, evenif the need for secondary energy is not yet known. Right after the selection, the TSO informs theparticipants.

During the dispatch interval all the selected entities must have their secondary reserve available;when the Secondary Control occurs, the required amount of secondary reserve is used automatically.

6. Selection and activation of Daily Offers (and Standing Offers) for Tertiary Regulation: in real-time during the dispatch interval (intra-day)

According to [14], a dispatch interval is divided in small ”regulation periods” (a dispatch intervalis divided into four 15 min intervals that are themselves divided into three 5min intervals). Duringthe ”regulation period” where the secondary control occurs, the TSO knows if some fast tertiaryregulation is needed. Thus the TSO selects the relevant bids (for fast and slow tertiary regulation)and calls the participants in real time.

The delivery of fast tertiary energy will start at least 15 min after the ”issue of dispatch instruction”by the TSO, and will end no later than the current dispatch interval or the next one (granted thatthe entire fast tertiary reserve is fully provided in less than 15 minutes).

The delivery of slow tertiary energy will start after the fast tertiary regulation (granted that thetime scale of slow tertiary regulation is generally 1 hour).

62 Romania

ROMANIA Delivery Participation Constitution Bid nameof power to regulation of reserve

Primary automatic compulsory participation contracted no bidControl to primary control & compulsorySecondary automatic - bidding of availability Secondary Reserve is ”DailyControl of ”secondary control constituted by daily Offer”

power” according to the auction on the daily for both”availability price” Balancing Market up & down- Compulsory bidding of - the reserve regulationMAX capacity availability is (availability

remunerated at the fee)availability price

Fast - Manual - Bidding of ”fast Fast Tertiary Reserve is ”DailyTertiary dispatching tertiary energy” implicitly included in Offer”Control - the TSO (for actual delivery) the compulsory bidding for both

selects according to the of tertiary energy, but up & down& calls ”utilisation price” the availability of the regulationbalancing - Compulsory bidding of reserve is not (energy fee)bids in MAX capacity for remuneratedreal time generation units- delivered - Voluntary biddingenergy is for loadsremunerated(energy fee)

Slow - Manual - Bidding of ”slow Slow Tertiary Reserve is ”DailyTertiary dispatching tertiary energy” implicitly included in Offer”Control - the TSO (for actual delivery) the compulsory bidding for both

selects based on ”utilisation of tertiary energy, but up & down& calls price” the availability of the regulationbalancing - Compulsory bidding of reserve is not (energy fee)bids in MAX capacity for remuneratedreal time generation units- delivered - Voluntary biddingenergy is for loadsremunerated(energy fee)

Slow - Manual - Bidding of ”Standing Slow Tertiary Reserve is ”StandingTertiary dispatching Energy” -slow tertiary implicitly included in Offer”energy - the TSO energy- (for actual the compulsory bidding includingfor selects delivery) based on of tertiary energy, but Start-upStart-up & call ”utilisation price” the availability of the &and balancing - Compulsory bidding reserve is not Stand-byStand-by bids in for all participants remunerated offersof slow real time with slow dispatch (energy fee)dispatch - delivered units & loadsunits and energy isloads remunerated

(energy fee)Ancillary Compulsory reserve of active andServices tendering reactive power are

purchased on auction

Table A.1: Overview of balancing services and markets in Romania

63

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64 Romania

Appendix B

Hungary

B.1 Glossary

Availability fee: ”Price to keep 1 megawatt available for 1 hour [HUF/MW/h].” [16]Energy fee: ”Price billed for 1 ordered megawatt during 1 hour [HUF/MWh] (ordered in real time bythe TSO). Positive value means that the market participant wants to be paid. Negative value meansthat the market participant is ready to pay the market operator back.”[16] (specific to delivery ofTertiary Regulation power)Command response fee: ”Price billed for 1 ordered megawatt during 1 hour [HUF/MWh]. Positivevalue means that the market participant wants to be paid. Negative value means that the marketparticipant wants to pay the market operator back.”[16] (specific to delivery of Secondary Regulationpower)HUF: Hugarian Forint (abbreviation of the name for the local Hungarian currency).Rate of change: ”Maximum permitted megawatt variation in a 15 min interval [MW/15’]”[16], also called Ramp limit.Technical limit: ”Maximum power value that the entity should not exceed (in the Up direction forgenerators and in the Down direction for loads [MW].” [16]Minute Reserve: the Minute Reserve is a fast tertiary reserve that is delivered on the basis of 15 minblocks (instead of 1 min resolution). The delivery of Minute Reserve starts at the beginning of the next15 min block after the order and lasts during the whole 15 minutes.Hourly Reserve: the Hourly Reserve is a slow tertiary reserve that is delivered at least 15 min afterthe order and that can last during one hour or more [15]. The main purpose of the Hourly Reserve is torestore Minute Reserve and cater for large perturbations.Product: a ”product” indicates the type of service tendered (reserve, balancing energy, etc) and aboveall the time period when this service will be delivered. Instead of noting the period of delivery in thebids, market participants submit bids on the ”product” they want.

B.2 Overview of Balancing Services and Markets related

Hungary has a balancing market that is associated to reserve markets and that is close to theGerman market model. The Hungarian system with rules as defined here has been operation sinceJanuary 1st, 2003.

66 Hungary

1. First particularity (reserve markets): the reserves for primary, secondary, fast and slow tertiaryregulations are constituted by auction and are based on seperated reserve markets, with differentbids. The reserve markets for fast and slow regulation are coupled to the Balancing Market sincethe same balancing bids are used to tender availability of reserve (day-ahead) and amount of energy(for intra-day delivery).

Fast Tertiary Reserve is called ”minute reserve” and Slow Tertiary Reserve is called ”hourlyreserve”. Especially the ”minute reserve” is a typical type of fast reserve delivered in blocks of15 min.

2. Second particularity (payment modes): There exist two ways to pay regulation services.

• Payment for availability of reserve based on the availability fee. This mode of paymentis used to remunerate availability of primary, secondary, minute and hourly reserve. thepayment for availability is calculated as the product of the forecasted amount of availablereserve and the availability fee.

• Payment for actual delivery of energy based on energy fee. The payment for energyutilisation is calculated as the product of the measured amount of delivered energy (afterutilisation) and the energy fee. In Hungary, the quantity of energy delivered is remunerated:for tertiary regulation (based on the ”energy fee”) and for secondary control (based on the”command response fee”).

3. Third particularity (bid selection): The bids for primary and secondary reserves are explic-itly sorted and selected according to their ”availability fee” only. Thus the ”command responsefee” is only used for the payment of the secondary reserve utilisation.

The bids for Minute Reserve (and Hourly Reserve) seem to be sorted and selected accordingto their ”availability fee” only. Nevertheless, the software system (MAVIR) for the Hungarian Bal-ancing Market include the possibility to pre-select Minute Reserve (and Hourly Reserve) accordingtheir ”availability fee” and their ”energy fee”.

Finally, the balancing bids for tertiary regulation are selected in real-time according to their”energy fee” only.

4. Fourth particularity (bid declaration): reserve and balancing bids can be seen as a set of one ortwo power quantities [MW] with one or two prices [currency/MWh]

• for primary reserve:{(1 power quantity for Up, 1 power quantity for Down); 1 availability fee}

• for secondary reserve:{1 power quantity (for Up or Down); (1 availability fee, 1 command response fee)}

• for tertiary reserve:{1 power quantity (for Up or Down); (1 availability fee, 1 energy fee)}

Finally, instead of noting the period of delivery in the bid declaration, market participants submitbids on one ”product”. A ”product” indicates the type of service tendered (reserve, balancingenergy, etc) and especially the time period when this service will be delivered.

Primary products are constituted of several hours; in contrast secondary, minute and hourly prod-ucts correspond to time blocks of one hour. Only one bid (for secondary or tertiary regulation)can be submitted per product of one hour, and per entity.

The regulation services and their markets related are described in table B.1:

67

B.3 Bid specificities

Participants can submit bids either for reserve markets (primary, secondary, minute or hourly reserve)or balancing market (for fast and slow tertiary regulation). They have the choice to offer regulation powerfor a certain time interval at a certain date. To implement these specificities, the notions of ”commodity”and ”product” can be used. [19]

Commodity

A ”commodity” indicates ”what is tendered” by the participant to the TSO: primary reserve, secondaryreserve, minute reserve or hourly reserve1.

Product

A ”product” indicates ”what is tendered” and for ”which time period”. A product can be simply seenas a pair {time period, commodity}. The time period is not a precise date, but a time interval (15min, 1h or more) that appears everyday or on specific days. In Hungary, the time period corresponds to”on-peak period” (i.e. busy period with high power production and consumption) or ”off-peak period”(i.e. period with a lower activity, e.g. nights or holidays).For example (from the user guide of the Hungarian Organised Market [16]):

• product 1 ⇔ [00:00-06:00] every working day (corresponding to off-peak period)

• product 2 ⇔ [06:00-22:00] every working day (corresponding to on-peak period)

• product 3 ⇔ [22:00-24:00] every working day (corresponding to off-peak period)

• product 4 ⇔ [00:00-24:00] every non working day (corresponding to off-peak period)

Bid form

In Hungary there are different bids for different markets, contrary to Romania where only one bid isused for almost all regulation services (see A). Any bid indicates ”what is tendered”, i.e. the commodity,the power quantity and the price for the service. Participants submit bids on pre-defined ”products”{time period, commodity}, which set the time period when the service would be available and maybedelivered.

B.4 Details of Primary Reserve Market

Primary Reserve Market

The Primary Reserve Market is a bi-annual market. For example the market is organised duringa week in March (bidding + bid clearing) for the market period [April 1st - Sept. 30th] (use of theresulting bids); then it is organised a second time in September for the market period [Oct. 1st - March31th].

The market participants offer availability of primary reserve; The bids are ranked and selected (by theTSO) according to their availability fee. The chosen market participants are paid at the availabilityprice (bid price).

1by extension, a commodity could be crossborder capacity or anything else that can be auctioned in electricity markets

68 Hungary

Primary bid form

”Primary reserve bids” include mainly:

1. entity concerned (and market participant)

2. amount of reserve offered for Upward control [positive MW]

3. amount of reserve offered for Downward control [negative MW] (thus it is the same price forup and down)

4. availability fee [HUF/MW]

5. availability plan with a daily resolution (which indicates if the reserve of the concerned entity isavailable or not for each day of the market period)

Primary products

The bids can be submitted on 4 different primary products constituted each of several hours:

product 1 ⇔ [00:00-06:00] every working day (corresponding to off-peak period)

product 2 ⇔ [06:00-22:00] every working day (corresponding to on-peak period)

product 3 ⇔ [22:00-24:00] every working day (corresponding to off-peak period)

product 4 ⇔ [00:00-24:00] every non working day (corresponding to off-peak period)

B.5 Details of Secondary Reserve Market

Secondary Reserve Market

The Secondary Reserve Market has two horizons:

• The first horizon corresponds to a bi-annual market. For example the market is organised duringa week in March (bidding + bid clearing) for the market period [April 1st - Sept. 30th] (use of theresulting bids); then it is organised a second time in September for the market period [Oct. 1st -March 31th]. [17]

• The second horizon corresponds to a daily market. In fact market participants are the same as forthe bi-annual secondary market; indeed, the 6-month bids are re-declared on the day-ahead marketevery-day. For the bids that have not been re-declared until the corresponding day of delivery, theinitial 6-month bid is used for the daily market. [17]

The daily market is organised on the day-ahead of the delivery day. Participants submit SecondaryReserve bids before 16:00 (day-ahead) and bids are selected between 16:00 and 00:00 (day-ahead).Secondary reserve is automatically used, when needed during the day of delivery. [17]

Secondary bid form

The market participants offer availability of secondary reserve; The bids are ranked and selected(by the TSO) according to their availability fee. Every chosen market participant is paid atthe availability price (bid price). In addition, after the actual delivery, chosen participants thathave had their secondary reserve used will be paid for the measured quantity of energy actually de-livered. This payment is based on their command response fee (which is not used in the merit order!2).

”Secondary reserve bids” include mainly:2In fact the software used in Hungary enables to select Secondary bids according to availability fees and command

response fees, however, apparently, the local TSO uses only availability fees in the merit order

69


2. amount of reserve offered [MW]

3. if it is for Upward or Downward control (thus prices are different for up or down)

4. availability fee [HUF/MW/h]

5. command response fee [HUF/MWh]

6. Technical limit [MW] (Min or Max quantity possible for the entity)

7. Rate of change [MW/15’] (ramp limit over 15 min)

8. Availability plan with a daily resolution (which indicates if the reserve of the concerned entity isavailable or not) for each day of the 6-month market period / Availability plan with a 1 hour (or15 min) resolution (which indicates if the reserve of the concerned entity is available or not) foreach hour (or 15 min) of the daily market period

Secondary products

The bids can be submitted on 24 different secondary products corresponding to each hour of a day(without any distinction between working and non-working days):

product 1 ⇔ [00:00-01:00]

product 2 ⇔ [01:00-02:00]

... ...

product 24 ⇔ [23:00-24:00]

Only one Secondary Reserve bid is submitted per entity and per hour (i.e. per product). In fact eachbid is a power quantity [MW] for a 1 hour interval, and it must be entirely selected in blocks of 1 hour.

B.6 Details of Minute Reserve Market

Minute Reserve

The Minute Reserve is a special fast tertiary reserve. It is delivered on the basis of 15 min blockinstead of 1 min resolution. If the TSO orders Minute regulation during the first half of the current15 min block, then the delivery of Minute Reserve should starts at the beginning of the next 15 minblock after instruction and lasts during the whole 15 min. According to the Code of Commerce of theHungarian Power System [15], ”the necessary ’one minute’ reserve equals to the highest value of:

1. power of the largest unit in operation

2. highest power in operation connected on the same section of bar-buses

3. 5% out of the total power generated in the system”.

70 Hungary

Minute Reserve Market

Bidding for Minute Reserve Market is done on the Balancing Market, which is a daily market. Thebusiness process is defined as following:

• [08:00 - 16:00] (day-ahead): Participants submit Minute Control bids between 08:00 and 16:00(day-ahead). The balancing bids are ranked according to their availability fee.

It can be noted that generation schedules can be modified during intra-day (until 1 hour ahead thehour of operation? ); so the ”Gate Closure” rolls every hour. But the balancing bid submissionstops very early at 16:00 day-ahead (at the same time as the Spot Market closure), and curiouslythe User Guide of the Hungarian Organised Market [16] does not indicate any bid (re-)submissionafter 16:00 day-ahead.

• [16:00 - 17:00] (day-ahead): The TSO pre-selects balancing bids to constitute the total MinuteReserve for the following day. The bids are (pre-)selected according to their availability fee andthey must be accepted in blocks of one hour. The TSO sends ”day-ahead orders” for reserve tothe chosen bidders. Every chosen market participant is paid at the availability price (bid price).

• 17:00 (day-ahead): Publication of the results of reserve pre-selection at 17:00 (day-ahead) on aweb-site.

• [17:00(day-ahead)3 - 24:00(intra-day)]: Then the pre-selected bids are ranked according totheir energy fee. During intra-day, the TSO selects tertiary bids (for energy delivery) in real-time,and immediately sends orders to entities/participants. The bids are selected according to theirenergy fee and they can be accepted totally in blocks of 1 hour, or partially in blocks of 15 min.

• After delivery, there is calculation of the utilisation price for fast and slow tertiary regulation,based on energy price, and for secondary control, based on command Response fee; then there isImbalance Settlement.

Minute Reserve bid form

”Minute Reserve bids” include mainly:


2. amount of reserve offered [MW]

3. if it is for Upward or Downward regulation (thus prices are different for up or down direction)

4. availability fee [HUF/MW/h]

5. energy fee [HUF/MWh]

6. Technical limit [MW] (Min or Max quantity possible for the entity)

7. Rate of change [MW/15’] (ramp limit over 15 min]

Minute products

Bids can be submitted on 24 different minute products corresponding to each hour of a day:

product 1 ⇔ [00:00-01:00]

product 2 ⇔ [01:00-02:00]

... ...3According to the User Guide of the Hungarian Organised Market [16], the TSO sends intra-day orders between 17:00

(day-ahead) and 24:00 (intra-day). The orders between 17:00 (day-ahead) and 00:00 (intra-day) are not clearly explained.

71

product 24 ⇔ [23:00-24:00]

Only one Secondary Reserve bid is submitted per entity and per hour (i.e. per product). In fact eachbalancing bid is a power quantity [MW] for a 1 hour interval. On the day-ahead (reserve pre-selection),bids must be entirely selected in blocks of 1 hour; whereas in intra-day (energy delivery), bids can beentirely accepted in blocks of 1 hour or partially accepted in blocks of 15 min.

B.7 Details of Hourly reserve market

Hourly Reserve

The Hourly Reserve is a slow tertiary reserve that is delivered at least 15 min after the order and thatcan last during one hour or more [15]. The main purpose of the Hourly Reserve is to restore MinuteReserve and cater for large perturbations.

In Hungary, the hourly reserve must follows special conditions: it can be called only ”if secondaryand minute reserve cannot ensure the control during more than 5 consecutive days” [15]. Besides, theminimum amount of offered Hourly Reserve is 10 MW per bid.

Hourly Reserve Market

The Hourly Reserve Market is completely separated from the Minute Reserve Market with different bids(contrary to Romania where the same bids offer fast ans slow regulation power). But the form of thebids are exactly the same and the market process too (though entities are able to produce slow reserve).It is even possible to exclude some Minute Reserve bids from the Minute Reserve Market in order to usethem for the Hourly Reserve Market.

72 Hungary

HUNGARY Delivery Participation Constitution Bid nameof power to regulation of reserve

Primary - automatic - Bidding of - Primary Reserve Bids forControl availability of is constituted by Primary

”primary control auction on the Reservepower” based on bi-annual Primary (for both”avail. price” Reserve Market up & down- Compulsory - the reserve availa- quantity)participation -bility is remunerated (availabilityto bidding at the avail. price fee)

Secondary - automatic - Bidding of - Secondary Reserve Bids forControl availability is constituted by Secondary

- after delivery, of ”secondary auction on the Reservethe power quantity control power” Secondary Reserve differentactually delivered according to Market (2 horizons): bids eitheris remunerated at the ”avail. 1. first tendering for up orthe utilisation price” on bi-annual market down reg.price (based on - Compulsory 2. bid re-declaration (availabilitythe command participation on daily market fee &response fee) to bidding? - The reserve availa- command

-bility is paid at responsethe ”avail. price” fee)

Minute - Manual dispatching - Bidding of - Minute Reserve is Bids forReserve - the TSO selects Minute Reserve constituted on auction Minute

& calls balancing on daily on the balancing market Reservebids in real time balancing market (day-ahead pre-selection different- delivered energy - Day-ahead based on avail. fee) bids eitheris remunerated pre-selection of - Reserve availability for up or(based on available minute is remunerated (based down reg.energy fee) reserve based on on availability fee) (avail. fee &

avail. fee energy fee)- Real timeselection ofminute controlenergy based onenergy fee

Hourly - Manual dispatching - Bidding of - Hourly Reserve is Bids forReserve - the TSO selects Hourly Reserve constituted on auction Hourly

& calls balancing on daily balan- on the balancing market Reservebids in real time -cing market (day-ahead pre- different- delivered energy - Day-ahead selection according bids eitheris remunerated pre-selection to availability fee) for up or(based on of available - reserve availability down reg.energy fee) minute reserve is remunerated (based (avail. fee &

- Real time on availability fee) energy fee)selection ofminute energy

Ancillary emergency reserve areServices purchased on auction

Table B.1: Overview of balancing services and markets in Hungary

Appendix C

Germany

C.1 Glossary

Availability fee: ”Price to keep 1 megawatt available for 1 hour [euro/MW/h].” [16]Energy fee: ”Price billed for 1 ordered megawatt during 1 hour [euro/MWh] (ordered in real time bythe TSO). Positive value means that the market participant wants to be paid. Negative value meansthat the market participant is ready to pay the market operator back.”[16]Bid Price: price of the regulation power (or reserve) indicated in the bid.Marginal Price: price of the regulation power (or reserve) of the last selected bid in the merit order.Minute Reserve: the Minute Reserve is a fast tertiary reserve that is delivered on the basis of 15 minblocks (instead of 1 min resolution). The delivery of Minute Reserve starts at the beginning of the next15 min block after the order and lasts during the whole 15 minutes.Control Area: a Control Area is ”a coherent part of an interconnected system (usually coincidentwith territory of a company, a country or a geographical area, physically demarcated by the position ofpoints for measurement of the interchanged power and energy to the remaining interconnected network),operated by a single TSO, with physical loads and controllable generation units connected within theControl Area. A Control Area may be a coherent part of a Control Block that has its own subordinatecontrol in the hierarchy of Secondary Control” (from UCTE Glossary [2]).Control Block: ”a Control Block comprises one or more Control Areas, working together in theSecondary Control function, with respect to the other Control Blocks of the synchronous area it belongsto” (from UCTE Glossary [2]).Commodity: a Commodity indicates ”what is tendered” by the participant to the TSO: primaryreserve, secondary reserve, minute reserve or energy, or hourly reserve or energy.Product: a ”product” indicates the type of service tendered (the Commodity: reserve, balancingenergy, etc) and above all the time period when this service will be delivered. Instead of noting theperiod of delivery in the bids, market participants submit bids on the ”product” they want.

C.2 Overview of Balancing Services and Markets related

German power system is divided in several Control Areas supervised by local TSOs. There are 4local TSOs in Germany (who are also grid owners): RWE, EnBW, EON, and Vattenfall Europe1.

1RWE Transportnetz Strom GmbHNET, EnBW Transportnetze AG, EON Netz GmtH and Vattenfall EuropeTransmission GmbH

74 Germany

The neighbouring country Austria is also divided in control Areas (with 3 local TSOs) and some of itscontrol Areas belong to the ”German Control Block” [2].

The German model has several balancing markets associated to reserve markets; some elements aresimilar to the Hungarian model (Minute Reserve, products, etc).

”The German market for balancing services was opened in February 2000, since September 2002 everyGerman TSO procures his overall demand for primary control, secondary control and minutes reserve byopen tendering procedures. (...) In July 2005 the new German Energy Law came into force. This maylead to adaptations in the market for balancing services in the future.” [2]

1. First particularity (Control Areas): Each TSO is responsible for the balance management of itsown Control Area and each Control Area is associated to a specific Balancing Market.

According to the ETSO report (Nov. 2005) [2], a ”Reserve Provider” can provide balancing reserveto any of the 4 TSOs; his physical location on the German network does not impose which ControlArea he has to supply. However the power supplier needs to have technical pre-qualifications toenter one of the Balancing Markets (so apparently a dispatch entity could not enter a market if itincreases problems of network congestions).

It is natural that local TSOs trade tertiary reserves with local power supplier, but they can alsotrade directly with an external power supplier from another Control Area. This is one of the”crossborder tertiary reserve trading” models: ”Reserve Provider” to TSO direct trading (seeparagraph 4.3.4).

This is why balancing bids (and reserve bids) must indicate toward which Control Area theregulation power (or reserve) goes; but, apparently, it is not necessary to indicate which physicaldispatch entity will provide the reserve [20].

2. Second particularity (Reserve Markets): Each TSO has its own Reserve Markets for primary, sec-ondary and tertiary reserve. Primary and Secondary Reserve markets are separated fromBalancing Market and are based on 6 month tendering (for all TSOs).

The type of Fast Tertiary Reserve is Minute Reserve (special tertiary reserve delivered in blocksof 15 min), like in Hungary. The Minute Reserve Market is a daily market (it is in fact thebalancing market) where reserve availability is pre-selected on the day-ahead and then ’minutecontrol energy’ is selected in real-time for its delivery.

3. Third particularity (payment modes): There exist two ways to pay regulation services.

• Payment for availability of reserve based on availability fee. The payment for availabil-ity is calculated as the product of the forecasted amount of available reserve and the availabilityfee. This mode of payment is used to remunerate availability of primary, secondary, fast &slow tertiary reserves.

• Payment for actual delivery of energy based on energy fee. The payment for energyutilisation is calculated as the product of the measured amount of delivered energy (afterutilisation) and the energy fee. This mode of payment is used to remunerate availability ofsecondary, fast (& slow) tertiary reserves.

4. Fourth particularity (bid selection): The bids for primary reserve are explicitly sorted andselected according to their ”availability fee” only.

Bids for secondary reserve may be be sorted and selected according to their ”availability fee”only or according to their ”availability fee” and ”energy fee”.

There are differences between German TSOs concerning bid selection: the bids for MinuteReserve are pre-selected according to ”availability fee” only, except for the TSO Vattenfall Europe,for which Minute Reserve bids are pre-selected according to an optimisation between ”availabilityfee” and their ”energy fee”. [21]

Then, the balancing bids for tertiary regulation are selected in real-time according to their”energy fee” only.

75

Finally, every TSO pays selected bidders at the bid price, except the TSO EON who pays at themarginal price.

5. Fifth particularity (bid declaration): reserve and balancing bids can be seen as a set of one or twopower quantities [MW] with one or two prices [currency/MWh] (availability fee and/or energy fee).

The time period when reserve must be available or regulation power must be delivered is notindicated in the bid but through a ”product” (like in the Hungarian model). A ”product”indicates also the ”commodity”, i.e. the type of service tendered (reserve, balancing energy, etc).

The regulation services and their markets related are described in table C.1:

C.3 Bid specificities

Market participants have the choice to offer balancing bids (and reserve bids) for a certain timeinterval at a certain date; this is implemented by the notions of ”product”. [19]

Product

The main purpose of a product is to indicate what is tendered on the market (commodity) and whenthe reserve must be available (and sometimes, the dispatch interval when the regulation power must beactivated).

In Germany, products are defined by- the type of balancing service (e.g. minute reserve for upward-regulation)- the time period when the balancing service must be available (e.g. every working day - monday tofriday -, from 01.01.06 (starting at 01:00) to 01.03.06, during winter)- the time of day during which the balancing service must be available (e.g. [06:00 - 18:00]).

The term ”product validity” can also be used to talk about ”period for balancing serviceavailability”. For example, if the product is valid every monday in May at [06:00-14:00], this means thatthe corresponding reserve must be physically available every monday in May at [06:00-14:00].

More formally, the following elements should be listed to define a product [20]:

1. Product name: e.g. ’Product1’

2. Type of regulation power: ’primary’, ’secondary’ or ’minute reserve’ power

3. Direction of the regulation: ’upward’ or ’downward’

4. ”Global period” including all the periods when the product would be valid (when the service wouldbe available): FROM ’start day’ TO ’end day’

5. Beginning hour when the product starts to be valid (when the regulation power must start to beavailable)

6. Day type: days in the week when the product is valid, e.g. ’Mon.-Fri.’

7. Time period: ’winter’ or ’summer’

8. Time of day: Set of hours during the day when the balancing reserve should physically be available(or even, in some cases, balancing power should physically be delivered)

The following table C.2 presents some examples of products [20]):

76 Germany

Bid form

In Germany there are different bids for the different markets. The bid should globally include thefollowing parameters [20]:

1. Bid ID

2. Bidder ID

3. Control Area in which supply is to occur

4. Partial Area in which supply is to occur

5. Product

6. Price (availability fee and/or energy fee)

7. Technical limits (entity’s maximal production or consumption)

8. Ramp limit

C.4 Details of Primary Reserve Market

The Primary Reserve Market is a bi-annual market, where pre-qualified generators participate.The market participants offer availability of primary reserve; The bids are ranked and selected (by theTSO) according to their availability fee. The chosen market participants are paid-as-bid, at theavailability price.

Concerning Primary Control, the table C.3 compares some features of the German TSOs [21].N.B.: Base Period: 24h/24 and 7 days/7 ; Peak period: 12h/24 and 5 days/7

C.5 Details of Secondary Reserve Market

The Secondary Reserve Market is a bi-annual market, where participation is voluntary.The market participants offer availability of secondary reserve and bid 2 prices: an availability

price and an utilisation price, therefore bids for secondary reserve include an availability fee and anenergy fee. Every chosen market participant is paid at the availability price (bid price). In addition,after the actual delivery, chosen participants that have had their secondary reserve used will be paid forthe secondary energy actually delivered, at the utilisation price. This payment is based on the energyfee.

According the sources about German system ([1] and [21]), it is not clear whether bids for secondaryreserve are selected according to availability fee only, or according to both availability fee and energyfee.

Concerning Secondary Control, the table C.4 compares some features of the German TSOs [21].

77

C.6 Details of Minute Reserve Market

Minute Reserve

The Minute Reserve is a special fast tertiary reserve. It is delivered on the basis of 15 min blocksinstead of 1 min resolution. The delivery of Minute Reserve starts at the beginning of the next 15 minblock after instruction and lasts during the whole 15 minutes.

Minute Reserve Market

The market participants bid 2 prices (an availability price and an utilisation price), thereforeMinute Reserve bids include an availability fee and an energy fee.

The TSO pre-selects balancing bids to constitute the total Minute Reserve on the day-ahead. Atthis stage, every chosen bidder is paid at the availability price; however there are differences betweenGerman TSOs concerning bid selection [21]:- On one hand, 3 of the German TSOs (RWE, E.ON & EnBW) pre-select the necessary Minute Reserveaccording to the availability fee only.- On the other hand, the TSO Vattenfall Europe pre-selects the necessary Minute Reserve according toan optimisation between availability fee and energy fee.

Then the pre-selected bids are ranked according to their energy fee. During intra-day, the TSO selectstertiary bids (for energy delivery) in real-time, and immediately sends orders to entities/participants.The bids are selected according to their energy fee. The minute regulation will be remunerated (thanksto Imbalance Settlement) based on the energy fee.

Concerning Minute Control, the table C.5 compares some features of the German TSOs [21].

78 Germany

GERMANY Delivery Participation Constitution Bid nameof power to regulation of reserve

Primary automatic - Bidding of - Primary Reserve Bids forControl availability is constituted by Primary

of ”primary auction on a Reservecontrol power” 6 month market(avail. fee) - the reserve- Bidding of availability ispre-qualified remunerated at the (avail.generators availability price fee)

Secondary - automatic - Bidding of - Secondary Reserve Bids forControl availability is constituted by Secondary

- after delivery, of ”secondary auction on a 6 month Reservethe power quantity control power” market.actually delivered - Voluntary bidding - the reserve (avail.is remunerated at - Bidders bid 2 fees: availability is fee &the utilisation ”avail. fee” & remunerated at the energy fee)price (based on ”energy fee” availability priceenergy fee) (it is not clear (based on the

whether bid selection avail. fee)is based upon ”avail.fee” only or both”avail. fee” &”energy fee”?)

Minute - Manual dispatching - Bidding of Minute - Minute Reserve Bids forReserve - the TSO selects Reserve on daily is constituted Minute

& calls balancing balancing market on auction on the Reservebids in real time - Voluntary bidding balancing market- delivered energy - Bidders bid 2 fees: (day-ahead pre-is remunerated ”avail. fee” & selection based(based on ”energy fee” on avail. fee) (avail.energy fee) - Day-ahead - reserve fee &

pre-selection of availability energy fee)available minute is remuneratedreserve according to (based oneither avail. fee avail. fee)only(for 3 TSOs)or both avail. &energy fees(for 1 TSO)- Real time selectionof minute controlenergy based onenergy fee

Table C.1: Overview of balancing services and markets in Germany

79

Product ”global period” start Day type Time period Commodity Time of dayP1 from 01.01.01 Mon.-Fri. Summer Tertiary 06:00-18:00P2 from 01.01.01 Sat./Sun. Summer Tertiary 06:00-18:00P3 from 01.01.01 Mon.-Fri. Winter Tertiary 07:00-17:00P4 from 01.01.01 Sat./Sun. Winter Tertiary 06:00-18:00P5 from 01.01.02 Mon.-Fri. Entire year Primary 06:00-18:00P6 from 01.01.02 Sat./Sun. Entire year Primary 06:00-18:00

Table C.2: Examples of ’products’ in Germany

Local TSOs’names RWE E.ON EnBW Vattenfall Europe

Trading Every Every Every Every

Time 6 months 6 months 6 months 6 months

Total ”+1230MW/ ”+800MW/ ”+720MW/ ”+580MW/

Capacity asked -1230MW” -400MW” -390MW” -580MW”

Min Capacity to Offer 30MW 30MW 30MW 20MW

Product Peak/Base Peak/Base Peak/Base Peak/Base

characteristics Period Period Period Period

Time to At least Whole period At least At least

guarantee reserves 4 hrs offered 4 hrs 4 hrs

Table C.3: Comparison between German TSOs concerning Primary Control [21]


Trading Every Every Every Every

Time 6 months 6 months 6 months 6 months

Total ”+310MW/ ”+190MW/ ”+75MW/ ”+150MW/



Product only working day Peak/Base only working day only working day

characteristics /week end possible Period /week end possible /week end possible



Table C.4: Comparison between German TSOs concerning Secondary Control [21]


Trading Time daily daily daily daily

Total ”+1030MW/ ”+1110MW/ ”+510MW/ ”+730MW/



Product period Peak/Base Peak/Base period

characteristics of 5 offers Period Period of 6 offers



pre-selection of bidders availability availability availability availability

for Minute Reserve fee fee fee & energy fee

remuneration pay as bid marginal price pay as bid pay as bid

Table C.5: Comparison between German TSOs concerning Minute Control [21]

80 Germany

Appendix D

France

D.1 Glossary

Balance Responsible or BRP: Balance responsible player; every market players has to choose abalance responsible which will be financially responsible for maintaining the balance between produc-tion and consumption. The BRP is especially responsible if one of the related players fails to deliver thescheduled power. The cost due to the ensuing imbalance between scheduled power and actually deliveredpower will be handled by the BRP.Balance Area: area including a set of entities (generation units and loads) under the responsibility ofa Balance Responsible.Implicit Offer: Balancing bids for (large) generators. Tertiary reserve is offered together with genera-tion schedules.Explicit Offer: Balancing bids for other balancing entities (loads, balancing entities at connectionpoints, aggregate set of balancing units, balancing entities connected to the distribution network). Ex-plicit Offers are submitted on the Balancing Market, apart from generation scheduling.Exclusive Offer: Balancing bids for thermal generators that have a nominal generation quantity of100MW and can have a production equal to 0MW during a part of the day.”Mobilization delay” (DMO): Time delay between the beginning of regulation power delivery andthe time of bid activation, i.e. when the required amount of regulation power is reached.

D.2 Overview of Balancing Services and Markets related

France does not have any ’reserve market’. The balancing market is only used to trade tertiaryregulation power. The French system with rules as defined here is currently in operation (Sept. 2006).

1. First particularity (Balancing market for tertiary regulation): There is no Reserve Market inFrance, only tertiary regulation power (for real time delivery) is tendered on the Balancing Market.By the way, there is no explicit distinction between fast and slow tertiary regulation in the bidding.

Reserves for primary, secondary, tertiary regulations are contracted bilaterally or provided directly:generators send to the TSO their maximum capacity of primary and secondary reserve togetherwith their generation schedule.

2. Second particularity (Balancing bids): There are three types of balancing bids for tertiary regula-tion, in France:

82 France

- Implicit Offer: Balancing bids for (large) generators. Tertiary reserve is offered together withgeneration schedules.- Explicit Offer: Balancing bids for other balancing entities (loads, balancing entities at con-nection points, aggregate set of balancing units, balancing entities connected to the distributionnetwork). Explicit Offers are submitted on the Balancing Market, apart from generation schedul-ing.- Exclusive Offer: Balancing bids for thermal generators that have a nominal generation quantityof 100MW or more and can have a production equal to 0MW during a part of the day.

3. Third particularity (Balancing Market process): In France, generation schedules are declared be-fore 16:00 day-ahead. Then there are 12 gates for re-declaration of generation schedules, hence12 ”Gates Closures” (1 gate on the day-ahead at 22:00 and 11 gates in intra-day at 00:00, 02:00,04:00, 06:00, 08:00, 10:00, 12:00, 14:00, 16:00, 18:00, and 20:00). Participants can re-declare theirschedule (and thus update their possible reserves) at any time during the day; the new schedulewill be registered by the TSO at the next gate (hence it is a kind of ”Gate Closure”).

These ”Gate Closures” coincide with the 13 gates that punctuate the Balancing Market:

• 2 Gates on day-ahead: 16:00 and 22:00 ;• 11 Gates in intra-day: 0:00, 2:00, 4:00, 6:00, 8:00, 10:00, 12:00, 14:00, 16:00, 18:00 and 20:00.

The first gate for balancing bid submission is on the day-ahead at 16:00. Every balancing bidssubmitted before 16:00 (d.a.) are taken into account by the system at this first gate.

Then the other gates are the same 12 gates (1 gate on the day-ahead at 22:00 and 11 gates inintra-day at 00:00, 02:00, 04:00, 06:00, 08:00, 10:00, 12:00, 14:00, 16:00, 18:00, and 20:00). Everybalancing bids submitted after 16:00 (d.a.) are taken into account at the first gate following thesubmission.

For a given ”fixed window” gate, all the balancing bids taken into account (at this gate) and whichoffer regulation power for the next period of operation (2 hours after) cannot be changed until theperiod of operation and will be directly used for the real-time regulation

For the intra-day regulation, the TSO calls an offer less than an hour before the beginning of thedelay of mobilization.

The regulation services and their markets related are described in table D.1:

D.3 Details about Tertiary Reserve

In France there is no terminology such as fast or slow tertiary reserve, but there exist names for thevariations of tertiary reserve:- Supplemental Fast Reserve : Type of tertiary reserve in France (time for full delivery is about 30min); ”manually instructed energy capacity for replacement of fast reserve” (according to the ETSOreport [1]).

- Decremental Reserve : Type of tertiary reserve in France (time for full delivery is about 30 min);”manually instructed downwards energy capacity for frequency control during load valleys” (accordingto the ETSO report [1]).

- Reserve at Peak : Type of tertiary reserve in France (time for full delivery is about 30 min);”manually instructed energy capacity for replacement of fast reserve and supplemental fast reserve”(according to the ETSO report [1]).

- Delayed Reserve : Type of tertiary reserve in France (time for full delivery is about 8 hours);”cold start energy capacity for replacement of Reserve at Peak” (according to the ETSO report [1]).

83

FRANCE Delivery Participation Constitution Bid nameof power to regulation of reserve

Primary automatic mandatory Primary reserveControl is offered with

generation schedules

Secondary automatic mandatory Secondary reserveControl is offered with

generation schedules

Tertiary - Manual dispatching Implicit Offers,Reserve - the TSO selects Explicit Offers,

& calls balancing Exclusive Offersbids in real time- delivered energyis remunerated(based onenergy fee)

Table D.1: Overview of balancing services and markets in France

Only the utilisation of tertiary reserve is tendered on the Balancing Market. The constitution ofprimary, secondary and tertiary reserves is not related to auction mechanisms.

D.4 Generation scheduling

The Generation Schedule of every generation plant must be set on the day-ahead for each 1/2hour of the following day. In the same time, the possible Primary Reserve , Secondary Reserveof every generation plant are set for each 1/2 hour of the following day. Therefore the generationscheduling includes primary and secondary reserves. Every Balance Responsible sends the generationschedule and the associated primary and secondary reserves of all the generation units, especially largeplants of the corresponding Balance Area to the TSO.

The declaration of generation schedule and primary and secondary reserve before 16:00 day-ahead includes:- maximum of active power (possibly generated by the concerned entity)- technical minimum (of generation for the concerned entity)- generation schedule (in MW)- price for reserve availability based ”on a cost reflective basis” [1]. - schedule of the availability ofprimary reserve (in MW)- schedule of the availability of secondary reserve (in MW)

Then, there are 12 gates for re-declaration of generation schedules (and primary and secondaryreserves), hence 12 ”Gates Closures” (1 gate on the day-ahead at 22:00 and 11 gates in intra-day at00:00, 02:00, 04:00, 06:00, 08:00, 10:00, 12:00, 14:00, 16:00, 18:00, and 20:00).

The re-declaration of generation schedule and primary and secondary reserve includes:- new schedule of active power- new amount of primary reserve

84 France

- new amount of secondary reserve

The re-declaration is taken into account at the next gate. The TSO can refuse it until 30 min afterthis gate.

Consumption schedule

The declaration of consumption schedule for loads is compulsory only if the load will be used foradjustment (tertiary regulation). The declaration and re-declaration of consumption schedule follow thesame rules as for generation scheduling.

Emergency reserve

The entire active power that is technically available and not used through scheduling must be availableto the TSO as Emergency Reserve. This reserve would be used in case of emergency, if there is a lack ofbalancing bids.

D.5 Balancing Market

In France, only tertiary regulation power is traded with balancing bids, through a real time adjustmentmechanism. There are 2 ways to ensure participation to Balancing Market (for the ”fast reserve” and”supplemental fast reserve”): trough annually negotiated commitment to submit balancing bids, or bydirect daily submission.

The 13 ”Gate Closures” (for scheduling) coincide with the 13 gates that punctuate the process of bidsubmission. The first gate is on the day-ahead at 16:00; every balancing bids submitted before 16:00(d.a.) are taken into account by the system at this first gate.

Then the other gates are the same 12 gates: 1 gate on the day-ahead at 22:00 and 11 gates in intra-dayat 00:00, 02:00, 04:00, 06:00, 08:00, 10:00, 12:00, 14:00, 16:00, 18:00, and 20:00. Every balancing bidssubmitted after 16:00 (d.a.) are taken into account at the first gate following the submission.

For a given ”fixed window” gate, all the balancing bids taken into account (at this gate) and whichoffer regulation power for the next period of operation (2 hours after) cannot be changed until the periodof operation and will be directly used for the real-time regulation.

For the intra-day regulation, the TSO calls an offer less than an hour before the beginning of thedelay of mobilization.

The process of submission, call and activation of balancing bids is illustrated in the figure D.1.

Figure D.1: process of submission, call and activation of balancing bids [10]

N.B.: The DMO, ”Mobilization delay”, is the time delay between the beginning of regulation powerdelivery and the time of bid activation, i.e. when the required amount of regulation power is reached.

85

Balancing bid declaration

The declaration of balancing bids includes the following basic parameters:

• Identification of the balancing entity

• Time period of adjustment (when the balancing bid is valid)

• Period of bid validity

• Bid direction: upward or downward

• Bid price [/MWh]

price of a balancing bid

• upward-regulation bids have only a positive price: because the TSO always pays participants forgenerating more power)

• downward-regulation bids have either- a positive or null price: if the participant pays - or not - the TSO, or- a negative price:if the TSO pays the participant.

There are two main kinds of balancing bids in France: ”Implicit Offers” for large generators and”Explicit Offers” the other kinds of (generating/consuming) entities.

D.6 Implicit Offer

In France, large generators must declare on the day-ahead their generation schedule and theiravailable primary and secondary reserve, for every 1/2 hour of the following day. At the same time, theyalso offer their available tertiary reserve for every 1/2 hour of the following day. In fact, the declarationof tertiary reserve for generators corresponds to a balancing bid called Implicit Offer.

As for the declaration of generation schedule, the submission of Implicit Offers is done before 16:00day-ahead; then they can be re-submitted during intra-day. Any new declaration of tertiary reserve istaken into account at the next gate (among the 12 intra-day gates).

Implicit Offers have the basic parameters of balancing bids, and they also include:

• Maximal available power

• Technical minimum (of power generation)

• Primary reserve and Secondary reserve (also given with generation scheduling)

• Duration of tertiary reserve utilisation:- maximal duration (of reserve utilisation) for hydro-power units - minimal duration (of reserveutilisation) for thermal-power units

• maximal offered quantity of balancing power (i.e. maximal generation increase, in case of up-regulation, or maximal generation increase, in case of up-regulation)

• ”Mobilization delay”: time delay between the beginning of regulation power delivery and the timeof bid activation, i.e. when the required amount of regulation power is reached); this representstechnical or operational constraints.

In other word, with two Implicit Offers (for upward and downward regulation) a generation unitoffers to increase (until the maximal available generation) or decrease (until the minimal technical limitof generation) its generation schedule. This is illustrated by the figure D.2. Nevertheless, the offeredamount of tertiary power and the related price are constant per each block of 1/2 hour.

86 France

Figure D.2: Implicit Offer: increase and decrease of generation schedule [10]

D.7 Explicit Offer

Explicit Offers are the balancing bids for balancing generation units and balancing loads, exceptlarge generators and thermal generators:- loads- balancing entities at connection points- aggregate set of balancing units- balancing entities connected to the distribution network.Contrary to Implicit Offers, Explicit Offers are not associated to generation scheduling, nor primaryand secondary reserves. In fact the tertiary reserve is given under the form of a schedule of generationavailability (or a schedule of consumption availability), between a minimal and a maximal offered amount(see fig. D.3).

t

P

Maximal consumptionschedule

Available amount of offered Powerfor consumption (downward regulation)

0

Minimal consumptionschedule

Figure D.3: Explicit Offer [10]

Explicit Offers have the basic parameters of balancing bids, and they also include:

• Schedule of the maximal available power (constant value of production or consumption per 1/2hour)

87

• Schedule of the minimal available power (constant value of production or consumption per 1/2hour)

• Minimal duration of tertiary reserve utilisation

• Maximal duration of tertiary reserve utilisation

• Maximal energy

• ”Mobilization delay” (≥ 30min): time delay between the beginning of regulation power deliveryand the time of bid activation, i.e. when the required amount of regulation power is reached); thisrepresents technical or operational constraints.

As for Implicit Offers, Explicit Offers are submitted a first time before 16:00 (d.a.); then they can bere-submitted all day long until a certain time prior to the corresponding hour of operation. New bidsare taken into account at the next gate following the re-submission. If the concerned gate is the lastone before the period of delivery, the last Explicit Offers cannot be changed anymore, and they will bedirectly used for the real-time regulation.

D.8 Exclusive Offer

Exclusive Offers are special balancing bids for thermal generators, which nominal generation issuperior or equal to 100MW and which can be ”off” during several hours of the day (i.e. their generationschedule can be null for part of the day). The Exclusive Offers are used for starting-up such thermalgenerators.

A balancing market participant can submit three Exclusive Offers for upward regulation on thesame thermal plant. The three Exclusive Offers have the same characteristics and are valid for 24 hours(i.e. the period of validity is [00:00-24:00]).

Only three parameters can vary between the three Exclusive Offers:- bid price- Minimal duration of tertiary reserve utilisation

The bid price decreases when the minimal duration of utilisation increases.

D.9 ”Adjustment in advance”

The balancing market can be used to perform ”adjustment in advance” of the generation schedules:the TSO can select balancing bids before the hour of operation, in basing his choice on short-term loadforecasts. Then the selected bidders must change their production/consumption plans. The rest of theunused balancing bids are kept for the tertiary regulation in real time. This is not a normal balancingservice, but a somewhat ”up dating” of the production schedule, using balancing bids.

88 France

D.10 Crossborder tertiary reserve trading at the Frenchborders:

The French TSO ”RTE offers the possibility, whenever the intra-day cross-border arrangements atneighbouring TSOs allow so, to integrate offers from interconnected areas into the Balancing Mechanism”.The mechanism is opened to participants from Switzerland, Spain, England and Germany.” [2]

According to the ETSO report [2], if an external ”Reserve Provider” wants to enter the FrenchBalancing Market from a given interconnection, he has to define a special bid: this bid will not indicatethe real dispatch entity but an ”Interconnection Balancing Unit”, which is not a physical dispatchunit.

”Technical conditions of the bids (which are bidders responsibility) depend on :

• the technical characteristics of the physical means used by the bidder to source his bid.

• the intra-day cross-border arrangements for entry/exit of energy defined by the neighbouring TSO.

When the French TSO activate a bid:

• on the French side, RTE schedules the corresponding exchange program

• on the neighbouring TSOs side, it is bidders responsibility to make sure that his bid is scheduledby the TSO

• in case the two schedules do not match, the bid cannot be delivered; in this case, under the linesof the BM rules, bidders responsibility is engaged, as is the case when a generating unit does notdeliver energy corresponding to the agreed activated bid.” [2]

Example 1: at the border between France and Spain [10]:- The bid is submitted by the external participant before 16:00 on the day-ahead.- RTE calls the bid before 17h30 on the day-ahead. The schedule is adjusted in advance.- RTE (French TSO) and REE (Spanish TSO) check that the offer has been correctly delivered.

Example 2: at the border between France and England:The use of the link between France and GB is remunerated (and reserved on capacity auction). Thecrossborder reserve trading between France and GB is used for two services: [2]

1. ”Emergency exchange: this service is permanently available but may only be called in case oflast resort before load shedding. The emergency exchange is paid at a fixed price.

A TSO can only refuse the service if he is himself in such a position that he should himself curtailcustomers to be able to supply. The volume offered is 1000 MW in each direction (FR to UK orUK to FR)

2. Balancing services: this service allows RTE and National Grid to exchange energy in order tosolve a congestion or to balance their respective systems. The price is based on the imbalancepricing for each system (e.g. in France it is based on the highest Powernext hourly price + 50euros).

This service is available as long as it is not declared unavailable. The volume offered is 500 MW ineach direction. This volume is limited by Intra-day Transfer Limits (intra-day limits of availablecapacity) defined intra-daily from end of day ahead on. A TSO may ask more than 500 MW butacceptation by the other is not mandatory. A TSO uses this service after using his local balancingmechanism in case there are no available bids/offers able to solve his problem.”

Appendix E

The Nordic countries

E.1 Glossary

Nordel: Nordic Electric Market, comprising Sweden, Norway, Finland, Denmark.Synchronous System: ”Synchronously interconnected power system consisting of the subsystems ofNorway, Sweden, Finland and Eastern Denmark (Sjaeland). Western Denmark is synchronously inter-connected with the UCTE system.”Subsystem: ”Power system an operator is responsible for”. Each country in Nordel is a subsystem.Nord Pool: Power exchange pool common to the Nordel countries.Elspot trading: ”Power trading on the spot (day-ahead) market of Nord Pool Spot. Elspot tradingcan occur prior to the day of operation in all subsystems.”.Elbas trading: ”Power trading in Elbas (short-term) market at Nord Pool Spot. Elbas trading cantake place in Sweden, Finland and Denmark prior to and during the day of operation after elspot tradinghas finished.” Norway does not take part to Elbas trading because Norway electric production is mainlyhydraulic.Elspot areas: ”Areas of the elspot market which the interconnected Nordic power system is divided intoin order to deal with potential capacity limitations (bottlenecks) on the transmission network. Potentialbottlenecks give rise to different elspot process in elspot areas. In Finland, Sweden, Western Denmark,the elspot areas correspond to the subsystems, i.e. the countries. In Norway, there are several elspotareas, and the areas change from time to time.”

E.2 Overview of Balancing Services and Markets related

The Nordic countries constitute a common power system, NORDEL, with a common market placeNord Pool. The Balancing Market is only used for the delivery of tertiary regulation power and forthe management of network congestions.

1. First particularity (NORDEL): The Nordic countries constitute a joint power system, Nordel,including a synchronously interconnected power system consisting of the subsystems of Norway,Sweden, Finland and Eastern Denmark (Sjaeland). Western Denmark is synchronously intercon-nected with the UCTE system.

2. Second particularity (Tertiary regulation): Nordel do not have any Secondary Control. The Nordiccountries use first an automatic ”Primary Regulation”, which is an equivalent of the Primary

90 The Nordic countries

Control in UCTE and then a manual ”Secondary Regulation”, which is an equivalent of theTertiary Regulation in UCTE.

3. Third particularity (Balancing Market process): The Balancing Market is only used for the deliv-ery of tertiary regulation power and for the management of network congestions. The balance-management participants submit their balancing bids to their local TSO. Then all the balancingbids (referring to any balancing entity from anywhere within the Nordic countries) are sorted ina common merit-order list (”bid ladder”) jointly for Norway, Sweden, Finland and WesternDenmark. A ”super TSO” (constituted by the Norwegian TSO and the Swedish TSO) selects thebalancing bids for all the Nordic system, regardless the origin of the balancing energy (except incase of congestion management). Finally the ”super TSO” transmits the selection to local TSOs,which activate their local balancing entities.

The regulation services and their markets related are described in table E.1:

FRANCE Delivery Participation Constitution Bid nameof power to regulation of reserve

Primary automatic contracted no market mechanismControlSecondary does not exist does not exist does not existControlTertiary - Manual dispatching ”RegulationReserve by local TSOs bid”

- the super TSO selectsbalancing bids from thecommon merit-order list& calls local TSOs- delivered energyis remunerated(based on energy fee)

Table E.1: Overview of balancing services and markets in Nordel

E.3 Details about Regulation Services

Nordel do not have any Secondary Control. The Nordic countries use first an automatic ”Pri-mary Regulation”, which is an equivalent of the Primary control in UCTE and then a manual”Secondary Regulation”, which is an equivalent of the Tertiary regulation in UCTE.

Primary regulation/control: first response of the automatic control systems to maintain thebalance between consumption and production in Nordel, within a short time-scale (few seconds). Thefrequency can be stabilised at another value than 50Hz. There is no Nordic market solution for theprimary control. The ”Primary Regulation” includes:

• Frequency controlled normal operation reserve: ”Momentarily available active power(600MW), available for frequency regulation in the range of 49.9 - 50.1Hz and which is acti-vated automatically by the system frequency. Previously called the Frequency regulation reserve.””Amount of power that will be fully activated within 2 to 3 min, in the wake of an instantaneousfrequency drop of 0.1Hz (frequency deviation within [49.9 - 50.1Hz]). [1]

• Frequency controlled disturbance reserve: ”Momentarily available active power (1000MW),available for frequency regulation in the range of 49.9 - 49.5Hz and which is activated automatically

91

by the system frequency. Previously called the Momentary disturbance reserve.” ”Amount of powerthat will be fully activated in the wake of an instantaneous frequency drop below 49.9Hz down to49.5Hz”. [1]

The manual ”Secondary Regulation” is a ”Manually instructed un-synchronised and synchro-nised energy capacity that can be activated quickly to compensate for demand forecast errors and shortterm plant loss” and to restore momentary reserve. It must be fully delivered within 15 min (in Norway),5-10min (in Sweden and Finland) or 1min-1hour (in Denmark). It is traded on the balancing market, byaccepting a submitted bid from a common Nordic merit order list (bid ladder). Accepted bids are paidat the marginal price in all Nordel countries except Denmark, where it is paid at the bid price.

Amongst the tertiary reserves can be found:- Slow disturbance reserve (only in Denmark): ”Manually instructed reserve capacity to re-establish mo-mentary disturbance reserve” within 4 hours.- Slow reserve or Peak Load reserve: ”Thermal power plants on stand by (with 6 - 48 hours of prepared-ness).”

E.4 Principles of the electricity markets and Balancing Marketin NORDEL

Nordel is a joint electric market, comprising Sweden, Norway, Finland and Western Denmark. Eachcountry is referred to as ’subsystem’ and has its own national TSO. The Nordic system aims to performa global balance management with a common electric system and a common Balancing Market, incontrast to Germany where each Control Area has its own Balancing Market.

However, there are significant constraints of capacity limitations at national interconnections whichcannot be avoided. It is why the Nordic electric system is firstly divided into pre-defined spot areas(also called ”Elspot areas” from the name of the Nordic Spot Market, ”Elspot”): 1 fix spot area inSweden, Finland and Western Denmark, and 2 or 3 dynamic spot areas in Norway. Then, the Nordicsystem is often divided again into congestion zones in order to solve network congestions during thereal time adjustment.

1. For the day-ahead Spot Market (called ”Elspot”), buyers and sellers submit bids through acommon power exchange, called Nord Pool. But because of congestion management at interconnections(Market Splitting), there often exist several spot areas, hence several Spot Markets with specific marketprices.

The ”Elspot market” closes at 12:00 day-ahead, which means that all participant to the spot marketmust have submitted their buying and selling bids until 12:00 day-ahead.

At 15.00 d.a. in Norway, at 16.00 d.a. in Sweden or at 19.00 d.a. in Denmark, market participantssend their initial generation (& consumption) schedules to their local TSO. The Elspot marketcloses and then the Elbas market opens (see fig. E.1). [?]

2. After the Spot Market closure, the aspect of ”shared market” is emphasized with the commonmarket called ”Elbas”. Elbas is used for schedule adjustment after the Spot Market closure. It is amarket place where any participants (coming from anywhere in Scandinavia, except Norway) can submitbids to buy and sell power, via an Internet interface. ”Elbas” is not a second Spot Market: indeedthe clearing of selling and buying bids generates bilateral trades and hence adjustment of participants’schedules.

All participants send their final generation (& consumption) schedules to their local TSO at the”Gate Closure”. Scandinavian countries have a rolling ”Gate Closure”: For an hour of operationT, the ”Gate Closure” occurs at T-1min in Sweden, at T-45min in Denmark or at T-1h in Norway (seefig. E.1). [?]

3. Aside from Elspot and Elbas, there is a common Balancing Market, which is used only for


tertiary regulation and congestion management (Counter-Trading). The specificity of this NordicBalancing Market is that all balancing bids from Norway, Sweden, Finland and Western Denmark aregathered and sorted in a common merit-order list or ”bid ladder”.

The model of ”crossborder tertiary reserve trading” in Scandinavia is the ”TSO-TSO trading”:- First participants submit balancing bids to their local TSO. For an hour of operation T, the balancingbids must be submitted to the local TSOs at T-30min in Sweden, at T-1hour in Denmark or atT-1hour in Norway (see fig. E.1).- Then the local TSO sends the balancing bids to the ”super TSO” (which is constituted of theNorwegian TSO (Statnet) and the Swedish TSO (Svenska Kraftnat)). The ”super TSO” selectsbalancing bids from the ”bid ladder” (joint list) for congestion management and tertiary regulation inall the Nordic system.- Finally the local TSOs receive orders from the ”super TSO” and then activate their local dispatchentities. The whole process for activation takes about 10-15 min [2].

In fact, the congestion management (counter-trading) is performed in priority, before the tertiaryregulation. Hence the Nordic territory is again divided in congestion zones, which usually match the”Elspot areas”. Besides, balancing bids used for congestion management (in real time) are notified inthe joint list and separated from balancing bids used for tertiary regulation. It is important to knowthe location of the balancing reserve provider.

4. The variation of exchanged power between the two Elspot areas due to crossborder reservetrading is not included in the schedule adjustment. It will be taken into account during ImbalanceSettlement between TSOs, as an imbalance between metered and scheduled exchange power betweentwo TSOs.

The different processes and timescales explained above are illustrated in the figure E.1.

Nord Pool informs the players about Price & assigned trading

14:00 d.a. T

Bid submission to Nord Pool

Initial Planning Dk: 16:00 Sw: 19:00 No : 12:00 Day-ahead

Gate Closure (Final Planning) Dk: T-45min Sw: T-1min No: T-1h

T = Hour of operation

12:00 d.a.

ELSPOTDay-ahead spot market

ELBAS Short-term adjustment market

& Balancing Market

00.00

Regulation in real time

T + 1


Bid selection from the bid ladder

Balancing Bids Dk: T-1h Sw: T-0.5h No: T-1h

Figure E.1: Processes and timescales of electricity markets and balancing markets in the Nordic countries[8]

The common merit order list is illustrated in the figure E.2 and E.3.

93

Figure E.2: Common merit order list of balancing bids in Nordel[9]

E.5 Primary Control

In all Nordic countries, primary response is procured under contracts with both an availability andutilisation price.

In Norway this service is in addition to mandatory requirements - and also in addition to provisionthrough the market for balancing power in summer. In Sweden and Finland, the TSOs also own somegas turbine capacity used for tertiary regulation.”

”Payment terms for primary response: in Denmark, there are bilateral contracts - these are paid asbid. In Sweden, there are arrangements for weekly and hourly bids (pay as bid) and in Norway there isa mix of yearly payments and a weekly market (marginal price).

E.6 Emergency procedure

The grid protection is an ”automatically activated regulation of DC-links/disconnection of produc-tion to protect the grid.” The provider of the grid protection can be a DC-interconnected TSO, a gasturbine, a hydro generation, a load and power shedding. The time to fully delivery is instantaneous. Thegrid protection is supplied by TSO agreement or on commercial basis. The grid protection is procuredby bilateral contracts and paid at the price of balance power.

Emergency procedure: ”If the Super TSO were to run out of balancing energy options and loadshedding was required, the System Operation Agreement between TSOs requires that the country withthe largest national deficit (i.e. the highest national demand relative to national generation) is requiredto cut load.”

Example of Sweden: ”During disturbances in the power system i.e. un-planned events that causepower stations or lines to be abruptly disconnected from the network - Svenska Kraftnat often has tostart generators quickly in order to take the pressure off the grid. It is the system operator’s responsibilityto make this rapid disturbance-reserve available. Thus, Svenska Kraftnat has purchased gas turbineswith a combined output power of 400 MW, and signed long-term agreements regarding the ability toutilize a further 800 MW. These reserves are not used for balance regulation during normal operation.”[9]


Task Force Balance Management

Page 10 of 17

The balancing is conducted in such a way that reserves are activated in the area with the lowest cost. Equal balancing prices in the areas result if there are no congestions. Parties with activated reserves shall be compensated for their costs.

3.3.1 Present balancing within the Nordel synchronous system

Balancing within the synchronous system is conducted in such a way that the specified quality standards regarding frequency and time deviation are met. Requirements regarding frequency response are maintained. Furthermore, balancing is conducted in such a way that the transmission capacity is not exceeded.

Sweden and Norway represent approx. 75% of the annual consumption of the synchronous system. The Parties have agreed in the Nordic system operation agreement that Svenska Kraftnät and Statnett will thus have the task of maintaining the frequency and time deviation within set limits. Fingrid and Energinet for Western Denmark) will normally only activate reserves after contacting Svenska Kraftnät. Energinet will exchange regulating power for Eastern Denmark with the Nordel synchronous system after contacting Statnett.

Figure 4: Joint list for regulating power in Nordel

A joint list of bids for regulating power is compiled, in order of price, containing bids from both the synchronous system and Western Denmark, see Figure 4. During the hour of operation, activation of bids is initially carried out for network reasons and then, if necessary, for balancing, i.e. to maintain the frequency. Activation of bids for network reasons within the operational hour needs only to be in one direction.

3.3.2 Frequency control

To control the frequency of the synchronous system, the bids on the joint list for regulating power are used in price order, with the exception of bids confined behind a bottleneck. The

Figure E.3: View of the common bid list in the Nordic Operational Information System (NOIS) [2]

E.7 Congestion Management

”In all electricity networks, there are constrained sectors, known as bottlenecks, where the capacityof the lines is not sufficient to meet the requirements of the players with regard to the transmission ofelectricity. On the open Nordic electricity market, two methods are used to manage bottlenecks - marketsplitting and counter-trade. Both principles are used simultaneously on the joint market, primarily atnational borders. It has been decided not to rectify anticipated bottlenecks on the grid during theplanning phase, instead dealing with them during the operational phase using counter-trading.” [9]

Appendix F

Zonal Model: user case of businessrequirement

This appendix presents an extract of the software model such as it is written in the software specificationdocuments of Areva.

This extract focuses on the ”Zonal Model”. The ”Zonal Model” is the model that represents thenotion of areas or zones in the business requirement. In simple words, a ”Zonal Model” is a set of fictivezones containing balancing entities. Two zones can be linked by a fictive channel represented by itsmaximum capacity and its direction. Hence, the ”Zonal Model” is used by the TSO to represent andmanipulate (fictive) zones or areas especially in case of congestion management.

The ”Zonal Model” is a User case of business requirement. It is defined by the description of severalscenarii:- Scenario 1: Creation of a ”Zonal Model”- Scenario 2: Modification, copy and existing ”Zonal Model”- Scenario 3: Deletion of an existing ”Zonal Model”- Scenario 4: Set the current ”Zonal Model”

In this extract only the first scenario is presented: Creation of a ”Zonal Model”. First the TSOcreates a new ”Zonal Model” in the information system (of the Balancing Market). Then the TSOdefines zero, one or more fictive zones in this ”Zonal Model”. Then the TSO fills the fictive zones with(the names of) balancing entities. Finally the TSO can define a channel between two zones, with amaximum capacity and a direction of power flow.

The following figure presents the example of User case of business requirements, ”Zonal Model” (seefig. F.1), focusing on the first scenario that describes the creation of a ”Zonal Model” (see fig. F.2 andfig. F.3).

This user case is an extract of the R&D project note ”Balancing Market Business Requirement”, basedon the analysis of the use of ’areas’ in the Balancing Market, especially for congestion management.

96 Zonal Model: user case of business requirement

Zonal model definition

Identification summary :

Title : Zonal model definition

Purpose : Define a zonal model for solving network congestions

Summary :

Network congestions can be managed in several time horizons :

- In intra-day and real time: congestions are treated in real time by using the counter-trading method. In this case two dynamic congestion areas need to be defined by the TSO in order to model the congestion problem. The congestion areas are based on short-term forecasts of data of congestion. Then a counter-trade can be defined by creating (in real time or just before the operational hour) a study case composed of a case request for upward regulation in a congestion area and a case request for downward regulation in the other congestion area. The congestion is solved by calling the balancing orders which result from the execution of such a study case: congestion is solved by using the balancing market.

- In day-ahead: risks of congestion are planned one day in advance and before the opening of the day-ahead spot market. Forecasted congestions are solved by using the market splitting method. Before the opening of the spot market, price areas are defined by the TSO in order to model the forecasted network congestions, and maximal capacity is attached to each pair of price areas and in both directions. Market participants must indicate in which price area they want to bid in the spot market. Maximal capacity between the price areas are taken into account for the determination of the awarded bids and the spot price in each price area.

In both methods the TSO needs to define a zonal model composed of areas and to attach maximal capacity to corridors between areas. This use case offers this possibility.

Actors : TSO

Creation date : 18/05/2006 Update :

Version : 1.0

TSO UC Zonal model definition

Scenarios description :

Four scenarios are described :

• Scenario 1 : Creation of a zonal model

• Scenario 2 : Modification, copy of an existing zonal model

• Scenario 3 : Deletion of an existing zonal model

• Scenario 4 : Set the current zonal model

Figure F.1: Zonal Model: example of user case of business requirements [23]

97

Scenario 1 : Creation of a zonal model

A zonal model is a set of disjoint areas and a set of corridors between the areas, knowing that an area may contain resources and maximal capacity can be attached to the corridors.

The TSO can define multiple zonal models.

The following sequence diagram describes the related process:

: TSO : Balancing Market System

1: Create a new zonal model

7: Save the zonal model

3: Define new areas inside the new zonal model

4: Move a resource from an area to another area

5: Define a corridor between two areas (direction, maximal capacity)

6: Validate the zonal model

2: Display the area definition interface

Figure F.2: sequence diagram of the 1st scenario ”creation of a Zonal Model” of the business requirementuser case ”Zonal Model” [23]

98 Zonal Model: user case of business requirement

Description of the scenario Zonal Model creation:

1. The TSO asks the system to create a new empty zonal model : areas and corridors will be attached to this model in the following steps.

2. The system proposes to the TSO to define new areas using the area definition interface.

3. The TSO creates new areas inside the new zonal model.

An area is a subset of a control area which is defined at least by the following properties :

o Name

o Type (Congestion area, price area, …)

The list of area types must be configurable in the system.

4. An area may contain resources (generation resources, load resources or virtual resources) but not necessarily, and the TSO may define a zonal model composed of areas in such a way that all the areas of the model contain no resource (e.g. zonal model for market splitting).

Initially the areas which have been created by the TSO at step 3 contain no resource.

In the area definition interface, the system initially displays a virtual area called “system area” which is composed of all the active resources of the system. This virtual area is not part of the zonal model.

If the TSO wants to add a resource to a given area, then he can do it by moving a resource from an input area (the system area or another area) to this given area. In this way the areas will be disjoint whatever the TSO do.

5. The TSO may define a corridor between two areas inside the new zonal model, by specifying following data :

o Direction (from area, to area)

o Infinite capacity (Yes/No)

o Maximal capacity schedule (quantity according to time)

The TSO may define zero, one or more corridor(s).

6. The TSO validates the zonal model once he agrees with its definition. The TSO must give a name to the newly defined zonal model.

7. The system saves the zonal model :

o Areas

o Links between resources and areas

o Corridors

Figure F.3: description of the 1st scenario ”creation of a Zonal Model” of the business requirement usercase ”Zonal Model” [23]

Appendix G

Example of market clearing(MAVIR, Hungary)

To better understand the market clearing process this appendix presents an example of balancingmanagement using the clearing engine of Areva’s software for the Hungarian TSO MAVIR.

Firstly, here is a brief summary of the Hungarian system: In Hungary, the fast tertiary regulation isensured by Minute reserve. The Minute reserve is a fast tertiary reserve that is delivered on the basisof 15 min blocks.

The participants to fast tertiary regulation have to submit Minute bids offering one quantity ofMinute Reserve (the maximal available reserve [MW]) and two prices: one price for the reserve availability(availability fee [HUF/MWh]) and one price for the energy utilisation (energy fee [HUF/MWh]).

The bid submission takes place on the day-ahead. Each Minute bid must be submitted on oneMinute product, which indicates the hour during which the Minute reserve will have to be avail-able. Consequently 24 Minute products (one for each hour of the day of delivery) are daily tendered onthe Balancing Market.

In Hungary there is a market of Minute reserve in addition to the Balancing Market:- First (on the day-ahead), the TSO pre-selects the Minute bids to constitute the total Minute reserve.The bids are (pre-)selected according to their availability fee and they must be accepted in blocks of onehour.- Then (during intra-day), the TSO selects the Minute bids according to their energy fee. Offeredamounts of power may be accepted totally or partially, in blocks of 15 min. The software systemMAVIR has two modes of utilisation, which represents the day-ahead pre-selection of Minute reserve andthe intra-day selection of Minute energy. The mode for pre-selection of Minute reserve is the MinuteControl mode, and the selection of Minute energy is the Energy intra-day mode (see fig. G.1).The following example illustrates a case of Minute reserve market.

100 Example of market clearing (MAVIR, Hungary)

Figure G.1: Modes of Minute Control (reserve market) and Energy intra-day (energy market) in MAVIR

G.1 Schedules of generations and loads

The example contains 3 generators (G1, G2 and G3) and 3 loads (L1, L2 and Consumers) (seefig. G.2).

Load L1

Load L2

TSO

Generator G1

Consumers Generator G2

Generator G3

Figure G.2: Set of entities

The load ’Consumers’ is a fictive load representing the behaviour of the national consumption inFrance on Friday 11/08/2006. The load curve of the national French consumption was found on theweb site of the French TSO: RTE (see fig. G.3). The consumption schedule of the load ’Consumers’corresponds to the schedule of the national French consumption (see table G.1). The load ’Consumers’is not used for balance management.

101

Figure G.3: National forecast consumption curve and load curve in France, on Friday 11/08/2006(www.rte.com)

The generators G1 and G2 represent large generators, which cater for the scheduled consumption.They both have a generation schedule (see table G.1) and the sum of their generation schedules isequal to the total scheduled load. G1 and G2 can provide upward regulation (limited by their maximalupward limit) and downward regulation (limited by their minimal technical limit).

The generator G3 does not have any schedule and it can only provide upward regulation reserve.

The loads L1 and L2 have a very low scheduled consumption (1 MW), so they almost only providedownward regulation reserve.

Initially their is no imbalance between production and consumption. The total forecasted consump-tion equals the total scheduled generation:

L1 + L2 +′ Consumers′ = G1 + G2

The imbalance between the total scheduled generation and the measured consumption (or based on short-term forecast) is inspired by the actual imbalance between measurement and forecast of the nationalFrench consumption (see fig. G.3 and table G.1). In this example the short-term forecasts will beconsidered as perfect.

The table G.1 presents the schedules of generation and loads and the difference between forecastedload and measured load between 13:00 and 15:00.


total ”Total ”real Imbalance:schedule Consu- G1 G2 G3 L1 L2 load consumption” ”realall in [MW] -mers MW MW MW MW MW sche- (based on consumption”

MW -dule” short-term -MW forecast) ”total

MW loadTime schedule”intervals MW13:00-13:15 4100 1101 3001 0 1 1 4102 3651 -45113:15-13:30 3150 1051 2101 0 1 1 3152 3189 3713:30-13:45 2200 1001 1201 0 1 1 2202 2520 31813:45-14:00 2250 1001 1251 0 1 1 2252 2314 6214:00-14:15 2300 901 1401 0 1 1 2302 2065 -23714:15-14:30 2000 801 1201 0 1 1 2002 2416 41414:30-14:45 1700 701 1001 0 1 1 1702 848 -85414:45-15:00 1300 601 701 0 1 1 1302 1426 124

Table G.1: Schedules of generation and loads and the difference between forecasted load and measuredconsumption

G.2 Reserve market

G.2.1 Step1: Tendering of products

This example considers only the time interval between 13:00 and 15:00 and the market of Minute reserve.Therefore only two products are tendered:P1: Minute; [13:00-14:00]P2: Minute; [14:00-15:00]

G.2.2 Step2: Submission of bids

The following bids are submitted on each on the products: see table G.4


Bid ID Bid Bid MAX offered Avail. fee Energy fee Bid Productdirection type reserve [MW] [HUF/MWh] [HUF/MWh] ENTITY

’131 M’ Up Minute 100 5 10 GEN1 P1’132 M’ Down Minute 50 2 2 GEN1 P1’133 M’ Up Minute 300 10 20 GEN2 P1’134 M’ Down Minute 50 3 3 GEN2 P1’135 M’ Up Minute 500 100 1000 GEN3 P1’136 M’ Down Minute 0 0 0 GEN3 P1’137 M’ Up Minute 0 0 0 LOAD1 P1’138 M’ Down Minute 500 10 20 LOAD1 P1’139 M’ Up Minute 0 0 0 LOAD2 P1’140 M’ Down Minute 500 20 40 LOAD2 P1’141 M’ Up Minute 100 5 10 GEN1 P2’142 M’ Down Minute 50 2 2 GEN1 P2’143 M’ Up Minute 300 10 20 GEN2 P2’144 M’ Down Minute 50 3 3 GEN2 P2’145 M’ Up Minute 500 100 1000 GEN3 P2’146 M’ Down Minute 0 0 0 GEN3 P2’147 M’ Up Minute 0 0 0 LOAD1 P2’148 M’ Down Minute 500 10 20 LOAD1 P2’149 M’ Up Minute 0 0 0 LOAD2 P2’150 M’ Down Minute 500 20 40 LOAD2 P2

Table F.2: Bid submission

Rank in the Bid ID MAX offered Avail. fee Bid PRODUCTsmerit order reserve [MW] [HUF/MWh] ENTITY1 ’131 M’ and ’141 M’ 100 5 ’GEN1’ P1 and P22 ’133 M’ and ’143 M’ 300 10 ’GEN2’ P1 and P23 ’135 M’ and ’145 M’ 500 100 ’GEN3’ P1 and P2

Table F.3: Bid merit order for UP regulation (Reserve market)

Time: [14:00, 15:00], Max needed reserve for UP: 414 MW, Max needed reserve for DOWN: -854MW

The pre-selected bids are given in table F.5 and the graphical representation of the selection inMAVIR is given in figure F.3

F.0.6 Step4: Bid merit-order (Energy market)

The bids that have been preselected are sorted according to their availability fee, separatly for up directionand down direction (see table F.6).

F.0.7 Step5: Selection of bids (Energy Market)

For the Minute reserve selection, the TSO selects the required quantity of balancing power for each 15min of each hour, in the upward and the downward direction:- [13:00 - 13:15] → Required balancing power is -451- [13:15 - 13:30] → Required balancing power is + 37 MW- [13:30 - 13:45] → Required balancing power is + 318 MW- [13:45 - 14:00] → Required balancing power is + 62 MW

Figure G.4: Bid submission

G.2.3 Step3: Bid merit-order (Reserve market)

Bids are sorted according to their availability fee, separately for up direction (see table G.5) and downdirection (see table G.6).


Bid ID Bid Bid MAX offered Avail. fee Energy fee Bid Productdirection type reserve [MW] [HUF/MWh] [HUF/MWh] ENTITY

’131 M’ Up Minute 100 5 10 GEN1 P1’132 M’ Down Minute 50 2 2 GEN1 P1’133 M’ Up Minute 300 10 20 GEN2 P1’134 M’ Down Minute 50 3 3 GEN2 P1’135 M’ Up Minute 500 100 1000 GEN3 P1’136 M’ Down Minute 0 0 0 GEN3 P1’137 M’ Up Minute 0 0 0 LOAD1 P1’138 M’ Down Minute 500 10 20 LOAD1 P1’139 M’ Up Minute 0 0 0 LOAD2 P1’140 M’ Down Minute 500 20 40 LOAD2 P1’141 M’ Up Minute 100 5 10 GEN1 P2’142 M’ Down Minute 50 2 2 GEN1 P2’143 M’ Up Minute 300 10 20 GEN2 P2’144 M’ Down Minute 50 3 3 GEN2 P2’145 M’ Up Minute 500 100 1000 GEN3 P2’146 M’ Down Minute 0 0 0 GEN3 P2’147 M’ Up Minute 0 0 0 LOAD1 P2’148 M’ Down Minute 500 10 20 LOAD1 P2’149 M’ Up Minute 0 0 0 LOAD2 P2’150 M’ Down Minute 500 20 40 LOAD2 P2

Table F.2: Bid submission

Rank in the Bid ID MAX offered Avail. fee Bid PRODUCTsmerit order reserve [MW] [HUF/MWh] ENTITY1 ’131 M’ and ’141 M’ 100 5 ’GEN1’ P1 and P22 ’133 M’ and ’143 M’ 300 10 ’GEN2’ P1 and P23 ’135 M’ and ’145 M’ 500 100 ’GEN3’ P1 and P2

Table F.3: Bid merit order for UP regulation (Reserve market)

Time: [14:00, 15:00], Max needed reserve for UP: 414 MW, Max needed reserve for DOWN: -854MW

The pre-selected bids are given in table F.5 and the graphical representation of the selection inMAVIR is given in figure F.3

F.0.6 Step4: Bid merit-order (Energy market)

The bids that have been preselected are sorted according to their availability fee, separatly for up directionand down direction (see table F.6).

F.0.7 Step5: Selection of bids (Energy Market)

For the Minute reserve selection, the TSO selects the required quantity of balancing power for each 15min of each hour, in the upward and the downward direction:- [13:00 - 13:15] → Required balancing power is -451- [13:15 - 13:30] → Required balancing power is + 37 MW- [13:30 - 13:45] → Required balancing power is + 318 MW- [13:45 - 14:00] → Required balancing power is + 62 MW

Figure G.5: Bid merit order for UP regulation (Reserve market)91

Rank in Bid ID MAX offered Avail. fee Bid PRODUCTsmerit order reserve [MW] [HUF/MWh] ENTITY1 ’132 M’ and ’142 M’ 50 2 ’GEN1’ P1 and P22 ’134 M’ and ’144 M’ 50 3 ’GEN2’ P1 and P23 ’138 M’ and ’148 M’ 500 10 ’LOAD1’ P1 and P24 ’140 M’ and ’150 M’ 500 20 ’LOAD2’ P1 and P2

Table F.4: Bid merit order for DOWN regulation (Reserve market)

Rank in the Bid ID MAX selected Avail. fee Bid Period ofmerit order reserve [MW] for [HUF/MWh] ENTITY availability

UP regulation of reserve1 ’131 M’ 100 5 ’GEN1’ [13h - 14h]2 ’133 M’ 218 10 ’GEN2’ [13h - 14h]1 ’141 M’ 100 5 ’GEN1’ [14h - 15h]2 ’143 M’ 300 10 ’GEN2’ [14h - 15h]3 ’145 M’ 500 100 ’GEN3’ [14h - 15h]Rank in the Bid ID MAX selected Avail. fee Bid Period ofmerit order reserve [MW] for [HUF/MWh] ENTITY availability

DOWN regulation of reserve1 ’132 M’ 50 2 ’GEN1’ [13h - 14h]2 ’134 M’ 50 3 ’GEN2’ [13h - 14h]3 ’138 M’ 351 10 ’LOAD1’ [13h - 14h]1 ’142 M’ 50 2 ’GEN1’ [14h - 15h]2 ’144 M’ 50 3 ’GEN2’ [14h - 15h]3 ’148 M’ 500 10 ’LOAD1’ [14h - 15h]4 ’150 M’ 254 20 ’LOAD2’ [14h - 15h]

Table F.5: Bid pre-selection for UP and DOWN regulation

- [14:00 - 14:15] → Required balancing power is - 237 MW- [14:15 - 14:30] → Required balancing power is + 414 MW- [14:30 - 14:45] → Required balancing power is - 854 MW- [14:45 - 15:00] → Required balancing power is + 124 MW

The selected bids are given in table F.7 and the graphical representation of the selection in MAVIRis given in figure F.4

Finaly the participations of the genertaors G2 and G3 and the load L1 to the reserve selection andthen to the energy selection are illustrated by the pictures F.5, F.6 and F.7.

Figure G.6: Bid merit order for DOWN regulation (Reserve market)

G.2.4 Step4: Pre-selection of bids (Reserve market)

For the Minute reserve pre-selection, the TSO selects the maximum needed balancing power duringeach hour, in the upward and the downward direction. The required values are found in the table G.1:Time: [13:00, 14:00], Max needed reserve for UP: 318 MW, Max needed reserve for DOWN: -451MWTime: [14:00, 15:00], Max needed reserve for UP: 414 MW, Max needed reserve for DOWN: -854MW

The pre-selected bids are given in table G.7 and the graphical representation of the selection inMAVIR is given in figure G.8.

It can be noted in the graphical representation that each ’rectangle’ represents a certain amount oftertiary power (in MW) offered in one bid, for 15min. The ’rectangles’ are the same during one hour


because the maximum amounts of reserve for upward-regulation (’positive rectangles’) and downward-regulation (’negative rectangles’) are pre-selected for the entire hour. Besides the sum of the ’positiverectangles’ (resp. ’negative rectangles’) is equal to the requested reserve for up-ward regulation (resp.downward-regulation).

91

Rank in Bid ID MAX offered Avail. fee Bid PRODUCTsmerit order reserve [MW] [HUF/MWh] ENTITY1 ’132 M’ and ’142 M’ 50 2 ’GEN1’ P1 and P22 ’134 M’ and ’144 M’ 50 3 ’GEN2’ P1 and P23 ’138 M’ and ’148 M’ 500 10 ’LOAD1’ P1 and P24 ’140 M’ and ’150 M’ 500 20 ’LOAD2’ P1 and P2

Table F.4: Bid merit order for DOWN regulation (Reserve market)

Rank in the Bid ID MAX selected Avail. fee Bid Period ofmerit order reserve [MW] for [HUF/MWh] ENTITY availability

UP regulation of reserve1 ’131 M’ 100 5 ’GEN1’ [13h - 14h]2 ’133 M’ 218 10 ’GEN2’ [13h - 14h]1 ’141 M’ 100 5 ’GEN1’ [14h - 15h]2 ’143 M’ 300 10 ’GEN2’ [14h - 15h]3 ’145 M’ 500 100 ’GEN3’ [14h - 15h]Rank in the Bid ID MAX selected Avail. fee Bid Period ofmerit order reserve [MW] for [HUF/MWh] ENTITY availability


Table F.5: Bid pre-selection for UP and DOWN regulation

- [14:00 - 14:15] → Required balancing power is - 237 MW- [14:15 - 14:30] → Required balancing power is + 414 MW- [14:30 - 14:45] → Required balancing power is - 854 MW- [14:45 - 15:00] → Required balancing power is + 124 MW

The selected bids are given in table F.7 and the graphical representation of the selection in MAVIRis given in figure F.4

Finaly the participations of the genertaors G2 and G3 and the load L1 to the reserve selection andthen to the energy selection are illustrated by the pictures F.5, F.6 and F.7.

Figure G.7: Bid pre-selection for UP and DOWN regulation

Figure G.8: Pre-selection of Minute reserve (MAVIR view)

G.3 Energy Market

G.3.1 Step5: Bid merit-order (Energy market)

The bids that have been preselected are sorted according to their availability fee, separately for updirection and down direction (see table G.9).

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Figure F.3: Pre-selection of Minute reserve (MAVIR view)

Rank in the Bid ID MAX selected Energy fee Bid Period ofmerit order reserve [MW] for [HUF/MWh] ENTITY availability

UP regulation of reserve1 ’131 M’ 100 10 ’GEN1’ [13h - 14h]2 ’133 M’ 218 20 ’GEN2’ [13h - 14h]1 ’141 M’ 100 10 ’GEN1’ [14h - 15h]2 ’143 M’ 300 20 ’GEN2’ [14h - 15h]3 ’145 M’ 500 1000 ’GEN3’ [14h - 15h]Rank in the Bid ID MAX selected Energy fee Bid Period ofmerit order reserve [MW] for [HUF/MWh] ENTITY availability


Table F.6: Bid merit order for UP&DOWN regulation (Energy market)Figure G.9: Bid merit order for UP&DOWN regulation (Energy market)

G.3.2 Step6: Selection of bids (Energy Market)

For the Minute reserve selection, the TSO selects the required quantity of balancing power for each 15min of each hour, in the upward and the downward direction:- [13:00 - 13:15] → Required balancing power is -451 MW- [13:15 - 13:30] → Required balancing power is + 37 MW- [13:30 - 13:45] → Required balancing power is + 318 MW- [13:45 - 14:00] → Required balancing power is + 62 MW- [14:00 - 14:15] → Required balancing power is - 237 MW- [14:15 - 14:30] → Required balancing power is + 414 MW- [14:30 - 14:45] → Required balancing power is - 854 MW- [14:45 - 15:00] → Required balancing power is + 124 MW

The selected bids are given in table G.10 and the graphical representation of the selection in MAVIRis given in figure G.11.

It can be noted in the graphical representation that for each 15min block, only the requested amountof power has been selected.

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GEN1 GEN2 GEN3 LOAD1 LOAD2 Total amountSelected amount of energy: of balancing powerTime interval of delivery (MW) (MW) (MW) (MW) (MW) (MW)block1: [13:00 - 13:15] −50 −50 −351 −451block2: [13:15 - 13:30] + 37 + 37block3: [13:30 - 13:45] + 100 + 218 + 318block4: [13:45 - 14:00] + 62 + 62block5: [14:00 - 14:15] - 50 - 50 -137 - 237block6: [14:15 - 14:30] + 100 + 300 +14 + 414block7: [14:30 - 14:45] - 50 - 50 -500 -254 - 451block8: [14:45 - 15:00] + 100 + 24 + 124

Table F.7: Selected bids for each 15min (Energy market)

Figure F.4: Selection of Minute energy (MAVIR view)

Figure G.10: Selected bids for each 15min (Energy market)


Figure G.11: Selection of Minute energy (MAVIR view)

Finally the participations of the generators G2 and G3 and the load L1 to the reserve selection andthen to the energy selection are illustrated by the pictures G.12, G.13 and G.14.

Figure G.12: participations of the generators G2 to the reserve pre-selection and the energy selection(MAVIR view)

Comment: The dark shadow is the generation schedule of the generator G2. The ’middle coulored’shadow is the balancing energy selected for upward-regulation and downward-regulation. The lightershadow is the rest of pre-selected reserve.

107

Figure G.13: participations of the generators G3 to the reserve pre-selection and the energy selection(MAVIR view)

Comment: The generator G3 does not have any generation schedule. The darker shadow is thebalancing energy selected for upward-regulation. The lighter shadow is the rest of pre-selected reserve.

Figure G.14: participations of the load L1 to the reserve pre-selection and the energy selection (MAVIRview)

Comment: The load L1 has a very low consumption schedule. The darker shadow is the balancingenergy selected for downward-regulation. The lighter shadow is the rest of pre-selected reserve.


References

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[2] Balance Management Task Force, Current State of Trading Tertiary Reserves Across Borders inEurope - ETSO report, ETSO (European Transmission System Operators), Tech. Rep., November2005. [On-line]. Available: http://www.etso-net.org/upload/documents/Report%20BMnov2005.pdf

[3] Balance Management Task Force, Current State of Balance Management in South East Europe -ETSO report, ETSO (European Transmission System Operators), Tech. Rep., June 2006. [On-line].Available: http://www.etso-net.org/upload/documents/Current%20State%20BM.pdf

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[8] ”Nordic common balancing arrangements”, Frontier Economics/Consentec, pages 75-82, December2005. (Source: AREVA)

[9] The Swedish Electricity Market and the Role of Svenska Kraftnat, SvenskaKraftnat, Sweden, Stockholm, Tech. Rep., November 2004. [On-line]. Available:http://www.svk.se/upload/3187/Elmarknaden eng-2004 webb.pdf

[10] Regles relatives a la Programmation, au Mecanisme d’Ajustement et au dispositif de Respons-able d’Equilibre, RTE, France, Paris, Tech. Rep., July 2006. [On-line]. Available: http://www.rte-france.com/htm/fr/offre/offre marche regles.jsp

[11] The Commercial Code of the Wholesale Electricity Market, Romania, Technical Report from Areva(translated version of a CC Romanian document received from A. Sandulescu), Nov. 2004.

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[13] BM System Specification,KEMA Consulting, France, Dec. 2004

110 References

[14] Mario Salazar Galvez, Analysis of the Romanian Electricity Market, Master Thesis, KTH, ElectricalEngineering dept., Sweden, Stockholm, 2005

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[16] The Hungarian Organised Market: User Guide, MAVIR, Hungary, March 2005.

[17] M. Muscholl, MAVIR NIP SYSTEM: Primary and Secondary Reserve Market, Areva T&D, France,Massy, Tech. Rep., Feb. 2003.

[18] H. Renouard, MAVIR NIP SYSTEM: Minute Reserve Specification, Areva T&D, France, Massy,Tech. Rep., March 2003

[19] S. Ammari, J.C. Passelergue, MAVIR NIP SYSTEM: Market Clearing, Areva T&D, France, Massy,Tech. Rep., February 2003.

[20] Customer Specification, chapter 8: Power Balance, E.ON Netz Gmbh, Germany, Tech. Rep. (Source:AREVA)

[21] D.J. Swider, Pushing a Least Cost Integration of Green Electricity into European Grid, Tech. Rep.,Sept. 2004. (Source: AREVA)

[22] Frederic Lecocq, Balancing Market UML Data Model - AREVA R&D Project Note, Areva T&D,France, Massy, Tech. Rep., Nov. 2005

[23] Frederic Lecocq, Balancing Market Business Requirements - AREVA R&D Project Note, ArevaT&D, France, Massy, Tech. Rep., July 2006

Analysis of Balancing Markets of Electricity in Europe614429/FULLTEXT01.pdf · Analysis of Balancing Markets ELSA KIENER Master’s Degree Project August 2006 Electric Power Systems

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