How the Nordic countries accommodates for new renewable energy and overcame the challenges

Transcription

1 How the Nordic countries accommodates for new renewable energy and overcame the challenges Medellín, Colombia 1. December 2017 Nord Pool Efficient, Simple and Secure power trading across Europe

2 Efficient, Simple and Secure power trading across Europe Nord Pool

3

4 Nord Pool Consulting are ambassadors for modern power markets across the world and work with Governments, Power Exchanges, Regulators, TSOs and other stakeholders on: Market design Rulebook development Market regulation Power market systems Capacity building Competence building

5 Stakeholders Owned by Nordic and Baltic transmission system operators Regulated in Norway by Norwegian Water Resources and Energy Directorate (NVE) Nominated NEMO in Austria, Belgium Denmark, Estonia, Finland, France, Germany, Great Britain, Ireland, Poland, Latvia, Lithuania, Luxembourg, the Netherlands and Sweden Statnett SF Norway 28.2% Elering AS Estonia 2% Svenska kraftnät Sweden 28.2% Litgrid AB Lithuania 2% Energinet.dk Denmark 18.8% Augstsprieguma tīkls AS Latvia 2% Fingrid Oyj Finland 18.8%

6 Some examples of Nord Pool projects European target model Latin America & Caribbean Southern African Power Pool Day-Ahead prices are determined simultaneously across Europe The Price Coupling of Regions (PRC) initiative now enables the coupling of Day Ahead electricity markets in 23 countries representing over 90% of European power consumption. NORWAY SWEDEN FINLAND ESTONIA RUSSIA NORDPOOL COLORS Use Eyedropper from Font Color or Shape Fill dropdown 100% 40% 90% 80% 70% 60% DARK BLUE LIGHT BLUE GREEN BLACK SECONDARY ACCENT COLORS OFF-WHITE LATVIA WHITE DENMARK LITHUANIA IRELAND BELARUS UK BELGIUM NETHER- LANDS GERMANY POLAND UKRAINE Part of PCR initiative today 4 MMC Independent FRANCE ANDORRA LUXEMBOURG CZECH REPUBLIC SLOVAKIA MOLDOVA AUSTRIA HUNGARY SWITZERLAND ROMANIA SLOVENIA CROATIA BOSNIA & SERBIA HERZEGOVINA BULGARIA MONTE- KOSOVO ITALY NEGRO MACEDONIA PORTUGAL SPAIN ALBANIA TURKEY GREECE nordpoolgroup.com/academy 92 South-east Europe India ASEAN

7 TOOLBOX FOR EFFICIENT LARGE SCALE RES INTEGRATION Strong transmission grids and interconnectors International electricity markets Flexible generation system Specialized forecasting and operational planning tools Danish experiences on market based integration of wind power November

8 Why? New energy production needs a big and transparent power market

9 European cooperation for common success Since 2014 a Day Ahead Power Market coupling 23 countries: Common price calculation with Implicit cross border capacity allocation Algorithm: EUPHEMIA FINLAND 23 National Regulatory Authorities NordREG ACER NORWAY SWEDEN ESTONIA RUSSIA LATVIA 17 Transmission System Operators (TSOs) Nordic TSO cooperation: Same 50 hz frequency ENTSO-E 7 Power Exchanges (PX) 6 order books SPAIN ALBANIA Paris agreement: Essential for goal and future RES PORTUGAL GREECE ambitions New economy: new types of jobs 9 NORTHERN IRELAND IRELAND UK FRANCE BELGIUM NETHER- LAND LUXEMBOURG DENMARK SWITZERLAND GERMANY ITALY CZECH REPUBLIC AUSTRIA SLOVENIA POLAND SLOVAKIA HUNGARY LITHUANIA CROATIA BOSNIEN & SERBIA HERZEGOVINA MONTE- NEGRO KOSOVO MAKEDONIA BELARUS ROMANIA UKRAINE BULGARIA MOLDOVA TURKEY

10 European target model based on Nord Pool Since 2014: Day Ahead Power Market coupling with 23 countries TWh pa consumption The world s largest power market Nordic: 400 TWh pa consumption 93 % market share of Day-ahead consumption EUR underlying value per year NORWAY SWEDEN FINLAND ESTONIA RUSSIA LATVIA Facilitates for better competition across Europe and better utilisation of infrastructure by: Power flow from low priced to high priced areas every each of the 8760 hours of the year The cheapest electricity is sold first: Merit order Both areas get reduced grid tariff: Congestion rent Optimal use of expensive HV/DC interconnectors Paris agreement: PCR is essential part of the plan for Europe to achieve its goal New economy, new types of jobs PORTUGAL SPAIN NORTHERN IRELAND IRELAND UK FRANCE BELGIUM NETHER- LAND LUXEMBOURG DENMARK SWITZERLAND GERMANY ITALY CZECH REPUBLIC AUSTRIA SLOVENIA POLAND SLOVAKIA HUNGARY LITHUANIA CROATIA BOSNIEN & SERBIA HERZEGOVINA MONTE- NEGRO KOSOVO MAKEDONIA ALBANIA GREECE BELARUS ROMANIA UKRAINE BULGARIA MOLDOVA TURKEY 10 Part of PCR initiative today 4 MMC Independent

11 ENTSO-E European Network Transmission Operators Electricity 41 TSOs from 34 countries Founded on 19 Dec 2008 and fully operational since July 2009 A trans-european network 525 million citizens served 828 GW generation 305,000 Km of transmission lines 3,300 TWh/year demand 400 TWh/year exchanges Legal mandate, among which TYNDPs, Network Codes etc. Source: November

12 Are you sure? The proof is in the hertz and Megawatt

13 Why cooperate? It s better for everybody! SOS: Security of Supply Security of Demand Complementary production Climate change

14 Number of Nord Pool customers today: There used to be one big energy and distribution company in each country

15 The price for the consumer has 3 parts

16 Daily operation of day-ahead and intraday markets

17 The Nord Pool model for power trading

18 Market Principles of the Power Market Nord Pool Day-Ahead Market is balancing production and consumption every hour of the year: Ensuring that the cheapest energy is produced/sold and consumed/bought first. Power flows from low priced areas to high priced areas.

19 Cheaper renewable energy increases demand Server parks

20 THE ENERGY SYSTEM IN DENMARK IS CHANGING By 2020, wind power will constitute 50% of the electricity consumption By 2050, Denmark must be completely independent of fossil fuels Strategic commitments of Energinet: - Security of supply - Efficient green transition - Healthy investment climate Danish experiences on market based integration of wind power November

21 THE DANISH ENERGY MODEL - DE-COUPLING ECONOMIC GROWTH, ENERGY CONSUMPTION AND EMISSIONS Index: 1990 = reasons: CHP/DH, Renew. Energy Energy Savings Danish experiences on market based integration of wind power November 2017 Page 21

22 PARALLEL DEVELOPMENTS - TOWARDS RENEWABLE ENERGY AND OPEN MARKETS From primary coal fired to local CHP and wind power 2000 From vertically integrated monopoly to competitive electricity market Generation Generation Trade Transmission Distribution Transmission System Operator Distribution Danish experiences on market based integration of wind power 22 November 2017

23 How? From a Nordic to a European Power Market

24 DANISH EXPERIENCES IN 30 YEARS Danish experiences on market based integration of wind power November

25 WHY MORE WIND ENERGY? - CHEAPEST OPTION AND STILL GETTING MORE COMPETITIVE (LCOE) Source: Danish Energy Agency Danish experiences on market based integration of wind power November 2017 Page 25

26 DEVELOPMENT IN FUEL CONSUMPTION, DEMAND AND GENERATION Fuel for electricity generation Fossil fuel: -70% Demand and generation Wind power/demand = 42%

27 The Danish electricity system capacity balance MW Demand Installed capacities January 2017 Danish experiences on market based integration of wind power November 2017

28 DENMARK WIND POWER AND INTERCONNECTORS Net imports 18% Thermal Plants 38% PV 2% Wind Power 42% Energy balance 2015 Danish experiences on market based integration of wind power November

29 NORDIC ELECTRICITY SYSTEM - ECONOMIC GAINS THROUGH COOPERATION Diversified generation system High share of non-fossils Large storage capacity Strong interconnections AC and DC Integrated markets Day-ahead, intraday and regulating Coordinated operation Sharing of reserves Coordinated planning Nordic and regional grid planning Energy mix 2013 Danish experiences on market based integration of wind power November

30 DENMARK OFTEN HAS SAME PRICE AS THE NEIGHBORS Denmark Danmark har has fælles same elpris price med as all neighboring alle nabolande countries i ca. 20 pct. af tiden 20% of the time Denmark has same price as Danmark har fælles elpris med the Norden Nordics i ca. 50 pct. af tiden 50% of the time Denmark has same price as Danmark har fælles elpris med Tyskland Germany i ca. 20 pct. af tiden 20% of the time Denmark Danmark has har its egen own elpris price 10% i ca. 10 of pct. the af time tiden Danish experiences on market based integration of wind power 30

31 A WEEK IN SEPTEMBER - 51% WIND AND SOLAR Danish experiences on market based integration of wind power November

32 FLEXIBILITY IN THE ELECTRICITY SYSTEM - HOURLY DISPATCH Danish experiences on market based integration of wind power November

33 SPOT PRICE, WIND POWER AND MARKET DYNAMICS Danish experiences on market based integration of wind power November

34 Example 1: Low winds high prices large imports Danish experiences on market based integration of wind power November

35 Example 2: High winds low price - no large power plants Danish experiences on market based integration of wind power November

36 Example 3: High winds negative price exports and high transits Danish experiences on market based integration of wind power November

37 OPERATION WITHOUT CENTRAL POWER PLANTS 7 syncronous condensers Danish experiences on market based integration of wind power November

38 The day-ahead and intraday markets

39 Nord Pool Intraday Market The first international intraday market Continuous (24/7) market for buying and selling electricity close up to gate closure: Allows for adjustment of all buy- and sell orders done in the Day-Ahead market (DAM) Possible to optimize trades done in the DAM or make better use of production/consumption that was not accepted in DAM NORWAY SWEDEN FINLAND ESTONIA RUSSIA LATVIA Trading resembles that of stock trading: DENMARK LITHUANIA What you see is what you get First come, first served Best priced orders first IRELAND UK BELGIUM NETHER- LANDS GERMANY POLAND BELARUS UKRAINE LUXEMBOURG CZECH REPUBLIC SLOVAKIA MOLDOVA FRANCE ANDORRA SWITZERLAND ITALY AUSTRIA SLOVENIA HUNGARY CROATIA BOSNIA & SERBIA HERZEGOVINA MONTE- NEGRO KOSOVO MACEDONIA ROMANIA BULGARIA ALBANIA TURKEY

40 Nord Pool Intraday Volumes 2016: 5 TWh another record year May 2017: All time high 2017: 37 % above 2016 YTD 3/4 of trades are cross border 1/3 of trades done the last hour 182 members in 14 countries

41 Nord Pool Intraday Web at a glance Market window Full Order Depth Transmission capacities Hub to Hub Order book/trade history Trade ticker

42 Nord Pool Intraday: Gate closure Gate closure for Nord Pool Intraday is set by TSOs and is not standardized: Denmark, Lithuania, Norway, Sweden and UK all have 60 min gate closure Finland and Estonia have 30 min gate closure, and now also Latvia NORWAY SWEDEN FINLAND RUSSIA Germany 20 minutes gate closure ESTONIA LATVIA Within each of the four German TSO areas there is 0 seconds gate closure IRELAND DENMARK LITHUANIA BELARUS UK BELGIUM NETHER- LANDS GERMANY POLAND UKRAINE LUXEMBOURG CZECH REPUBLIC SLOVAKIA MOLDOVA FRANCE ANDORRA SWITZERLAND ITALY AUSTRIA SLOVENIA HUNGARY CROATIA BOSNIA & SERBIA HERZEGOVINA MONTE- NEGRO KOSOVO MACEDONIA ROMANIA BULGARIA ALBANIA TURKEY

43 Nord Pool Intraday German Gate Closure

44

45 Regulatory Regime in Norway Government Licensing Authority Ministry of Petroleum and Energy Managing responsibility Supervisory Authority/ Licensing Authority Entity Rulebooks Marketplace license Market Operator (Nordpool Spot AS) Trading Rules Market Conduct Rules + Ethical Guidelines NVE System Operator (Statnett) Regulations on Power System Operations (FoS) System operator license Settlement Responsible (Statnett) Decree on the Energy Act (ENL) Settlement license Energy Act (EL)

46 Market place license Network Codes CACM REMIT Transparency Regulation Electricity wholesale market regulation Rules related to Nord Pool and its members Rules related to the wholesale market Norwegian Ministry of Oil and Energy NVE Nord Pool AS Cross-border trading license Trading Rules Market Conduct Rules Wholesale market participant (Nord Pool member)

47 Transparency and Market surveillance No trust, no trade and no sound investment in new energy production Rules Pricing Transparency is vital for the market as it builds confidence and trust Increased Liquidity Confidence and Integrity Market Interest Brings lower risk of misconduct due to increased transparency Forward curve price discovery improves Transparency Orders Market Surveillance

48 How it all connects - REMIT, OTC, Transparency Regulation, UMM.. Market Participant REMIT UMM Transparency Regulation Availability & outages Bilateral contracts REMIT OTC REMIT art. 4 (Insider information) REMIT art. 8 (Transactions) Exchange traded prod REMIT Transaction

49 European cooperation for common success Since 2014 a Day Ahead Power Market coupling 23 countries: Common price calculation with Implicit cross border capacity allocation Algorithm: EUPHEMIA FINLAND 23 National Regulatory Authorities NordREG ACER NORWAY SWEDEN ESTONIA RUSSIA LATVIA 17 Transmission System Operators (TSOs) Nordic TSO cooperation: Same 50 hz frequency ENTSO-E 7 Power Exchanges (PX) 6 order books SPAIN ALBANIA Paris agreement: Essential for goal and future RES PORTUGAL GREECE ambitions New economy: new types of jobs 49 NORTHERN IRELAND IRELAND UK FRANCE BELGIUM NETHER- LAND LUXEMBOURG DENMARK SWITZERLAND GERMANY ITALY CZECH REPUBLIC AUSTRIA SLOVENIA POLAND SLOVAKIA HUNGARY LITHUANIA CROATIA BOSNIEN & SERBIA HERZEGOVINA MONTE- NEGRO KOSOVO MAKEDONIA BELARUS ROMANIA UKRAINE BULGARIA MOLDOVA TURKEY

50 Haakon Reiersen Leknes Senior Consultant Nord Pool Consulting Thank you for your attention! nordpoolgroup.com/ consulting

51 The Nord Pool App Access to day-ahead prices with optimal push notifications when prices are published Graphs information at a glance with highlighted max, min and average prices Drill down in hourly price table Check prices in the currency of your choice Free in App Store and Google Play NOW