Nordic Stakeholder reference group meeting - Arlanda Airport May 21th 2019
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Agenda # Topic Time 1 Opening the meeting, role and tasks of the reference group, introductions and expectations 09:30 (80min) 2 Competition Act 10:50 (10min) 3 What is Nordic Balancing Model and what are the dependencies between NBM and Higher 11:00 Time Resolution (HTR) (45min) 4 Lunch 11.45 (45min) 5 Results from the reference group members’ pre-assignment 12.30 (45min) 6 NBM and HTR Roadmap 13.15 (30min) 7 Coffee break 13.45 (30min) 8 Roadmap for stakeholder cooperation 14.15 (30min) 9 Next meeting and assignment for participants 14.45 (15min) 10 AOB 15:00 2
• Implementation of NBM Programme will apear as variety of tasks and changes in TSOs' and market participants' systems • Need for a dialogue and knowledge – both ways from TSO's to market participants and the other way around • Combining national projects 4
Role and task of the Nordic stakeholder reference group • contribute to the planning of the common Nordic NBM Roadmap • follow the implementation phase • identify risks and propose ways to mitigate them • increase stakeholder awareness of the NBM project especially Higher Time Resolution (HTR) • contribute to ensure a wide and good flow of information to all stakeholders 5
Prohibited restrictive measures The following is prohibited Examples of prohibited arrangements • all agreements between • directly or indirectly fix purchase undertakings, decisions by or selling prices or any other associations of undertakings and trading conditions concerted practices which may • limit or control production, affect trade, and markets, technical development, • which have as their object or or investment effect the prevention, restriction • share markets or sources of or distortion of competition supply ... 8
Meeting practices for ensuring the compliance • Must have: an agenda & minutes. • Materials of the meetings are published. • Sharing business sensitive information must be avoided. − topical information which is not available from public sources − information that may affect other parties market behavior, e.g. information on future prices or quantities • If concerns regarding the compliance arises, the handling of the matter must be stopped. 9
#3 What is Nordic Balancing Model and what are the dependencies between NBM and Higher Time Resolution (HTR) 10
The common Nordic Balancing Market is very efficient • For more than 15 years the Nordic TSO’s has operated a cross border balancing energy market. • Nordic consumer benefits have several times been calculated to be in the range of +200 mEUR per year • This welfare should be maintained also in the new world with 15 min ISP, smaller bid size etc.... • Hence the transition towards the new world should be carefully planned • Next step for the Nordic Balancing Market is to harvest welfare from common capacity markets 11
15 minutes imbalance settlement period (ISP) Same Phasing out of coal power plants main Increasing share of wind and other intermittent energy resources drivers as NBM Phasing out of Swedish nuclear power plants More interconnectors out of the Nordic synchronous area • EB GL 53.1: By three years after the entry into force of this Regulation, all TSOs shall apply the imbalance settlement period of 15 minutes (...) 15 minutes imbalanse 15 minutes 15 minutes settlement period Intraday markets balaning markets 12
Development for balancing philosophy ACE in each country Frequency control mACE ~0 ~0 ~0 ~0 ~0 ~0 ~0 ~0 ~0 ~0 ~0 ~0 ~0 ~0 ~0 Nordic ~0 AOF More efficient use of resources Digitalization of balancing Netting of imbalances Better control with flows Merit order bid list Clearer responsibilities 13
Automatic optimization function (AOF) efficient trade and netting Imbalances and available reserves in each bid-area are optimized in a central algorithm. This secures: • optimized use of grid capacity • efficient exchange of balancing products • fair settlement between buyers and sellers 14
Now: Integrated into one comprehensive program From manual processes based on operator knowledge and experience to automated processes. Necessary due to increase in complexity, and requires: • Extensive change of control room processes • Formalization of knowledge and routines • Considerable IT-investments • Significant improvement in data quality Transition to control based balancing within each bidding-area • Smaller building blocks a prerequisite for automated processes • Provides consistency between authority and responsibility between TSOs • Basis for correct settlement and proper incentives • Depending on regulatory approvals From an ambitious roadmap in parallel with other major development in 15 min Time 1.Generation 2.Generation system operation – to an ambitious and realistic plan for implementation. Resolution NBM NBM 15
Digital support needed with 15 minute markets – Operational planning period changes from 1 hour to 15 minute T T+1 T+2 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 1 hour operational planning period For T+1 For T+2 For T+1 For T+0 For T+2 For T0 For T+1 For T+2 For T+1 Q1 For T0 Q3 For T+1 Q1 For T0 Q4 For T+1 Q2 For T+1 Q1 15 min operational For T+1 Q2 planning period For T+1 Q3 For T+1 Q2 For T+1 Q3 For T+1 Q4 For T+1 Q4 For T+2 Q1 For T+2 Q1 For T Q3 For T Q4 For T+1 Q1 For T+1 Q2 For T+1 Q3 For T+1 Q4 Proactive congestion handling and balancing Monitoring and continues balancing and congestion handling Periode shift planning – Smooth production changes Determine price Label: "T+1 Q1" is operational planning for hour t+1 and quarter 1 16 16
1 MW bid size and more standardized bids • In the proposals for the implementation of the European platforms for an aFRR and mFRR market, the minimum bid size is 1 MW − Lower entry barriers, more bids (mFRR: 10 MW => 1 MW, aFRR: 5 MW => 1 MW) − Standard activation time and ramping vs more flexible Nordic approach 17
Not possible to implement 15 minutes settlement without changes to the Nordic balancing • Today's balancing of the Nordic system is already at its limit. If we add more complexity, the operational risk is unacceptable without new solutions and automation • As long as 15 minutes imbalances are visible to market actors, we risk moving into a 15 minutes world – any implementation of 15 minutes settlement requires new solutions and automation 18
The regulations require that 15 minutes settlement, 15 minutes ID market and 15 minutes balancing markets are implemented simultanously • EBGL and the Clean Energy Package (CEP) put the following requirements on compliance concerning 15 minutes ISP: − The ISP within a bidding zone shall be 15 minutes − The market time unit within a bidding zone shall be equal to the ISP. − The cross border market time unit shall be equal the highest market time unit of the adjacent bidding zones. − The TSOs shall calculate an imbalance price for each ISP − The Clean Energy Package puts an obligation on the NEMOs to offer products at least as short as the ISP in both the day-ahead and intraday markets. A comprehensive program covering the new balancing model and markets, 15 minutes ISP, and 15 minutes market time unit in the intraday and possibly day ahead markets 19
15 minutes ISP and the new imbalance settlement model • The NRAs are currently assessing the all TSO proposal to proposal to specify and harmonize the imbalance settlement in Europe • When approved TSO must implement • Not full harmonization, but the main change is from dual imbalance position to single imbalance position One position? New NRA assessment Amendment Implementration 18 months 15 min imbalance 6 months 4 months? ISP price 2019 2020 2021 2022 20
What will the delay of 15 minutes settlement imply for the datahubs? • For elhub in Norway the delay means more time to implement • Originally 15 minutes ISP was expected to go live before the datahubs in Finland and Sweden • What is the impact of the delay? Are there new dependencies? 2019 2020 2021 2022 21
The Clean Energy Package gives the NEMOs an obligation to offer 15 minutes trading in day-ahead and intraday • Energy regulation article 8.2: NEMOs shall provide market participants with the opportunity to trade in energy in time intervals which are at least as short as the imbalance settlement period for both day-ahead and intraday markets. • With the delay it is more likely that 15 minutes intraday and day ahead trading will go live will be closer in time • How to handle different market time units in an auction? 22
#4 Lunch (45 min) 23
#5 Results from the reference group members’ pre- assignment 24
Background • The pre-questionnaire was sent to the Nordic stakeholder reference group members − Both multiple choice and open questions included • Altogether 13 participants answered • The results help the Nordic TSOs to create an overall picture about the prepardness and will of the Nordic stakeholders regarding NBM − This guides and supports the decision-making 25
RESULTS 26
Role(s) BRP BSP Consumers DSO Industry associations NEMO RE 0 1 2 3 4 5 6 7 8 9 10 27
In which countries your company is operating? Denmark Finland Norway Sweden 0 1 2 3 4 5 6 7 8 9 28
How well the national energy industy in your country is prepared for the implementation of 15 min ISP? 1=very poorly 2=poorly 3=somewhat 4=well 5=very well 0 1 2 3 4 5 6 7 8 29
How well the national energy industy in your country is prepared for the implementation of 15 min markets? 1=very poorly 2=poorly 3=somewhat 4=well 5=very well 0 1 2 3 4 5 6 7 30
Do you prefer that the change to one-position (one price) balance is implemented: after 15 min ISP does not have an influence on the business of the company EBGL schedule 12/2020 simultaneously with 15 min ISP 0 1 2 3 4 5 6 7 8 31
What are the necessary preconditions in order to enable implementation of 15 min ISP? • Trading possibilities with 15 min products − 15 min intraday market to trade away imbalances; additionally 15 min day-ahead market mentioned • 15 min balancing markets and balancing power calculation rules defined • Sufficient number of metering points in 15 min resolution − Large consumption, production units, MGA exchange metering and TSO grid measurements • Definition of profiling methods and principles • Datahubs in operation and tested • Realistic and transparent roadmap with clarified scope and freezed specs − System vendors do not start the modifications until the details and timetable are known • Enough time to execute and test ICT systems 32
What are the necessary preconditions in order to enable participation in to 15 min markets? • Adequate coverage of 15 min metering to support market participation • Sufficient (real-time) market data transparency available for market participants • Intraday and balancing market gate closures should be closer to real-time, preferrably the markets should close 0 min before the start of an ISP • Data transfer protocols between market participants and market places must work in 15 min cycles without delays and bottlenecks • A clear definition of market rules and specifications well in advance to enable ICT-system development and implementation − Orders to system vendors will be done only after the details and schedules are known • Enough time for ICT-system modifications and testing − Production planning, trading and balance management systems need to be updated − New routines and automation of processes required 33
What are the greatest risks in implementing Nordic Balancing Model / 15 min ISP? • The governance around NBM & Fifty is not transparent and simple enough, which harms efficient delivery and prioritization • Lack of communication with industry stakeholders • Unclear details and scope, uncertainty on timetables and too tight deadlines for ICT projects • Legislation and regulation are not defined early enough • Project is postponed in very late phase, which brings additional costs • Linking too many different changes to one "big bang" results in unnecessary dependencies so that a delay of one part delays everything else • Low market liquidity and too complex markets, for instance due to different requirements • Data quality and system capacity to handle increasing data volumes • Nordic countries do not implement 15 min ISP simultaneously 34
What are the changes regarding the Nordic balancing that have the greatest positive impacts on your business? • New business opportunities and possibilities for new services • Shortened gate closure and improved trading possibilities closer to ISP • One position and one price model simplifies and eases operations • Smaller balancing costs than in hourly world • Better use of existing infrastructure and more efficient use of resources on Nordic level • Enables participation to European market – harmonization of products and ISP with Central Europe increases power system efficiency and improves resource utilization • Allowing BRPs to self-balance on 15 min basis and up-to-delivery improves the frequency quality • Automatisation of processes creates a path to smaller bid sizes and shorter waiting periods • No positive impacts on DSOs 35
What are the topics and themes you want to get more information about and to discuss in the NBM reference group? • Changes and development of market places and future of day-ahead and intraday markets − e.g. when 15 min day-ahead market is implemented and how to secure high liquidity in the day-ahead market • The overall timeframe for all market changes and the cooperation between the different markets and the connection to the settlement • Open discussion on situations of different countries, other on-going projects and dependencies • Understanding the big picture and details: timetable, dependencies, profiling principle hour to 15 min, reporting MW or MWh, day ahead 15 min implementation etc. • Single imbalance elements and structure, imbalance price formation principles and transparency of price formation • How to ensure that the markets will remain competitive and equal for all the market participants • How metering should support 15 min ISP and markets in socioeconomically advantageous way and what are the implementation phases for 15 min metering 36
#6 NBM and HTR Roadmap 37
DISCLAIMER This presentation illustrates draft work in NBM roadmap update process Presented timelines are indicative Final roadmap will be presented after stakeholder feedback, further detailing is also required from TSO side 38
NBM roadmap update process First meeting of NBM TSO replanning reference group 21.5. Updated New TSO NBM Roadmap proposal for considering the NBM roadmap Stakeholder stakeholder 29.5. consultation feedback Stakeholder open until early August (tbc) NRA process webinar End of (exemption of 15 min September (tbc) ISP) 39
The focus of the roadmap ACE based balancing 15 min ISP 2019 go-live European platforms MARI & PICASSO 40
1. Nordic aFRR capacity market 2. Nordic mFRR capacity market Main building blocks of roadmap 3. One price – one balance model 4. Nordic mFRR energy activation market • New mFRR processes for TSOs • New mFRR standard product • Congestion management 5. 15 min time resolution • National remarks (datahubs, metering) 6. Data and transparency 41
DISCLAIMER Represents current TSO work in 1. New Nordic aFRR Capacity May 2019 market go-live Q1/2020 Timelines subject to change 2. New Nordic MFRR Capacity market go-live Q3/2021 3. One Price – One Balance model Go-live Q1/2021 4. New Nordic mFRR energy activation market Go-live Q4/2022 5. 15 min market resolution Go-live Q4/2022 6. Market transparency European platforms MARI (mFRR) & PICASSO (aFRR) Legal deadlines as requested by EBGL ~Q4/2021 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2019 2020 2021 2022 2023 42
1. Nordic aFRR capacity market • Legal proposals submitted to NRA approval on 12th of April • NordREG currently consulting on proposals – Consultation open until 3rd of June1 • Implementation of market platform (IT) well advanced • Expected go-live Q1/2020 • aFRR volume needs to be increased in the Nordic system as shorter market time unit (15 min) is implemented 1 https://www.nordicenergyregulators.org/2019/05/consultation-on-proposals-for-nordic-afrr-capacity-market-and-cross-zonal- capacity-allocation-methodology/ 43
2. Nordic mFRR capacity market • The Nordic mFRR capacity market design is planned to be based mainly on the same principles as the Nordic aFRR capacity market − Thus there's a connection to aFRR regulatory approval process • Implementation of mFRR capacity market has low impact on other milestones of NBM roadmap • Expected go-live Q3/2021 44
3. One price – One balance model • Part of European harmonization process. Electricity Balancing Guidelines requires European harmonization of imbalance settlement • NRA approval of proposal made by All EU TSOs is ongoing − Needs to be implemented latest 18 months after the NRA approval • Main options for implementation: Implementation as requested by EBGL (~Q1/2021) or together with 15 min ISP (~Q4/2022) 45
4. Nordic mFRR energy activation market 1/2 • New mFRR process for TSOs: − Better decision support for TSO control room operators. The demand for mFRR is determined per bidding zone based on forecasted imbalances − Scheduled and direct activation of mFRR • First phase only scheduled activations are planned to be part of Nordic optimization • New European mFRR standard product − Partly implemented on go-live of Nordic mFRR energy market • Congestion management − mFRR is relevant product for congestion management. Bid filtering functionality to be developed. − The need and extent of congestion management interventions varies a lot among the Nordic TSOs 46
4. Nordic mFRR energy activation market 2/2 • Features will be aligned with European MARI platform when possible − For example: 15 min validity period for mFRR bids: separate volume and price for each quarter • Requires major IT development • Implementation of mFRR energy market has high impact on other milestones of NBM roadmap – especially 15 min time resolution • Expected go-live Q4/2022 47
5. 15 min time resolution • Imbalance settlement in 15 min is a prerequisite for 15 min markets − NEMOs may/should implement 15 min products on intraday and day-ahead markets − TSOs expect that 15 min intraday products are implemented at the same time as shorter imbalance settlement period • NMB road map will look closer national dependencies: − Datahubs, metering, national regulations etc • Expected go-live Q4/2022 48
6. Market transparency • Mainly part of European harmonization process. Electricity Balancing Guidelines requires market and balancing data to be published on ENTSO-E transparency platform • Data quality important also for operation of the power system: − The ability to automatize operational processes requires consistent delivery of reliable data. Improving data maturity and quality is crucial for succeeding with the transformation to increased automation of the balancing process. • Expected go-live (EBGL data): Q4/2019 − further developed as NBM program proceeds 49
DISCLAIMER Represents current TSO work in 1. New Nordic aFRR Capacity May 2019 market go-live Q1/2020 Timelines subject to change 2. New Nordic MFRR Capacity market go-live Q3/2021 3. One Price – One Balance model Go-live Q1/2021 4. New Nordic mFRR energy activation market Go-live Q4/2022 5. 15 min market resolution Go-live Q4/2022 6. Market transparency European platforms MARI (mFRR) & PICASSO (aFRR) Legal deadlines as requested by EBGL ~Q4/2021 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2019 2020 2021 2022 2023 50
#7 Coffee break (30 min) 51
#8 Roadmap for stakeholder cooperation 52
DRAFT Consultation period Nordic Stakeholder reference New TSO group proposal for stakeholder Consultation end meeting early august NBM consultation September (tbc) roadmap 29.5. Updated Stakeholder NBM Roadmap TSO review considering the webinar Fingrid national period stakeholder reference group 5.6 feedback Svenska kraftnät End of Energinet Webinar for Statnett national Finnish national national September NRA process reference reference reference stakeholders (tbc) group 6.6 group 19.6 group 18.6 14.6 NRA meetings, common Nordic and national 53
Plan for Stakeholder reference group meetings • May 21th, Stockholm (Arlanda) • September, Helsinki • December (early), Copenhagen or Oslo 54
Nordic and national reference groups Nordic National Language English Nordic languages Few representing on sector level Broader representation and a higher Participation number Overall design, common Nordic processes In addition to Nordic topics: and methodologies, common solutions Detailed local implementation, datahub, Topics (balancing energy and capacity markets), metering, local balancing market solution eSett, Transparency, Nordic regulatory interfaces, national regulatory processes, processes and coordination, Intra-day and update of national terms and conditions Day-ahead market 55
#9 Next meeting and assignment for participants 56
# 10 AOB 57
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