DSM and benefits for the cross-border market integration. Milan Vukasovic and Florian Pink UMM: Market Management

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DSM and benefits for the cross-border market integration Milan Vukasovic and Florian Pink UMM: Market Management

Agenda Why Demand Side Management (DSM)? Benefits of Demand Side Management ; DSM and electricity market timeline; Integration of DSM within control area possible concept for commercial integration; possible concept for technical integration; Cross-border balancing potential benefits of implementation; reservation of transmission capacity; models for balancing energy exchange; AUSTRIAN POWER GRID AG 08.02.2012 2

Benefits of Demand Side Management Change consumption patterns from peak to off-peak times: reduce the need for investments in networks and/or power plants; energy efficiency increase; Congestion management (redispatching): Increase in system security; Ancillary services: Decrease in total balancing costs; AUSTRIAN POWER GRID AG picture: http://politicsforbreakfast.blogspot.com/ 08.02.2012 3

Real Time DSM and electricity market timeline Buy/sell: trading among market participants TSOs are exclusive buyers (counterparty) Market Timeframes Long - term FORWARD Short - term DAY AHEAD INTRADAY BALANCING MECHANISM Primary Stakeholders INVESTORS DSM: reserve capacity (MW) / energy activation (MWh) MARKET PARTICIPANTS TSO s Primary Purposes & Outcomes AUSTRIAN POWER GRID AG HEDGE FUTURE PRICE RISK FINANCIAL TRADING AND DELIVER INVESTMENT SIGNALS NOMINATION AND ADJUSTMENT OF PHYSICAL POSITIONS source: ENTSO-E ENSURE SYSTEM EQUILIBRIUM & SECURITY 08.02.2012 4

Integration of DSM within control area AUSTRIAN POWER GRID AG 08.02.2012 5

Demand-side management: possible concept for commercial integration (1/2) Provider of DSM reserve: fullfils technical preconditions written in prequalification documents a.o ramp definition ( green-card ); Register commercial balance group (BG) within control area of APG; takes part at the tenders for capacity reservation for certain periods (weekly; monthly); Al three above-mentioned preconditions are fullfiled and provider of DSM has been awarded during tender (f.e. with 100 MW) for upward regulation; AUSTRIAN POWER GRID AG 08.02.2012 6

Demand-side management: possible concept for commercial integration (2/2) BG1 BG2 BG3 10 60 30 BG DSM- Provider APG TRL AUSTRIAN POWER GRID AG 100 Target/ actual deviation: Balancing energy to be booked in case that requested DATCR is not delivered/ or not delivered in line with technical preconditions; Example of DSM-activation: APG calls 100 MW DATCR from DSM provider; DSM provider makes pooling or resources beforehand in order to always fullfil request of APG delivery of 100 MW with technical preconditions (ramp); 08.02.2012 7

Demand-side management: possible concept for technical integration P [MW] a) b) 10 + 100 MW 10 > 15 t [min] Request #1 Request #2 Schedule of DSM-BG for clearing and settlement Ramp definition: Request no.1: +100 MW to deliver (Inc GEN or Dec CON); Tertiary energy has to be fully delivered 10 after request; AUSTRIAN POWER GRID AG Request no.2 : +100 MW to take over (Dec GEN or Inc CON); Path1: no deviation from schedule (no imbalance in DSM-BG) Path_2: a) + b) = imbalance (booked in DSM-BG);

Cross-border balancing energy exchange AUSTRIAN POWER GRID AG 08.02.2012 9

XB-balancing mechanism: potential benefits of implementation 1. Minimise total costs of procured balancing energy; 2. Possible decrease in amount of activated tertiary and/or secondary control (over netting of CA-balance); 3. Increase efficiency (with available cross-border transmission capacity); 4. Increase is security of connected systems: efficient use of different PPs portfolio (RES; hydro; thermal); If several control areas are sharing balancing resources: higher level of security of supply; efficiency increase/cost decrease and possible decrease in activated balancing energy; AUSTRIAN POWER GRID AG 08.02.2012 10

XB-balancing mechanism: reservation of transmission capacity Cross-border capacity must be reserved for automatically activated reserves (f.e. primary control over TRM); Manually activated capacity (mostly tertiary control) could be contracted over-the-border, but under the preconditions: Portion of Available Transmission Capacity (ATC) has to be AUSTRIAN POWER GRID AG taken out of commercial activities (market) and reserved exante approval of NRA is needed (social welfare increase has to be demonstrated as there is high uncertainty regarding the use of contracted XB-reserves); Without reservation of transmission capacity manually activated energy could be exchanged; 08.02.2012 11

XB-balancing mechanism: models for balancing energy exchange (1/2) TSO to TSO model Reserve providers (RPs) make bids to local TSO Local TSOs call off reserves and perform the settlement with RPs in their control areas RP to TSO model RPs make bids to local and other TSOs Local TSOs call off reserves (in coordination with TSO where RP is located) and could perform the settlement directly with RPs AUSTRIAN POWER GRID AG 08.02.2012 12 source: ETSO

XB-balancing mechanism: models for balancing energy exchange (2/2) Intermediate model: TSO to TSO w/o CMOL energy (MWh) Merit-order list ATC power flow TSO A TSO B Control Area A Control Area B TSOs have an exclusive right to use their own share of the reserve and based on forecast (f.e. 15 before real-time) they can offer surplus to CMOL; Energy could be exchanged only in case of a sufficient cross-border transmission capacity; Total costs of reserve energy will be decreased; example: TSO B with more expensive reserves can use bids from control area A; AUSTRIAN POWER GRID AG 08.02.2012 13

Thank you for your attention Contact information: Milan Vukasovic: Milan.Vukasovic@apg.at Florian Pink: Florian.Pink@apg.at AUSTRIAN POWER GRID AG

Back-up slides AUSTRIAN POWER GRID AG 08.02.2012 15

Balancing mechanism in Austria (2011) Ancillary Services Procurement volume Timeframe Products Provider Prequali- fication Primary 76 MW (since 2010 Weekly tender G inside the control market is open) (min offer = 1 MW) control area Secondary control +/- 200 MW Weekly tender from 2012. Weekly / Four weekly products: Peak/ Off-Peak Week and Weekend; G inside the control area (+ suppliers outside the CA in the 2 nd phase) energy to be available 5 min after request +100 /- 125 MW (+ Weekly tenders Minutes 180 MW to cover (MM) and daily reserve outage of the tenders (day-ahead biggest unit) market); daily products (energy energy to be only); Marketmaker available 10 (energy + capacity): minutes after weekend and week telephone call AUSTRIAN POWER GRID AG 08.02.2012 16 (blocks of 4 hours)