Download - SR Introduction to the Electricity Market
SR Introduction to the Electricity Market
6 July 2016In association with
Welcome & Chair
Michael RieleyScottish Renewables
The Electricity Market and Renewables
Helen SnodinCAG Consultants
5
Introduction to the electricity market
Scottish Renewables
Technology and Innovation Centre, University of Strathclyde
6 July 2016
What will we cover?
An introduction to….
• Renewable support mechanisms• The GB market• The Capacity Market
6
RENEWABLE SUPPORT MECHANISMS
7
8
Growth in generation (GWh)
NFFO 1990
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
onshore offshore
Renewables Obligation 2001 EMR 2015
• NFFO
• RO
• EMR
• CfDs, allocated competitively on price to paper renewable projects, regionally allocated, frequency, size and duration controlled by government. No trading. Non-competitive allocation to nuclear power.
• Tradeable certificate system, allocated by eligibility (only renewables) but value created by selling (competitively) to suppliers. Value maintained by including headroom in calculation of Obligation size.
• CfDs, allocated competitively on price to ready-to-build renewable projects, nationally allocated, frequency, size and duration controlled by government. No trading. Non-competitive allocation to nuclear power.
9
• NFFO
• RO
• EMR
• Prices driven down, at expense of volume i.e. some projects were not economic and did not go forward.
• Very successful on volume, built up the industry, some local manufacturing. Initially designed as price competitive across all technologies, but subsequently banded.
• CfDs have revealed cost reductions in RO-conceived projects, passed on in price. Hostage to political changes, government exercising its control.
10
11From: UK offshore wind, opportunities for trade and investment
Contracts for Difference and the market
• Strike Price – paid a cleared price by technology and delivery year.
• Reference price – for renewables based on traded day-ahead prices– Interactions with the capacity market and wind generation
• Difference between strike price and reference price = levy controlled budget– Lower market prices, higher subsidies – Difference between Lib / Con co-alition and Conservative government as to
how budget controlled
• CfDs awarded amount to £1.9-2 Bn per year. RO generation costs around £4Bn. Levy Control Framework has cap of £7.9 Bn by 2020. (Hinkley around £2.7 Bn in 2012 prices)
https://www.theccc.org.uk/publication/technical-note-budget-management-and-funding-for-low-carbon-electricity-generation 12
GB ELECTRICITY MARKET
13
14
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
scotland england wales northern ireland
Onshore + offshore (GWh)
GB-wide market 2015
BETTA – GB-wide market
• Separate System Operator, National Grid– System balancing– System services– Transmission connection and transmission charging
• Extension of transmission charging (TNUoS) to Scotland– Replaced a deeper charging methodology in Scotland– Common distribution charging followed
• The Scotland – England ”interconnector” disappeared overnight– Much more connected and “managed” before upgrades
• Settlement of market positions on GB basis, by Elexon– Imbalances settled every half hour
• Long term mandatory purchase agreements for conventional generation fell away15
Jobs, turnover, & acquisitions, onshore wind, 2014
16From: Office for National Statistics: Low Carbon and Renewable Energy Economy Survey
THE CAPACITY MARKET
17
The Capacity Market
• Introduced alongside CfDs as part of EMR• Buying a promise (4 and 1 years ahead) from generation and
demand side to be generating or reduce load, when a stress event warning (4 hrs notice). Like reserve, but not like reserve.
• Of approx 85 GW on system, 50GW have contracts for 2018 delivery. Costing about a £Billion per year based on initial auction results.
• Likely to impact wholesale prices, directly by lowering energy-related revenues requirements, and indirectly by seeing off system stress (accompanied by price spikes)
18
Fiona ShepherdScottishPower Renewables
www.scottishpowerrenewables.com 20Template for corporate and business use/ July 2015 /
Introduction to Electricity Markets6 July 2016
Impact of Renewables on Electricity Prices
Fiona ShepherdEnergy Policy Manager
www.scottishpowerrenewables.com 21Template for corporate and business use/ July 2015 /
Electricity Price Drivers
45/MWh
Long-term Short-term
Average Power Price
Underlying commodity prices
Short-term dispatch decisions
www.scottishpowerrenewables.com 22Template for corporate and business use/ July 2015 /
Historic UK Generation Mix
Coal generation dominates during the 80’s and early 90’s
Dash for gas during the 90’s
Cost of dominant generation technologies drive the power price
Increasing renewable generation since early 00’s
www.scottishpowerrenewables.com 23Template for corporate and business use/ July 2015 /
Factors Affecting Underlying Commodities – Fuel Costs vs Power Price
www.scottishpowerrenewables.com 24Template for corporate and business use/ July 2015 /
Merit Order Effect
Changing energy mix leads to a shift in the merit order
Renewable generation with lower marginal cost displace more expensive forms of generation
Renewable
Nuclear
Coal
Gas
Oil
Nuclear
Coal
Gas
Oil
Merit Order and Supply vs demand determines the market price in the short term
www.scottishpowerrenewables.com 25Template for corporate and business use/ July 2015 /
Future Long Term Prices
Demand Drivers
Energy efficiency
Electrification of heat and transport
Commodity Drivers
Coal – closure of existing coal fleet
Gas – new build CCGT
Carbon Price Consumer buying power
National Grid FES 2015 – Slow Progression
StorageRenewables-capacity/generation profile
Q & A
Trading Power
Iain RobertsonSmartestEnergy
28
Trading PowerIntroduction to the Electricity Market
Iain Robertson, Generation Sales Manager
Agenda
SmartestEnergy
What is a PPA?
Traded markets
The role of Elexon
SmartestEnergyThe UK’s leading purchaser of power from independent renewable generators and supplier of renewable electricity to large commercial and industrial organisationsEstablished as generation aggregator since 2001Diverse portfolio
3GW contracted installed capacity600 sites (>13% of GB independent embedded renewables)Includes all commercial-scale renewable technologies
Strong balance sheet, backed by an international corporationAnnual turnover £1.2bn and profit after tax £13mWholly-owned subsidiary of Marubeni Corporation
170+ employees across offices in London, Ipswich & Glasgow
What is a PPA?
What is a Power Purchase Agreement?
Route to market contract between:Generator (the seller) and Purchaser of electricity (the buyer)
Defines the commercial terms, including: Pricing structuresKey dates and schedule for deliveryObligations and penaltiesPayment termsRisk and termination provisions
The principal agreement that defines the revenue and credit quality of a generating project and is a key element of project finance
Construction Risk ROC PPAsFor Project Finance, up to 15 years
FiT PPAFor Feed-in Tariff generators
CfD PPATo dovetail with CfD contract
Short-term PPAMerchant, typically up to 3 years
FlexiPPATypically for portfoliosFrameworks up to 7 years
“Linked Supply” Direct PPAs with end-users
PPAs for renewable generators
Project revenue made up of 4 componentsWholesale Power Price
Fixed or flexible market priceEmbedded Benefits
Payments for distribution-connected generators
Renewable Subsidye.g. ROC, FiT, CfD top-up
New BenefitsREGO value emergingCapacity Market Avoidance Benefit
New Benefits
Subsidy
Embedded Benefits
Power
Fundamentals: short-termSupply & demand
Recession led to 6-8% demand reduction Outages
Supply of primary energy Price largely linked to gas priceCoal, oil
System capacity marginsGas storage
European marketsWeather
UK Electricity Wholesale Market drivers
Sentiment: longer-term viewEconomic climate(Geo)political effectsRegulatory changes
Emissions legislationNew technologies, sources and uses
Power Price optionsMay be fixed for a forward period based on liquid wholesale market at the time
typical forward liquidity 3-4 years
Prices can be fixed beyond the liquid curve if a suitable hedge can be found in the market
Price may float by linking to a market index or via agreed price setting mechanism
Floor price may be required for project finance
Forward annual price
N2EX day-ahead price
PPA - Imbalance
Purchaser takes Volume Risk on the forecast versus delivered generation outputAn imbalance charge is made, based on:
Nature of the supplyHistoric data (if any)Prevailing level of wholesale prices Prevailing wholesale price volatility Time between contract agreement and deliveryPurchaser’s experience of similar generationPurchaser’s portfolioExpected nature of prices in the imbalance mechanism
What are Embedded Benefits?Costs to end users accrue as benefits to embedded generation as it is treated as ‘negative demand’ in settlements
Vary according to location and connection voltageDistribution and Transmission lossesGeneration Distribution Use of System (GDUoS)Balancing Services Use of System (BSUoS) chargesResidual Cashflow Reallocation Charge (RCRC)
Capacity Market Avoidance BenefitTransmission Network Use of System Charges (TNUoS)
Transmission Network Use of System (TNUoS) – Triad benefit
2015/16 Final(£/kW)
2016/17 Final(£/kW)
2017/18 Current Forecast(£/kW)
1 Northern Scotland 23.47 40.97 29.732 Southern Scotland 26.79 40.24 30.453 Northern 32.62 42.93 38.164 North West 35.68 42.83 43.595 Yorkshire 36.29 42.49 44.136 N Wales & Mersey 35.62 42.68 44.507 East Midlands 39.07 44.72 47.018 Midlands 39.63 45.74 48.269 Eastern 41.18 46.54 49.0210 South Wales 37.61 42.31 45.4411 South East 43.74 49.20 51.8312 London 46.24 51.87 54.3713 Southern 44.79 50.08 52.8314 South Western 43.98 48.58 51.43Range 22.77 11.63 24.64
Transmission Network Use of System Charges (TNUoS)
Embedded Benefits Review1. Growing gap between the Use of System charges faced
by transmission connected and embedded generation
2. Regulatory developments:
a) Ofgem reviewing charging arrangements for distribution-connected generators
b) CMA proposals also effectively remove the transmission losses embedded benefit
3. NG widening review of “Commercial Charging Arrangements”
ROC PPAPower + ROCs + REGOs + Embedded Benefits
Monthly cashflow
Short-term market remains competitive
Long-term market typically 10-15 year dealsFewer PPA providers
Power and ROC price volatility
ROC ValuesROC history Buy-Out Recycle
NominalValue
CP1 2002-03 £30.00 £16.52 £46.52
CP2 2003-04 £30.51 £22.99 £53.50
CP3 2004-05 £31.39 £14.17 £45.56
CP4 2005-06 £32.33 £10.19 £42.52
CP5 2006-07 £33.24 £16.04 £49.28
CP6 2007-08 £34.30 £18.65 £52.95
CP7 2008-09 £35.76 £18.61 £54.37
CP8 2009-10 £37.19 £15.15 £52.34
CP9 2010-11 £36.99 £14.35 £51.34
CP10 2011-12 £38.69 £3.58 £42.27
CP11 2012-13 £40.71 £3.59 £44.30
CP12 2013-14 £42.02 £0.70 £42.72
CP13 2014-15 £43.30 £0.35 £43.65
CP14 2015-16 £44.33 ? ?
CP15 2016-17 £44.77 ? ?
Targets
Values
ROC to become fixed price in 2027
Nominal ROC value forecast
FiT PPAFiT includes published Generation Tariff plus Export Tariff
Paid quarterly in arrearsIndexed annually
PPA is a market alternative to Export TariffGenerators can opt-outExport Tariff provides effective floor price
PPA includes Power + REGOs + Embedded Benefits
Monthly cashflow
Small Scale FiT
How CfDs workLow Carbon Contracts Company (LCCC) operate schemeDifference payments from and to LCCCGenerators also need a PPA provider to sell their power (at the Market Reference with discount)Strike Price = Market Reference Price + Difference Payment
Key aspects of CfDPr
ice
Generator pays back
Strike price
Generator receives Difference Payment
Market reference price- day-ahead for intermittent- season ahead for baseload
PPA standard model is a discount to MRP
CfD v RO
ROC CfD
Support financing low-carbon generationDrive down costsLong-term price certainty
PPAs in a post-subsidy world
Market stabilisation CfDDirect end-user PPAs
Generator agrees (long-term) price with ConsumerConsumer must also be creditworthy
Supplier provides PPA to GeneratorIncluding Embedded Benefits
Power is sleeved through to Consumer’s supply contract at agreed price
PPA provider may or may not also be Consumer’s SupplierCertainty for both partiesGreat opportunity to bring together willing partiesCSR and PR opportunities
Trading Power
Wholesale electricity is traded mostly OTC via brokers
Voice and screenTraders prefer interfaceMore flexibleProvides market intelligenceEncourages tighter pricesHighlights opportunities
Trades are anonymous, until after the tradeOther trading done via exchanges, on indicesUK trades up to 6 times consumptionSome other European markets more liquid
Wholesale market
Trading Parties
GeneratorsSuppliersBanks/ hedge fundsCommodity traders/ speculatorsConsumersEuropean utilities
Approximately 60 companies trading UK power
c.100 trading gas
Traded PeriodsForward Market
Months, Quarters, Seasons, Annuals
Prompt MarketDay-ahead, week-ahead
Spot MarketWithin-dayUp to gate closure
Can trade baseload or “shape” e.g. peak/ off-peak
Forward annual price
Forward winter price
Forward summer price
Impact of Solar PV generation on intraday wholesale price
The Role of Elexon
What does Elexon do?
Elexon monitor and validate payments made between generators and suppliers (BSC Parties)Compare how much electricity generators and suppliers were contracted to produce or consume with actual volumesCalculate a price for the difference and transfer funds accordingly
Elexon deliver the Balancing and Settlement Code
National GridBalance physical generation and
demand
ElexonSettlement imbalance
for generators and suppliers
BSC PartiesProduce or use
energy
System Sell Price - Single Cash Out
Trading arrangements
Transmission Network(Operated by National Grid)Generation Large
Consumption
Central volume allocationSupplier volume allocation
Grid Supply Point
Distribution Network
GSP GroupSupply Embedded Generation
How does Imbalance occur
Generators Suppliers Non-physical traders
May produce more or less energy than they have sold contractually
May consume (through customer demand) more or less energy than they have purchased contractually
No generation to sell, or demand to satisfy – buys from generators and trades to suppliers for profit
Elexon Settle ImbalanceELEXON’s systems capture the contracted volumes from generators/ suppliers to record what they said they would produce/consume
ELEXON’s systems and processes analyse the actual data to see who generated/consumed what
National Grid (Transmission operator) provides pricing data on actions taken to balance the system
Prices are calculated by Elexon as per National Grid data and applied to difference between contracted volumes & actual data = Imbalance.
Payment is made to and from their customers – the BSC parties
Thank you for watching….
Follow us on Twitter @SmartestEnergy for upcoming events and our latest
blogs
> Follow us here
Follow our company LinkedIn page for updates and connect with our team
> Connect with us
Sign up for our weekly newsletter The Informer to keep up to date with latest
developments
Sign up here
Energy Entrepreneurs Report 2016
Download our free report
Go to our blog to hear the latest from all our experts
Visit the info hub on our website
www.smartestenergy.com
Q & A
Networking Break
Making the Network Work
Audrey RamsayNational Grid
Managing Supply and Demand
Scottish Renewables: Introduction to Electricity MarketAudrey Ramsay, Commercial Strategy ManagerNational Grid
Agenda
Introduction and overview of National Grid
Balancing the system
Challenges
Publications
Introduction and overview of National Grid
National Grid
Commercial and Domestic Customers
National GridGas Distribution UK
Other GasDistribution Networks
National GridTransmission UK (Electricity & Gas)
Electricity Generators Gas Producers and Importers
SystemOperator
ElectricityDistribution Networks
TO
TO
TO
SO
Owns, builds and maintains assets
Operates the system
Provides customer interface
SO
Balances the GB System
Configures the GB Transmission System
Operational planning
Connection and Use of System Agreements with Generators, Suppliers and Distribution companies
GB charging and billing
Electricity Operations - who is responsible for what?
Transmission Owner
System Operation
OFFTO’s
Transmission provides the backbone of GB electricity reliability
Generation
SupplyDistribution 132kV
& Lower
National GridTransmission
99.999%
Low Loss Transmission 275kV & 400kV
Responsibilities
Supply electricity
Own electricity transmission networks in Scotland
Discriminate between customers or technologiesWe Don’t
We Do
Economically balance supply and demand, second by second for GB to keep frequency within statutory limits.
Facilitate the energy market by maintaining adequate transmission capability to within agreed security standards.
Facilitate competition via connection of new generation
Balancing the System
Through forward markets suppliers contract with generators to produce the right amount of energy
On the day generators decide which of their generating units run to meet their contractual obligations
Forwards and futures markets >24h ahead
Power exchanges <24h fine tune positions
National Grid administer Balancing Mechanism <1.5hr ahead
Supply companies forecast their electricity requirements per half hour.
Arrange contracts with generators per half‐hour
The electricity market
Generation Markets Suppliers
Target speed 50 miles/hour (+/- 0.5mph)
Accelerator = GenerationGradient = Demand
Statutory duty (License – balancing)
To maintain secure operation of the system
To maintain quality of supply
To operate economically
50.0
49.5
50.5Generation Demand
Real time balancing: keeping the frequency at 50Hz
Energy Balancing in real time
35500
36000
36500
37000
37500
38000
38500
39000
39500
40000
19:30
19:35
19:40
19:45
19:50
19:55
20:00
20:05
20:10
20:15
20:20
20:25
20:30
20:35
20:40
20:45
20:50
20:55
21:00
21:05
21:10
21:15
21:20
21:25
21:30
Time
MW
Demand
Market expectation
Need to reduceGeneration (or increase demand)
Need to increaseGeneration (or reduce demand)
The importance of a balanced generation portfolio
5gCO2eq/kWh
6000
0
Nuclear
48 hours
Coal Fired
12 hours 6 hours
Gas Turbines
2 minutes
CCGT
10 seconds
Hydro Wind
N/A
1000gCO2eq/kWh 450gCO2eq/kWh 800gCO2eq/kWh 10gCO2eq/kWh
Environmental data source:Parliamentary Office of Science & Technology
Solar
N/A
Start‐up times
85
Power Exchanges
Imbalance Settlement
Balancing MechanismForward Markets
National Grid’s Role in GB Market
Rolling half hour trades
(fine tuning) ~5%
T - Year Ahead(or earlier)
T – 1hr T+ 14 months
Suppliers contract directly with
generators to source the electricity they
need~ 90+%
T- 24 hrs
Generation & demand
balanced by National Grid
as SO ~ 3%
Post eventsettlement (Elexon)
ReserveTrades
Response
£30bn £1bn
Challenges to Balancing the System
Distributed Generation
Active Demand
Industrial Domestic
Passive Demand
DomesticIndustrial
Balancing an evolving grid
Conventional Generation
Inflexible generation
Intermittent Generation
0
200
400
600
800
1,000
1,200
1,400
1,600
0
200
400
600
800
1,000
1,200
1,400
1,600
01-J
an
05-J
an
10-J
an
15-J
an
20-J
an
25-J
an
30-J
an
01-J
an
05-J
an
10-J
an
15-J
an
20-J
an
25-J
an
30-J
an
MW
Interconnection
Interconnection
Challenges for National Grid
More than 700,000 individual PV sites across GB connected at
distribution levelGeneration dependent on weather
conditions
Power flows increasingly variable
Suppresses transmission demand
Increasing complexity in balancing
Impact of Distributed Generation
Total electricity use in GB
Electricity supplied via National Grid system
Available tools to manage difficult conditions
Low Demand/High Generation
System reconfiguration
Forward Trades/Contracts
Bid-Offer Acceptances (BOA)
SO-SO Trades
Negative Reserve Active Plant Margin (NRAPM)
High Demand/Low Generation
System reconfiguration
Forward trades/Contracts
Bid-Offer Acceptances (BOA)
SO-SO Trades
Notification of Inadequate System Margin (NISM)
Publications
We want to help you keep up to date
Any questions or feedback? Please contact [email protected]
Winter Consultation (July)Share your views on winter 2016/17Future Energy Scenarios (5 July)Credible pathways for energy out to 2050Winter Outlook Report (October)Our analysis for winter 2016/17
Andrew UrquhartSSEPD
CommercialMajor Connections Contracts
Andrew UrquhartActive Solutions ManagerSSEPD
The Future Network
Scottish and Southern Energy Power Distribution owns:• One electricity transmission
network• Two electricity distribution
networks• 106,000 substations • 130,000 km of overhead lines and
underground cables• 100+ submarine cable linksThe company serves 3.5 million customers across one third of the UK’s landmass
About SSEPD
• New market/network actors• New network configurations• New challenges• DSO, a natural evolution?• DNO current approach
Overview
policyexchange.org.uk
New Players - Interconnectors
New Players - Storage Operators• Grid scale
– Service providers at Distribution grid scale– EFR requires Fast import/export service– Technologies tendered
Batteries InterconnectorsDSR Diesel/backup
– 200MW tender resulting in circa 4GW of SEPD applications
• Smaller scale storage– EVs Increasing in volume– New actors including car manufacturers– Home storage
New Players - Community Energy
LegendOil heating
Wood heat’g
Electric heating
Other heating
Generator 400kWLoch Donhead s/s
New Network Configurations• Flexible connections
– ANM (single, multiple & 3rd party)– Export limiting– Timed connections
New Challenges
• Capacity conflict– G59 vs G83– Storage charging
• Service conflict– ANM vs Transmission services– Distribution vs Transmission services
• Storage applications• Modelling of new technologies/configuration
DSO, a natural evolution?
DNO
DSO
TSO
Service ProvidersTNO
Ofgem/DECC
Network connectees
DNOs Current Approach• Business as Usual projects
– ANM (UKPN, SSEPD, UKPN, SPEN & NPG)– CMZ Network service provision (SSEPD)
• R&D projects– NINES demand/generation control and stability control (SSEPD)– Mull Access Project (SSEPD)– CLNR demand/generation control (ENW)– C2C paid curtailment (ENW)– OpenLV better network capacity understanding (WPD) – ReZone islanded network management post fault (SSEPD)– Transmission & Distribution Interface 2.0 service request and
provision from D actors (NG)
Conclusion
Future networks involve new actors and network configurations
DSO seems natural evolution to solve new challenges
Work to do but already started
www.ssepd.co.uk/innovationEmail: [email protected]: @SSEPD_FN
Thank you
Q & A
Scotland in Context
Dr. Simon GillUniversity of Strathclyde
1. What does Scottish electricity system looks like today?
2. How will it develop in the next few years? How much transmission network should get built and why?
3. Wind generation and the balancing mechanism
4. Paying for the network: Transmission Use of System Charges
5,500MW
9,500MW
5,200 MW
4,300MW
740MW1,100MW
2,300MW
2,650 MW / 3,500MW
Scottish Peak Demand
Generation with TEC
Pumped storageHydro
Wind with TEC
Wind > 100kW
Longannet – just closedImport / export capability of the ScottishBoarder
The Scottish Electricity system in numbers (from the Electricity Ten Year Statement)
Gas
Coal
NuclearMajor hydroPumped StoreLarge wind
Major Scottish Generation
Interconnection
Nuclear
‐ 2 stations‐ Torness and Hunterson‐ 4 units‐ Approx 2.2 GW‐ Hunterston currently
licenced until 2023‐ Torness currently licenced
until 2030
https://it.wikipedia.org/wiki/Centrale_nucleare_di_Tornesshttps://en.wikipedia.org/wiki/Hunterston_B_nuclear_power_station
Gas
‐ 1 station‐ Peterhead‐ 400 MW ‘in the market’‐ 390 MW in Supplementary
Balancing Reserve‐ Total capacity ~ 1200MW
http://www.geograph.org.uk/photo/1695720
Hydro
‐ 32 stations with TEC‐ 1,100MW capacity ‐ Several groups managed as
‘Cascade Hydro’ scheme where stations within the same water catchment
‐ Mainly in SHT region‐ Galloway hydro in SW
Scotland‐ Does not include smaller
‘distributed’ hydro
http://www.geograph.org.uk/photo/2752542
Pumped Store
‐ 2 station‐ Foyers, Cruachan‐ 6 units‐ Total capacity 740MW‐ Possibility of new station at
Corrie Gals
https://commons.wikimedia.org/wiki/File:Dam_at_Cruachan_reservoir.jpg
Wind
‐ 4,500MW wind with TEC‐ 5,200MW wind > 100kW‐ 4,200MW wind monitored
by NG‐ 39 ‘units’ submitting bids /
offers to the Balancing Mechanism (shown)
http://www.geograph.org.uk/photo/1074051
Interconnection‐ Moyle interconnector‐ HVDC link to Northern
Ireland‐ 2 independent monopole
links‐ Designed to be ‘highly
reliable’‐ 500MW cable capacity‐ Operation can be limited by
system / network limits at either end.
‐ Historically has predominately exported from Scotland
https://en.wikipedia.org/wiki/Mull_of_Kintyre
5500 MVADouble Circuit(400kV)
4220 MVADouble Circuit(400kV)
Images and
data from
ETYS, 2014 http://w
ww2.natio
nalgrid
.com
/UK/Indu
stry‐in
form
ation/Future‐of‐
Energy/Electricity
‐Ten
‐Year‐Statem
ent/
2 x 120 MVASingle circuits(132kV)
Transmission
Transmission
Current export capability ofAbout 3600 MW
The SQSS standard requires:About 1800 MW
Secure Transfer Capacity import
About 10 GW thermal line capacityAcross 4 main transmission circuitsCurrent Secure transfer capacity of
2650MW
Looking at the Future:Generation
‐ Wind Capacity: significant increases (17,000MW + in ETYS by 2025)‐ PV ? : significant continued increase in GB, maybe some in Scotland.
‐ Hydro capacity: no further major stations proposed at present
‐ Pumped Store: possibility of new station at Corrie Glas, SSE.
‐ Nuclear: both stations due to close within 15 years‐ Remember further 3 stations due in N. England due to close within 15 years
‐ Gas: Peterhead capacity ..??
Transmission‐ Beauly‐Denny, Kintyre‐Hunterston :
Complete
‐ Scottish Boarder, Series compensation, Scottish Export: due 2016
‐ Shunt compensation, Scottish voltage support: due next few years
‐ Western Link (HVDC): Due 2017
‐ Caithness‐Moray link (HVDC): Due 2018 Diagram adapted from NG, ETYS 2015
Transmission‐ Beauly‐Denny, Kintyre‐Hunterston :
Complete
‐ Scottish Boarder, Series compensation, Scottish Export: due 2016
‐ Shunt compensation, Scottish voltage support: due next few years
‐ Western Link (HVDC): Due 2017
‐ Caithness‐Moray link (HVDC): Due 2018 Diagram adapted from NG, ETYS 2015
Transmission
PeterheadKintore
‐ Beauly‐Denny, Kintyre‐Hunterston : Complete
‐ Scottish Boarder, Series compensation, Scottish Export: due 2016
‐ Shunt compensation, Scottish voltage support: due next few years
‐ Western Link (HVDC): Due 2017
‐ Caithness‐Moray link (HVDC): Due 2018 Diagram adapted from NG, ETYS 2015
‐ Beauly‐Denny, Kintyre‐Hunterston : Complete
‐ Scottish Boarder, Series compensation, Scottish Export: due 2016
‐ Shunt compensation, Scottish voltage support: due next few years
‐ Western Link (HVDC): Due 2017
‐ Caithness‐Moray link (HVDC): Due 2018
Looking at the Future:Transmission
Diagram adapted from NG, ETYS 2015
Transmission‐ Beauly‐Denny, Kintyre‐Hunterston :
Complete
‐ Scottish Boarder, Series compensation, Scottish Export: due 2016
‐ Shunt compensation, Scottish voltage support: due next few years
‐ Western Link (HVDC): Due 2017
‐ Caithness‐Moray link (HVDC): Due 2018 Diagram adapted from NG, ETYS 2015
Generation adequacy…..How is it regulated?
DECC sets the generation
security standard
National Grid calculate weather the market is
likely to meet the standard
If not….Pay for
supplementary services
How much generation
capacity should we build?
DECC Says….
The reliability standard for the GB electricity market is a LOLE of 3 hours/year. This translates as a system security
level of 99.97%.
RoI: 8 hours per year NI: 4.9 hours per yearFrance: 3 hoursNetherlands: 4 hours
VoLL dived CoNE gives max LoLE
Generation Adequacy
How much generation capacity should
we build?
…..obviously!(?)!
Value of Lost Load (VoLL)
The value we place on having an
uninterrupted supply£17,000/MWh
Generation Adequacy
The Cost of New Entry
The annuitized cost of building a new peaking plant £47,000/MW
Generation Adequacy
Loss of Load Expectation (LoLE)
The number of hours per year, on average, that generation availability is less than demand
Generation Adequacy
How much does it cost to build new peaking generation capacity?
Cost of New Entry
How much do we value an uninterrupted supply?
Value of Lost Load
£47,000 / MW £17,000 / MWh
What duration of not serving load would lead to the best trade off between building generation capacity, and the risk of not serving demand?
3 Hours “Loss of Load Expectation”
By Antho
ny Hartm
an from
Meizhou
, China
‐Flickr, CC BY
2.0, https://com
mon
s.wikim
edia.org/w
/inde
x.ph
p?curid
=380
087
By Alan Zomerfeld ‐Own work, CC BY
‐SA 2.5, https://com
mon
s.wikim
edia.org/w
/inde
x.ph
p?curid
=866
641
Generation Adequacy
How secure is our electricity supplyin GB?
Without additional balancing services “Loss of Load Expectation for the base case would have been 8.9 hours/year equivalent to a de‐rated margin of 1.2%
July 2015: Winter Outlook consultation
October 2015: Winter Outlook Report
With the additional balancing services “Loss of Load expectation of 1.1 hours/year equivalent to a capacity margin of 5.1%
How secure is our electricity supplyin GB?
What is “loss of load”?
Asking generators to use a short term ‘Max Gen’ output
Emergency instructions for interconnectors
Reducing the voltage slightly so energy arrives slightly slower in our homes / businesses
Un‐planned disconnection of load
Generation Adequacy
What is “loss of load”?
Asking generators to use a short term ‘Max Gen’ output
Emergency instructions for interconnectors
Reducing the voltage slightly so energy arrives slightly slower in our homes / businesses
Un‐planned disconnection of load
Only this is really “loss of load”
Generation Adequacy
Transmission ‘adequacy’
Security and Quality of Supply
Standarda requirements of
TO licence
National Grid, SP Energy
Networks and SHE Transmission plan and build the
network
National Grid operate the transmission
system
How much transmission capacity should
we build?
Greater power to Nation Grid, System Operator in last
year (ITPR, NOA)
Impo
rtant C
hapters
2. Design of generation connections
3. Design of demand connections
4. Design of the main interconnected
transmission system (MITS)
5. Operation of the system
6. Voltage limits for onshore
7. Generation connection offshore
8. Demand connection offshore
9. Operation of offshore networks
10.Voltage limits for offshore
The NETS SQSS – Quick Intro
The NETS SQSS – Quick Intro
Defines Minimum Transmission CapacityUnder 2 backgrounds
Security Background
Peak Demand: ACS Peak Demand
Economic Background
Peak Demand: ACS Peak Demand
Defines Minimum Transmission CapacityUnder 2 backgrounds
Security Background
Peak Demand: ACS Peak Demand
Economic Background
Peak Demand: ACS Peak Demand
Makes sure there is enough transmission capacity to:
give a very high chance that demand can be served in a region
Makes sure there is enough transmission capacity to:
Facilitate the market efficiently.
(If there is not enough transmission, demand will be met but it will be
more expensive to do so.)
E.g. Scottish wind curtailed; English CCGT used instead
The NETS SQSS – Quick Intro
Defines Minimum Transmission CapacityUnder 2 backgrounds
Security Background
Peak Demand: ACS Peak Demand
Economic Background
Peak Demand: ACS Peak Demand
Wind, Wave and Tidal 0
‘Importing’ Interconnectors 0
Peaking Plant Scaled
Pumped Storage Scaled
Nuclear Scaled
Coal/Gas CCS Scaled
Other Plant Scaled
Wind, Wave and Tidal 70%
‘Importing’ Interconnectors 100%
Peaking Plant 0
Pumped Storage 50%
Nuclear 85%
Coal/Gas CCS 85%
Other Plant Scaled
The NETS SQSS – Quick Intro
The NETS SQSS – Quick Intro
And in each case adds a bit more to represent variations around the medium
Security Background Economic Background
Planned Transfer Capacity
Inter‐connection Allowance
Secure transfer capability, N‐1*
Planned Transfer Capacity
Boundary Allowance
Secure transfer capability, N‐2*
*Loosely defined
Secure transfer capability, N‐1*
Secure transfer capability, N‐2*
Transmission
Current export capability ofAbout 3600 MW
The SQSS standard requires:About 1800 MW
Secure Transfer Capacity import
About 10 GW thermal line capacityAcross 4 main transmission circuitsCurrent Secure transfer capacity of
2650MW
Can Scotland meet its peak demand?Last
Winter
2015 – 16
Transmission
Can Scotland meet its peak demand?NextW
inter
Probability of Scotland needing to import at peak: ~55% To be 99% sure of
meeting Scottish Peak: 1.9 GW
To be 99.9% sure of meeting Scottish Peak: 2.5 GW
2016 – 17
Transmission
Can Scotland meet its peak demand?
Transmission
Can Scotland get its electricity out?
‐ Calculation based on data from the Balancing Mechanism Reporting Archive (www.elexonportal.co.uk )
Can Scotland get its electricity out?
October 2014 December 2015
‐ Calculation based on data from the Balancing Mechanism Reporting Archive (www.elexonportal.co.uk )
2011‐12 2012‐13 2013‐14 2014‐15
Energy available, FPN (GWh)
3776 4571 7563 7396
Energy curtailed,BOAV (GWh)
69 36 538 776
Percentage curtailed(%)
1.8 0.8 7.1 10.5
Balancing mechanismwind
‐ Calculation based on data from the Balancing Mechanism Reporting Archive (www.elexonportal.co.uk )
Local Tariff Wider tariff
Old TNUoS charging structure for generation
Residual, non locational element
Locational ‘zonal’ cost reflective charge
Locational cost
reflective local circuit charge
Local substation charge –type cost reflective
Generator TNUoS tariffs
Paying for the network –TNUoS
Residual, non locational element
Local Tariff Wider tariff
Residual, non locational element
Peak Security Tariff(Not paid by intermittent
generation)
Year Round Tariff
Non‐shared Component
Shared Component(Scaled by Annual Load
factor)
New TNUoS charging – Adjusts
the existing Locational Element
Residual carries out full D, G splitting as well as aligning revenue with price‐control allowances
Local Tariff Wider tariff Old TNUoS charging
structure for generation
Locational cost
reflective local circuit charge
Local substation charge –type cost reflective
Paying for the network –TNUoS
‐10‐505101520253035
1 6 11 16 21 26
£/kW
Zone (1 = N. Scotland, 27= W. Devon and cornwall)
Components of the Generation Wider Tariff (old methodology)
Residual
Final
Paying for the network –TNUoS
‐30.00
‐20.00
‐10.00
0.00
10.00
20.00
30.00
40.00
1 2 3 4 5 6 7 8 9 101112131415161718192021222324252627
£/kW
Generation Zone
Wider Tariffs for a Conventional 80% Generator
2016/17 2017/18 2018/19 2019/20 2020/21
‐20.00
‐10.00
0.00
10.00
20.00
30.00
40.00
1 2 3 4 5 6 7 8 9 101112131415161718192021222324252627
£/kW
Generation Zone
Wider Tariffs for an Intermittent 40% Generator
2016/17 2017/18 2018/19 2019/20 2020/21From NG TNUoS forecasts for 2017‐18 – 20/21 Forecastshttp://www2.nationalgrid.com/WorkArea/DownloadAsset.aspx?id=45336
‐ Electricity Ten Year Statement: http://www2.nationalgrid.com/UK/Industry‐information/Future‐of‐Energy/Electricity‐Ten‐Year‐Statement/
‐ Network Options Assessment: http://www2.nationalgrid.com/UK/Industry‐information/Future‐of‐Energy/Network‐Options‐Assessment/
‐ Winter Outlook Report: http://www2.nationalgrid.com/UK/Industry‐information/Future‐of‐Energy/FES/Winter‐Outlook/
‐ Security and Quality of Supply Standard: http://www2.nationalgrid.com/uk/industry‐information/electricity‐codes/sqss/the‐sqss/
‐ DECC Enduring Reliability Standard: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/223653/emr_consultation_annex_c.pdf
‐ TNUoS tariff forecasts: http://www2.nationalgrid.com/UK/Industry‐information/System‐charges/Electricity‐transmission/Approval‐conditions/Condition‐5/
‐ Scottish Security of Supply Study: www2.nationalgrid.com/WorkArea/DownloadAsset.aspx?id=40185
Useful links
Q & A
Networking Lunch
SR Introduction to the Electricity Market
6 July 2016In association with