“R3 DYNAMIC PROFILE” beleidsplatform VREG 24 juni 2013.

“R3 DYNAMIC PROFILE”

beleidsplatform VREG24 juni 2013

Agenda

1. Challenges ahead & how to mitigate ? Overview ELIA reserves Role Balancing Responsible Party (BRP) Support balancing by BRPs Facilitate diversification & steps taken

2. “R3 Dynamic Profile” Stakeholder consultation via Expert Working Group Development of R3 Dynamic Profile product Product features Timing of tendering

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Many challenges ahead…how to mitigate ?

53

Installed capacity wind and PV Belgium [MW]

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Wind [MW] Total

Solar [MW] Total The significant increase in installed solar and wind generation capacity will have an impact on the system management as well as on the size and nature of the residual system imbalances, used as input for the dimensioning of the reserves, due to:-forecast errors -ramping

Overview of ELIA contracted reserves 2013 description

Primary Control

(R1) or

Frequency

Containment

Reserves (FCR)

91 MW Contain the system frequency after the occurrence of an incident or imbalance within the Synchronous Area.

Secondary Control

(R2) or

automatically

Frequency

Restoration Reserves

(FRRa)

140 MW Automatically activated reserves with an activation time less than 15 minutes which are used to restore the ACE of the control block to zero in case of an imbalance in the block.

Manually activated reserves with an activation time less than 15 minutes which are used to desaturate the FRRa in case of large imbalances.

Tertiairy Control (R3)

or

manually Frequency

Restoration Reserves

(FRRm)

661 MW :-400MW R3 production-261MW interruptible load

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Role of Balancing Responsible Party (BRP)

5

• Balancing responsible parties (BRPs) are responsible for balancing their perimeter on a 15-minute time interval in the Belgian system.

• BRPs have to nominate a balanced perimeter in day-ahead and have to perform intraday adjustments according to more accurate intraday forecasts and actual measurements of production and off-take, as the uncertainty on the final balancing position of the perimeter decreases towards real-time.

• Any residual system imbalance is in last instance resolved by Elia by deploying the reserves at its disposition.

• As a result, any assessment of the required reserve volumes crucially depends on the behaviour of BRPs

• Once all metering is known, ELIA calculates imbalances per Qh per BRP• Imbalances are invoiced at imbalance tariffs:

MDP= Marginal Decremental Price = Lowest downwards activation price

MIP = Marginal Incremental Price = Highest Upwards activation price

5

Mitigation 1: support balancing by BRPs

56

Residual balancing needs, to be solved in real-time by TSO, should be minimised.

BRP responsibilities

•Invest in & use forecasting•Be pro-active on markets (trade their imbalance, offer flexibility in DA & ID)•Develop flexibility in their generation portfolios

TSO responsibility

•Design appropriate incentives (imbalance)•Develop liquid short-term markets in cooperation with PXs (NWE ID project)•Provide publicly available forecasting and balancing data

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Mitigation 1: support balancing by BRPs

Mitigation 2: facilitate diversificationPurpose: opening the Balancing Energy & Reserves Market to a new kind of flexibility.Today : Majority of Balancing Energy & Reserves provided exclusively:

- By injection ARPs (who have signed a CIPU contract)- On Centralized Production Units- Exceptions: Interruptible Load and R1 Load from ELIA-Grid Users

Goal: Extend participation of Balancing Energy & Reserves to new resources (load and decentralized production units) and new players.

As is To Be

Contractual framework

• CIPU contract • TBD

Flexibility resources used for Ancillary Services

• Centralized Production Units covered by a CIPU contract

• Mainly TSO grid connected

• Centralized Production Units • Decentralized Production

Units & Load• TSO & DSO grid

Flexibility Supplier

• BRP producer• Exception: GU for ICH

• Any BRP with physical flexibility

• BSP not BRP

9

Steps taken towards diversification…

What Innovation Description

R1:

“R1 Load”

Production

load

- Task Force organized with 3 GUs in 2011/2012- 30MW R1 UP provided by industrial load connected

to Elia grid in 2013

R2:

Diversification survey

Centralized

Decentralized production

Survey launched in October 2012 on Elia’s website in order to assess potential for R2 flexibility in Belgium, esp. from CHPs- CHP participating in 2013 to R2

R3:

ICH 2013

Grid Users

Aggregators

- Possibility to offer from a pool of load access-points connected to the Elia grid

- 15MW provided by BSP from a pool of 5 access points

R3 (R&D)

Pilot Project R3 from

distributed load

TSO-connected load distributed

load

- 10 MW of interruptible load on the distribution grid- Concrete case study that allows to:

- test the technical performance of interruptible load in distribution grid

-gain experience on control modalities and contractual prerequisites

- Based on above pilot project, ELIA developed for 2014 a new product “R3 Dynamic Profile” to contract flexibility, principally situated at distribution grids, to complement its existing R3 portfolio.

March 4th 201310

Continuous stakeholder consultation Against this fast-changing context, ELIA established the Balancing Taskforce (as

ad hoc group under Users’ Group) as the platform via which Elia consults the market when proposing evolutions to balancing and ancillary service mechanisms.

During such Taskforce of Jan 11th 2013, dedicated to the contractual models for diversification, it became clear that there are quite some complex issues to be tackled in this respect. Those issues are emphasized for resources located in distribution grid as Elia does not own any metering in those grids. It’s for this specific purpose that an “Expert Working Group” (as subgroup of TF Balancing) has been created, consisting of BSPs, BRPs, DSOs, FORBEG and ELIA.

Main questions to be discussed within the working group:

- How to manage the impact on the BRP of the activations by a BSP non-BRP:- How the manage the control and remuneration of ancillary services provided

from resources that are not directly metered by Elia.- Balancing services provided by resources located on distribution grid, should not

cause congestion problems on distribution grids importance of establishing a prequalification process with DSOs to assess and qualify eligible access points.

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The development of R3 Dynamic Profile Conclusions of this working group will directly be reported to the Task Force

Balancing. Elia will finalize its proposals taking into account the input of the Taskforce and will then require appropriate approval from CREG.

Experts has met 4 times now with focus on establishing the R3 Dynamic Profile product for 2014 using flexibility residing at distribution access points (short term) and providing recommendations for the long term.

In order to achieve this first step, Elia introduced on April 17th, according to article 233 of the Federal Grid Code, a proposal to the CREG for the applicable reserve volumes for 2014 with a specific part related to the procurement of reserves through a ”R3 Dynamic Profile” product.

Having no experience with the performance of such a product, Elia decided to limit the volume of ”R3 Dynamic Profile” to be procured at 50 MW maximum for 2014.

After technical qualification performed by DSOs and Elia, Elia will apply a market based approach to contract between 0 to 50 MW with the “R3 Dynamic Profile” product.

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1. No correction of ARP-perimeter• Amendment of ARP-contract, introducing notion of “Dynamic Profile Provider”, incl. information to ARP

when activating

2. Capacity only product (no activation price nor payment to BSP)

3. Needs• To open R3 to Distributed Energy Resources (load and prod with AMR Meter) through BSP participation;

resources at TSO level could also be eligible to be part of the BSP pool for this product;

4. Volume and selection1. Limited volume in comparison with R3 production due to the model characteristics (i.e. end of the merit

order, tariffs impact) and to gain experience. Start with max 50 MW

5. Number and duration of activationsAround 40 activations; Maximum duration of 2 hours;

– Availability control1. Requirement of 100% availability (cf R3 Production); Controlled per quarter-hour;2. Based on real metering (15’ metering) provided by DSO (and not on nominations);

1. Activation control1 activation = number of quarters between start and stop of Elia-bidBased on real 15’ metering and not on 10” T.M.Reference curve: based on the last 15’ meteringSettlement in balancing prices : as R3 Dynamic Profile is only activated in merit order after R3

Production is activated, the MIP will reflect the most expensive R3 free Bid price

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“R3 Dynamic Profile”: product description

13

Timing Tendering

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• Starts at contract notice;• BSP must submit max number of EAN’s to DSO with

required information before Aug 20th at the latest;• From end of May to Aug 20th, BSP can/must ask for

“preliminary advise” from DSO for certain EAN;• DSO communicates the officially validated EAN by Sep

20th

This is minimum time Elia & BSP need for adapting IT-tools,Installation of communication lines, …

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2013 apr mei jun jul aug sep okt nov dec

jan

2014

2014

Today

Official start R3 DP1/1/2014

R3 DP ready to start1/12/2013

Communication selection BSP11/10/2013

Tendering R3 DP first Results23/9/2013

Communication DSO prequalification decision20/9/2013

R3 DP tendering starts1/7/2013

Contract notice R3 DP7/6/2013 (might be earlier)

Design Freeze17/4/2013

Drafting of contracts17/4/2013 30/5/2013

Finalization contract 17/5/2013 30/6/2013

Tendering procedure 1/7/2013 22/9/2013

Prequalification by DSO 7/6/2013 20/9/2013

Selection of BSP 23/9/2013 11/10/2013

Signing of contracts + implementation 28/10/2013 30/11/2013

Testing period 1/12/2013 31/12/2013

Submission + preliminary advise

BACKUP SLIDES : R3 Dynamic Profile

Product Description

Elia ENMAN

16/05/2013

1. No correction of BRPs perimeter

• Only upward activation in “all or nothing modus” (complete contracted volume is activated);• BRPs position is raised with the effectively activated energy

1. BRP (and through him Supplier) is remunerated by the tariffs;

2. BRP is not penalized for the discrepancy;

1. A specific control of the activation is necessary as there is no incentivizing correction• In principle the final position of the BRP is favourable towards the position of the zone• The effect will be moderate due to characteristics of the product:

1. Limited activation duration

2. Limited # of activations => after R3 production in merit order

BRP 2

Initial Position: +100 injection – 100 load = 0MW

GU (Load)

Offtake = 100MW

Prod

Injection=100MW

supplier

Buys

Sells

BRP 2

New Position: +100 injection- 60 load - 0 correction = +40 MW

Prod

Injection=100MW

supplier

Buys

Sells

Activation settlement: 40MW for BSP GUImbalance settlement: + 40 MW @ MIP

Example without activationExample with activation of 40 MW to GU & no

correction


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2. Capacity Only product

Activation settlement fur GUImbalance settlement: +100 MW for BRP

BRP 2

Initial Position: 0MW

Elia Activation Request @ GU: -100 MW (load convention)NO correction

BRP 1

Initial Position: -100MW

Zone is short:-100 MW

Zone is balanced

BRP 1

Position: -100MW

Imbalance settlement: -100 MW @MIP

GU

100MW

Prod

100MW

BRP 2

New Position: +100MW

Prod

100MW

BRP 2

New Position: +100MW

• As there is no correction of BRP’s perimeter, activation costs are not covered by tariffs• Activation costs have to be = 0 €/activation & entire remuneration provided on capacity fee

Number and duration of activations have to be contractually fixed• Such product cannot be price maker Volumes to be limited, at least initially

BRP 1 -100 invoiced @ MIP

BRP 2 +100 paid @ MIP

GU +100 Paid @ Bid price

Total +100 Bid price

Result:


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3. Needs• To open R3 to Distributed Energy Resources (load and prod with AMR Meter) through BSP participation;• Resources at TSO level could also be eligible to be part of the BSP pool for this product;• To have nearly the same “quality” as R3 prod and at competitive price;• To be able to launch a Tender for this product in 2013, in parallel with ICH;

4. Volume and selection• Limited volume in comparison with R3 prod due to the model characteristics (i.e. end of the merit order,

tariffs impact) and to gain experience. Start with max 50 MW Minimum threshold for participation: 5MW P/OP/BASE offer (for other selection rules, see annexe) Candidate BSPs must provide their margin for P/OP/BASE per EAN of their pool

– Number and duration of activations• Both contractually predefined and will influence the reservation price• Number as close possible as number of R3 prod activations but can be less, as activated at the end of

merit order Around 40 activations 12h between 2 consecutive activations• Duration of activation must be limited to avoid a change of NRV sign during activation• On the other hand a duration of activation must fulfil to current R3 prod characteristics and needs of

dispatcher Maximum duration of 2 hours;

Trade off between conservative need and price

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6. Availability control Requirement of 100% availability; Based on real metering (15’ metering) and not on nominations; Controlled per quarter-hour; No control during the activation Penalty per quarter-hour based on Capacity Remuneration with penalty factor With a yearly cap = yearly reservation remuneration

Penalty for 1qh of missing power [€/qh] = 1,3 * Missing power [MW] * Capacity Remuneration [€/MW/h] * 1/4

Missing power [MW] = R3 [MW] – Pmadeq [MW]*

Margin = Power that cannot be curtailed (vital elements of a site)

Agg R3

Pmad

Pmad

Pmeasured = Meq

R3= Contracted MW that BSP must have available at any time Pmad = MW that

BSP really has available


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Ref = Load equivalent off-take of last 15’minP(k) = Load equivalent off-take during activationR3 (k) = contracted volume (fixed amount; which might depend on PEAK/L-OFFPEAK-period)Qh1 = quarter when the activation starts

Reminder: No remuneration to BSP for the activation due to the model

characteristics


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7. Activation control

start stop

R3

Qh 1 Qh 2 Qh 3

Elia Request for activation

Limitation of 15 min metering data points

Qh 0

Last Qh for activation serves as reference Qh

(Ref)

Energy that should be activated (incl. billable Margin)

Ref

P(k) = Really activated energy

No availability control during activation


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“R3 DYNAMIC PROFILE” beleidsplatform VREG 24 juni 2013.

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