Balancing power 2015

Transcription

1 Balancing power 2015 Insights to the German market for balancing power Lion Hirth

2 Market size Prices Volumes The German Balancing Paradox Balancing energy (activation) Suppliers Lion Hirth 2

3 Market size

4 Balancing power: another year of contraction Balancing power market size In 2015, the market for balancing power contracted further. Revenues totaled to 340m, 60% less than in 2009 and 25% less than in Lion Hirth 4

5 Upward or downward balancing: all markets shrink Market size: positive / negative Market size: positive / negative Secondary and tertiary only. Secondary and tertiary only. Revenues for positive (upward) and negative (downward) balancing declined. Since the 2009 peak, revenue has declined by 60% (positive) to 80% (negative). Lion Hirth 5

6 Primary stable, secondary and tertiary in decline Market size by segment Market size by segment The markets for secondary and tertiary balancing (minute reserve) continue to decline. Primary balancing remains stable. Since 2009, revenue has declined by 60% in secondary balancing and by 80% in tertiary. Lion Hirth 6

7 Primary stable, secondary and tertiary in decline Market size by segment Primary balancing now comprises nearly 40% of the balancing power market. Lion Hirth 7

8 Market size in perspective Different power prices The retail electricity price for households is about 280 per MWh. Of this, 0.38 (0.1%) pays for holding balancing reserves. Pretty cheap. Lion Hirth 8

9 Prices

10 Prices in different market segments Two years ago, secondary balancing was more expensive than primary. In 2015, primary balancing was by far the priciest product. Lion Hirth 10

11 Prices remain volatile especially during Christmas Market design Christmas TSO cooperation Fukushima Regulatory action Christmas Christmas websites. Monthly volume-weighted averages of all products (peak / off-peak, negative / positive) per segment. Lion Hirth 11

12 Primary: increasing Primary Primary Prices for primary balancing power increased for the third year in a row. TSOs procure balancing power in pay-asbid auctions. As theory predicts, marginal prices converge. Lion Hirth 12

13 Secondary: declining Secondary: average Secondary: by segment Prices for secondary balancing hit a record low, down a third from previous year. The prices for negative (downward) balancing during off-peak periods declined more than in any other segment. Lion Hirth 13

14 Tertiary: disappearing? Tertiary: average Tertiary: by segment Prices for tertiary balancing power (minute reserve) declined nearly 50% in Tertiary balancing is at the edge of turning itself into an energy-only market: it paid 0.6 per MW and hour. Lion Hirth 14

15 Secondary balancing: price structure Peak / off-peak ratio Positive / negative ratio Prices during peak and off-peak behave quite differently over time. During early 2012, negative balancing was seven times more expensive than positive in late 2015 the ratio was reversed. Lion Hirth 15

16 Primary vs. secondary: correlation disappeared Primary Prices for primary and secondary used to go hand-in-hand. Not anymore. Lion Hirth 16

17 Volumes

18 Balancing reserves by segment Secondary and Tertiary Primary The requirement for secondary and tertiary balancing, determined by the TSOs, declined further. Primary reserve is set commonly by European TSOs. (Includes 25 MW for CH and 35 MW for NL.) Lion Hirth 18

19 Secondary and tertiary balancing reserve Overall By segment Secondary and tertiary only. Despite seasonality, the trend is clear: less and less balancing reserve is needed. Procured volumes decline across product types. Lion Hirth 19

20 Secondary and tertiary balancing reserve Secondary Tertiary Secondary volumes were stable year-toyear, except for a spike over Christmas. There was a record low demand for positive (black) and negative (orange) tertiary balancing in Lion Hirth 20

21 The German Balancing Paradox

22 The German Balancing Paradox TSO cooperation introduced +200% -20% Source: Neon. Since 2008, installed wind and solar capacity tripled. At the same time, balancing power reserves decreased by 20%. Lion Hirth 22

23 Source: Neon. The German Balancing Paradox Balancing reserve 5.3 GW 680m p.a. Balancing cost Wind + solar capacity 27 GW +200% -20% -70% Since 2008, installed wind and solar capacity tripled. At the same time, balancing power reserves decreased by 20% - and procurement costs by 70%! Lion Hirth 23

24 Balancing energy (activation)

25 Less and less activation of balancing power Source: BNetzA Monitoringbericht 2015 Lion Hirth 25

26 Reduced activation of secondary balancing Source: BNetzA Monitoringbericht 2015 Lion Hirth 26

27 Suppliers

28 More suppliers of balancing power Pre-qualified suppliers In 2015, the number of companies that supply secondary and tertiary balancing continued to increase. This was not the case for primary a hint why prices were more stable in this segment. Lion Hirth 28

29 Further reading Hirth, Lion & Inka Ziegenhagen (2015): Balancing power and variable renewables: Three links, Renewable & Sustainable Energy Reviews 50, Get PDF Hirth, Lion & Inka Ziegenhagen (2013): Wind, Sonne, und Regelleistung, Energiewirtschaftliche Tagesfragen 10/ Get PDF Lion Hirth 29

30 Seeking advice on power markets? Neon Neue Energieökonomik is a Berlin-based boutique consulting firm for energy economics. Neon conducts model-based studies of power markets, provides electricity price forecasts, and organizes workshops. Lion Hirth hirth@neon-energie.de