130328 introduction to network codes

An Introduction to Network Codes &

The Links Between Codes

March 2013

What is a network code?

A set of rules applying to one aspect of the energy sector

Which are developed by ACER, ENTSO-E & market participants

And become legally binding after the Comitology process

Hence they will have the same status as any other Regulation

Introduction to Network CodesMarch 2013

Article 4: ENTSO

•Charged with working to complete the internal energy market.

Article 6: Creating network codes

•In line with ERGEG framework guidelines.

•Which become binding.

•And involve extensive consultation.

Article 8; Para 7: The scope of network codes

•Cross border & market integration issues.

•Without prejudice to Member States’ right to establish codes.

Article 8: ENTSO-E’s activities

•Network codes•Ten-Year Network Development Plans.

•Generation adequacy reports.

•Winter and summer outlooks.

•Work programs and annual reports.

ENTSO-E’s legal roleUnder the designation of Regulation 714/2009


How are network codes developed?

Comitology process (where appropriate)

EC In consultation with all stakeholders resulting in a legally binding network code

Assessment of network codeACER Recommendation of network code to the European Commission

Period in which ENTSO-E can develop a network code (12 month period)ENTSO-E In consultation with stakeholders according to FWGL

Request for ENTSO-E to draft a network codeEC According to FWGL submitted by ACER

Development of the FWGL (6 month period)ACER In consultation with ENTSO-E, stakeholders and Expert Group

Request to draft a FWGLEC On a topic identified in art.8 (6) of Regulation EC 714/2009

Development of Framework Guidelines

(FWGL)

Development of network code

Assessment, agreement &

entry into force

… through a collaborative processIntroduction to Network Codes

March 2013

Intended benefits

Security of supply

CompetitivenessSustainability

Enabling renewables

Creating clear connection

rules.

Providing harmonisation

to benefit manufacturers.

Creating markets to

reduce risks.

Ensuring security of

supply

A coordinated approach to

system operations.

Greater optimisation to

enhance efficiency.

More flexible markets (e.g. balancing).

Enhancing competition

A single market design across Europe (in all timescales).

Promoting cross border

trade & enhancing liquidity.

Reducing risk for all market

players


Overview of current & future network codes

• Requirements for Generators (RfG)• Demand Connection Code (DCC)• HVDC Connection Code (HVDC)• Connection Procedures (CP)

Grid Connection

Related Codes

• Operational Security Network (OS)• Operational Planning & Scheduling (OPS)• Load Frequency Control & Reserves (LFCR)• Operational Procedures in an Emergency (EP)

System Operation

Related Codes

• Capacity Allocation & Congestion Management(CACM)

• Forward Capacity Allocation (FCA)• Balancing Network Code (EB)

Market Related Codes


Order of work

HVDC High Voltage Direct Current Connection requirements

EB Electricity Balancing

FCA Forward Capacity Allocation

LFCR Load Frequency Control and Reserves

OPS Operational Planning and Scheduling

OS Operational Security

DCC Demand Connection Code

CACM Capacity Allocation and Congestion Management

RfG Requirement for Generators

Through a ‘Priority List’ agreed upon through consultation Decided by the EC

• Accessed here

ENTSO-E’s Three- Year Work PlanInfluenced by and informs

• Accessed here

Therefore current network

codes are developed in

this order


http://ec.europa.eu/energy/international/consultations/doc/20110410_consultation_document.pdf

http://ec.europa.eu/energy/gas_electricity/codes/doc/20120605_3years_electricity.pdf

The jigsaw that is network codes

CACM

Network

Codes

FCA

EB

DCC

RfGHVDC

CP

EP

OS

OPS

LFCR

DCC

Both linked to energy efficiency directive

RfG

All connection

codes linked to existing

standards

HVDC

All connection codes link

to EBCP


to OS

Linked to smart grid initiatives through

DSR

• RfG was developed first• Followed by DCC• Soon HVDC will begin & CP

will follow

• These codes link into (and are influenced by) several important policy areas

• And are also related to existing standards

Some of the more substantial links to others codes are:

• Electricity Balancing and• Operational Security

Grid connection related network codes

EPLFCR/OS/

OPS all linked

OSLFCR closely

linked to EB

OPS

OPS/OS link to CC

due to CGM

LFCR

OS links to all

connection codes

• Operational Security was first• Closely followed by Operational

Planning & Scheduling• Next is Load Frequency Control

& Reserves• They will be followed later by

Emergency Procedures

The operational codes have strong links between themselves and to other codes:• OS links to all connection codes• LFCR is closely tied to EB• All the operational codes are

linked• OS and OPS are linked to the

CC part of CACM (because of the Common Grid Model).

System operation related network codes

DAIDCC

Market related network codes

CACM

• Capacity Allocation and Congestion Management was the first market code to be developed

• It contains three main subsections that were merged at an early stage:

• Intraday• Day Ahead• Capacity Calculation

• This was done to ensure consistency between these heavily interrelated areas

• The CACM code is based on the EU wide “Target Model” for market design.

IDDA/ID link

to EC Governance

guideline

DA

CC link to OS/OPS due to CGM

CC

All market codes link to transparency

regulation

FCA

FCA Linked to

MIFID

EB


to EB

• Capacity Allocation and Congestion Management was the first market code to be developed

• Followed by Forward Capacity Allocation

• And Electricity Balancing

• All market related codes tie into transparency regulation

• Day Ahead & Intraday are closely linked to the EC Governance Guideline

• FCA has links to MIFID

These codes have direct links to others:

• EB to all connection codes• Also to LFCR operational code• Capacity Calculation links to

both OS and OPS

Market related network codes

EB closely linked to

LFCR

How do all the network codes fit together?

Connection codes

Market codes

Operational codes


to OS

CC link to OS/OPS

due to CGM

LFCR closely

linked to EB

OS

OPS EP

LFCR

LFCR/OS/ OPS all linked

NetworkCodes

DCC


RfG

All connection


standards

HVDC

CPLinked to smart grid initiatives through

DSR


to EB


to OS

IDDA/ID link to

Governance

guideline

CC


regulation

FCA

FCA Linked to MIFID

EB

All connection

codes link to EB

CC link to OS/OPS

due to CGM

LFCR closely

linked to EB

DA

How do all the network codes fit together?

NetworkCodes


to OS

CC link to OS/OPS due to CGM

LFCR closely

linked to EB

OS

OPS EP

LFCR


DCC

Both linked to energy

efficiency directive

RfG

All connection


standards

HVDC


DSR


to EB


to OS

IDDA/ID link

to Governance guideline

CC


regulation

FCA

FCA Linked to MIFID

EB


to EB

CC link to OS/OPS

due to CGM

LFCR closely

linked to EB

DA

Connection codes

Market codes

Operational codes

Network

CodesID

DA/ID link to

Governance guideline

DA

CC

All market codes link

to transparency regulation

FCA

FCA Linked to MIFID

EB

DCC


RfG

All connection


standards

HVDC

CP

Linked to smart grid initiatives through

DSR


to EB


to OS

CC link to OS/OPS

due to CGM

LFCR closely

linked to EB

OS

OPS EP

LFCR


Of course this is not exhaustive.

There are further extensive links between codes…

NetworkCodes

IDDA/ID link

to Governance guideline

DA

CC

All market codes link

to transparency regulation

FCA

FCA Linked to MIFID

EB

DCC

Both linked to energy

efficiency directive

RfG

All connection


standards

HVDC


DSR


to EB

All connection

codes link to OS

CC link to OS/OPS

due to CGM

LFCR closely

linked to EB

OS

OPS EP

LFCR

LFCR/OS closely linked

CACM

Network code overview

CACM

Network

Codes

FCA

EB

DCC

RfGHVDC

CP

OS

OPS EP

LFCR

Click on a code to see more details…..

Network code overview

Network Code on:Requirements for Generators

6 Months 12 Months 3 Months > 12 Months

Framework Guidelines DraftingInternal

ApprovalPublic

ConsultationUpdating

Internal Approval

ACER Opinion Comitology Process ….

Scoping Development Approval

Code Overview

Purpose: Provide a set of coherent requirements for generators (of all sizes) in order to meet the future power system challenges.

Status: An ACER recommendation to adopt the code was made on 27 March 2013.

Contents:

• Requirements

• Operational Notification Procedure for Connection

• Compliance

• Derogations

Links to other codes/ areas

• DCC – Balances demand and generation requirements and uses similar processes..

• HVDC – Reference to part of the RfG requirements for offshore HVDC connected generation. Coherence in processes.

• OS – Technical requirements to strengthen coordination and system security.

• EB – Must ensure RfG characteristics are reflected in products.

Go back to Network code overview

Network Code on:Capacity Allocation and Congestion Management



ApprovalPublic


Internal Approval



Code Overview

Purpose: Translate the vision for a pan European Target Model into a binding set of rules.

Status: An ACER recommendation to adopt the code and proposals for change was made on 14 March 2013.

Contents:

• Capacity Calculation

• Bidding Zones

• Day Ahead Markets

• Intraday Markets

• Remedial Actions

• Firmness rules

• Cost recovery

Links to other codes/areas

• OS/OPS – Build on the CGM in CACM.

• FCA – Bidding zones and capacity calculation are common. Structure is similar.

• EB – Strong link with intraday markets and common capacity calculation, bidding zones & structure.

• OPS – Schedules are relevant in day ahead markets.

• Transparency regulation – Vital to efficient market functioning.


Network Code on:Operational Security



ApprovalPublic


Internal Approval



Code Overview

Purpose: To set common rules for ensuring the operational security of the pan- European power system.

Status: Submitted to ACER on 28 February.

Contents:

• Operational Security Requirements

• Testing and Investigation

• Data Exchange

• Training

• Compliance

• Staff Training


• OPS – Is an extension of the OS code prior to real time.

• LFCR – Frequency control operations uses the coordinated schedules from OPS.

• RfG/DCC – Contain technical requirements to strengthen coordination and system security.

• CACM – Capacity calculation uses a common grid model as does OS.


Network Code on:Demand Connection


Framework Guidelines Drafting Internal Approval

Public Consultation Updating Internal

Approval ACER Opinion Comitology Process ….


Code Overview

Purpose: To set requirements for new demand users and DSO connections and to outline demand side response requirements related to system frequency.

Status: An ACER opinion and recommendation to adopt the code was made on 27 March 2013.

Contents:

• Requirements

• Operational Notification Procedure

• Compliance

• Derogations


• RfG/ HVDC – Balance between demand and generation requirements and coherence in processes.

• LFCR – Impact of DSR SFC on system reserve calculations.

• OS – Technical requirements to strengthen coordination and enhance system security.

• EB – Demand Response will be an ever more needed building block in balancing products.

• Ecodesign/labelling Directive – Vehicle to develop DSR requirements.

• Cenelec M490 – Work on-going to develop DSR standards.


Network Code on:Forward Capacity Allocation



ApprovalPublic


Internal Approval



Code Overview

Purpose: To set rules for calculating and buying capacity in timescales before day ahead and for hedging price risk between bidding zones.

Status: Under public consultation from 28 March until 28 May

Contents:

• Governance

• Capacity Calculation for FCA

• Bidding Zones

• The Forward Capacity Market

• Single Platforms for Allocation and Secondary Trading

• Allocation Rules

• Firmness and Congestion Income Distribution

• Transitional Arrangements


• CACM – Similar processes and consistency with capacity calculation.

• MIFID – Sets capital and organisational requirements for investment firms and markets operators when dealing with financial instruments/impact on TSOs and joint platforms.

• Transparency Regulation – Impacts on the information that is published.


Network Code on:Load Frequency Control and Reserves



ApprovalPublic


Internal Approval



Code Overview

Purpose: To set out coordinated and clearly specified load frequency control processes and rules regarding the levels and location of reserves (back-up) which TSOs need to hold.

Status: Out of public consultation on 2 April – being updated

Contents:

• Frequency Quality

• Load Frequency Control Structure

• Frequency Containment Reserves

• Frequency Restoration Reserves

• Replacement Reserves

• Exchange and Sharing of Reserves

• Co-operation with DSOs

• Compliance


• EB – Specifies how the reserves determined under LFC will be procured.

• OS – Frequency quality; deviation management; improves operational security.

• OPS – Frequency control operations: uses the coordinated schedules from the OPS.

• DCC – Impact of DSR SFC on system reserve calculations.

• CACM – Operational limits: have an impact on transmission capacity available for XB exchanges.

• HVDC – Impact of loss of power (e.g. from an offshore wind farm) on system reserves.


Network Code on:Balancing



ApprovalPublic


Internal Approval



Code Overview

Purpose: To define rules for the development, implementation and operation of a pan-European balancing market.

Status: Initial draft produced and stakeholder discussions ongoing.

Contents:

• The Electricity Balancing System

• Procurement of Balancing Reserves

• Use; Allocation and Reservation of Cross Zonal Capacity for Balancing Reserves

• Settlement

• Balancing Algorithm Development

• Reporting

• Transitional Arrangements


• LFCR – Strong link with LFCR setting rules for the volume of reserves to be procured & BAL creating rules to procure them.

• CACM – Overlap with capacity calculation and links to intraday markets (which close before balancing opens).

• RfG/DCC – Important that connection rules are reflected in products available on balancing markets.


Network Code on:Operational Planning & Scheduling


Framework Guidelines Drafting Internal Approval

Public Consultation Updating Internal

Approval ACER Opinion Comitology Process ….


Code Overview

Purpose: Sets requirements, ranging from the year ahead timeframe to real time, for assessing the adequacy and operational security of the interconnected power system and for planning outages required by TSO’s and grid users when they have cross-border impacts on power flows.

Status: Submitted to ACER on 29 March.

Contents:

• Data For Operational Security Analysis in Operational Planning

• Operational Security Analysis in Operational Planning

• Outage Planning

• Adequacy

• Ancillary Services

• Scheduling

• ENTSO-E Operational Planning Data Environment


• OS – Extension of OS requirements prior to real time. .

• CACM – An overlap with schedules in day ahead markets and the Common Grid Model.

• Market Codes – Planning and scheduling cooperation will unlock transmission capacity in the forward, DA, ID and – indirectly – balancing.

• LFCR – Frequency control operations: uses the coordinated schedules from the OPS.


Network Code on:HVDC Connection



ApprovalPublic


Internal Approval



Code Overview

Purpose: Sets requirements for HVDC connections and offshore DC connected generation.

Status: Initial drafting and stakeholder engagement.

Contents: Under discussion, scoping document under development.


• RfG – Reference to part of the RfG requirements for offshore HVDC connected generation. Coherence in processes.

• OS – Technical requirements supporting frequency and voltage stability, system stability robustness and system security.

• LFCR – Impact of loss of power (e.g. from an offshore wind farm) on system reserves.

• EB – Ensure balancing capabilities for reserve transactions across cross-border HVDC links where relevant.

• DCC – Coherence in processes (operational notification, derogations, …)


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130328 introduction to network codes

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