Purchasing ancillary services on the market: The role of Elia as … · 2017-01-23 · Purchasing ancillary services on the market: The role of Elia as catalyst for new market developments

Purchasing ancillary services on the market:

The role of Elia as catalyst for new market developments

James Matthys-Donnadieu, Head Market Development

FEBEG conference, January 20th, 2017

Disclaimer: some elements of this presentation have, for the sake of easiness of understanding, been

represented in a more simplified way than what they are in reality

Elia Film: The evolution of the electricity market

Click to play: https://youtu.be/n7Chd2zi3qQ

Need for additional flexibility: a multi-dimensional approach

Context Impact for Grid Operators Necessary Answers

Flexibility needs

More important & more volatile

Flexibility sources

New technologies & players

… with challenges

& opportunities …

A rapidly changing

environment …

… requires an ambitious but

pragmatic approach

Keep “needs” under control

• Enforced Balancing Responsible Party (BRP) role

• Dynamic “needs” dimensioning

Cover “needs” efficiently

• Reserve sharing

• Cross border integration

• Shorter term procurement

• Open market to all

All technologies (batteries, load,..)

All players (independent BSP)

All voltage levels (TSO & DSO levels)The regionalisation

of the electricity

sector

RES

development

Decentralisation,

digitalisation &

new players

Year aFRR+ mFRR+ FRR- aFRR- mFRR-

2016 910 140 770 140 140 -

↓

2021 1240 175 1065 1000 175 825

2023 1240 175 1065 1000 175 825

2027 1240 175 1065 1000 175 825

NEEDS VOLUMES

FCR R1

aFRR R2

mFRR R3

Trend

NEW

Source: Adequacy study and assessment of the need for flexibility in the Belgian electricity system - April 2016, available on www.elia.be

Increased flexibility needs for balancing [MW]

Product opening

Open our products to all:

• Technologies• Market parties• Voltage levels

• Energy bidding rules• Generic prequalification rules• Generic activation controls• Generic Rx performance controls• Merit order activation

Market rules harmonization Contractual harmonization

Product development: A global roadmap with 3 major steps

Steps in function of regulation / EU discussions

1 standardised contract for all flexibility

2016 2020

7

+ Q3 2016: R1XB with DE

+ 05/2017: R1 new technologies (e.g. batteries)

FCR: Roadmap

+ 2018/19: Generic FCR contractual framework

R1 producttype

Technology

TSO GEN>25MW

TSO Non-conventional

DSO connected

Asym up / down

R1 down R1 down R1 down

R1 up R1 up R1 up

Sym 100 / 200 Mhz

R1 sym R1 Sym R1 sym

R1 producttype

Technology

TSO GEN>25MW

TSO Non-conventional

DSO connected

Asym up / down

R1 down R1 down R1 down

R1 up R1 up R1 up

Sym 100 / 200 Mhz

R1 sym R1 Sym R1 sym

Be

gin

nin

g2016

Sin

ce

Oct

2016

8

Product Detailed description Types Offered by

Secondary

reserves (R2)

• automatically and continually activated both upstream and downstream.

• It kicks in quickly (between 30 seconds and 15 minutes) and remains active

as long as it is needed.

R2-upTSO GEN>25MW

CIPU

R2-downTSO GEN>25MW

CIPU

aFRR roadmap

R2 is the most important balancing

product for Elia

• 85% of the balancing energy activated

• Setting the imbalance price for at least

80% of the time

• Together with R1 accounting for 60 -

70% of the AS budget

Challenges

• Needs for reserve volumes are slightly

increasing

• Future of historic providers

(conventional power plants) is uncertain

and expensive (must run)

Potential solutions

• Cross border integration: technically

very complex and requires Cross Border

capacity (= will take time)

• Diversification: Wind (pilot R2 wind),

CHP & Load

Elia has initiated a pilot project with willing industrial consumers or aggregators to develop an

R2 (aggregated) non-CIPU product

mFRR Target Model

9

R3 Prod Up

[CIPU units]

ICH Up

[TSO GUs]

R3 DP Up

[Aggregator]

Free bids

Up /Down

[CIPU units]

R3 Generic

Up/Down

[BSPs]

Free bids

Up/Down

[BSPs]

As Is (2016) To Be

Non contracted mFRR Contracted mFRRLegend:

R3 Prod Up

[CIPU units]

ICH Up

[TSO GUs]

R3 DP Up

[Aggregator]

Order of activation

MO: free prices MO: free prices No MO: no prices No MO: fixed prices

Order of activation

R3

Contingency

[BSPs]

Bid Ladder platform

R3 Generic

Up/Down

[BSPs]

R3

Contingency

[BSPs] *

Energy Bids

Reserve Bids

TBC *

TBC *

National MO

merged with XB

CMO

2018-

2019

STD [Up/Down] (€)(€) Ambition (3);

Tbd with DSO Ambition;Tbd with DSO (3)

Monthly / or Shorter

FLEX [Up/Down](€) (€) Ambition (3);

Tbd with DSO

FREE [Up/Down] (€) (€)(€) Ambition;

Tbd with DSO (4)Tbd with DSO (4)

NA

2017

STD [Up]* (€)

Monthly

FLEX [Up]* (€) + ICH

FREE [Up/Down] (€) (€) Tbd with DSO (4)Tbd with DSO (4)

NA

TechnologyAcc. Independent

BSPs ? => ToE(2)Sourcing MO activation

Year mFRR Type TSO GEN>25MWTSO non

conventionalDSO connected TSO DSO

2016

Prod [Up] (€) -Yearly / Monthly

DP/[Up] - +ICH (no ICH)

FREE [Up/Down] (€) - NA

2019-

2020

generic

[Up/Down] (€)Weekly or

Daily

FREE [Up/Down] NA

10

Pro

du

ct

op

en

ing

&

Bid

Lad

der

• pink indicates new elements compare to prev. year

• (€) indicates activation price

• PROD, DP, STD , FLEX & generic = contracted

mFRR

• FREE = uncontracted mFRR

Generic Bid Ladder Platform linked to

international CMO

Legend:

mFRR Roadmap(1)

Co

mm

on

Me

rit

Ord

er

Ge

ne

ric

mF

RR

&

XB

bala

nc

ing

(1) Non-binding - Roadmap reflects an ambition not a commitment from Elia to implement;

(2) The implementation of Trans of Energy is subject to law changes

(3) The implementation of an activation price requires the implementation of ToE both at TSO & DSO

level (as STD and FLEX may be composed of TSO & DSO delivery points

(4) Access for DSO points to Elia’s free bid market (‘Bidladder”) is subject to agreement from DSO ; this

holds also when this access takes place with the ToE mechanism; Elia will discuss this with DSOs

R3 100%

open to all

technologies

BidLadder

(+ with ToE?)

One

Common

Merit Order

mFRR down

Generic

Product and

Contract

Cross Border

integration

Monthly

Auctions

0

50

100

150

200

250

300

350

400

2013 2014 2015 2016 2017

Off

ere

d V

olu

me

in M

W

R3DP-R3 Flex Volume Offered in MW

Increase of offered volumes and suppliers

11

=> Offered volume of mFRR from Non

Conventional Units (including demand

response) has been growing over the

years, in line with product

opening/redesign

0

2

4

6

8

10

12

2012 2013 2014 2015 2016 2017

Number of R1 Belgian Suppliers

R1 CIPU Suppliers R1 Non-CIPU Suppliers

# suppliers increases

=> R1 diversification not only in

Belgium but also at EU level

Many thanks for your attention!

ELIA SYSTEM OPERATOR

Boulevard de l'Empereur 20

1000 Brussels

+32 2 546 70 11

info@ elia.be

www.elia.be

An Elia Group company