TRANSMISSION TARIFF METHODOLOGY - WORKSHOP ON CROSS-BORDER ELECTRICITY TRADING SESSION 2 WEBINAR JANUARY 19-20, 2021
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
shutterstock
Photo:
TRANSMISSION TARIFF METHODOLOGY
WORKSHOP ON CROSS-BORDER
ELECTRICITY TRADING
SESSION 2
WEBINAR
JANUARY 19-20, 2021
1/22/2021 1
OUTLINE
SOTHERN AFRICA POWER POOL;
UNITED STATES OF AMERICA.
1/22/2021 2
OUTLINE
SOTHERN AFRICA POWER POOL;
UNITED STATES OF AMERICA.
1/22/2021 3
SOUTHERN AFRICA POWER POOL (SAPP)
The SAPP was created in August
1995 when member governments
of Southern African Development
Community (SADC) signed an
Inter-Governmental Memorandum
of Understanding for the formation
of an electricity power pool in the
region under the name of the
Southern African Power Pool.
The SAPP has twelve member
countries represented by their
respective electric power utilities
1/22/2021 4SAPP – KEY FEATURES
• The SAPP is governed by four agreements:
– The Inter-Governmental Memorandum of Understanding which enabled the
establishment of SAPP;
– The Inter-Utility Memorandum of Understanding, which established SAPP’s
basic management and operating principles;
– The Agreement Between Operating Members which established the specific
rules of operation and pricing;
– The Operating Guidelines, which provide standards and operating guidelines.
• The SAPP coordinates the planning and operation of the electric power system
among member utilities and provides a forum for regional solutions to electric
energy problems.
1/22/2021 5SAPP MARKET DEVELOPMENT
; CURRENT PHASE
▪ Bilateral contracts;
INITIALLY
▪ Day-ahead Market (DAM);
▪ Bilateral contracts
▪ Forward Physical Market s (MA &WA);
▪ Intra Day Market;
▪ Balancing Market – under development;
▪ Financial Markets – under development.
FIRST PHASE
▪ Bilateral contracts;
▪ Short-Term Energy Market (STEM) – 2001;
▪ Post STEM (Balancing Market) – 2002;
▪ Day-ahead Market (DAM) – 2009;
▪ Post Day Ahead Market (PDAM) – 2013.
1/22/2021 6BILATERAL TRADING IN SAPP – KEY FEATURES
• Trading arrangements mutually agreed between bilateral parties:
– Volumes and Prices are the key parameters;
– Transmission path to be secured in advance;
– Bilateral parties directly invoice and settle each other.
• Can be firm or non firm:
– Firm contracts; Generally, not interruptible – hence there is reliability
premium;
– Non firm contracts; Are interruptible with notice. If notice given, no
penalties.
1/22/2021 7STAGES OF TRANSMISSION PRICING IN SAPP
PREVIOUSLY:
• At inception, a Postage Stamp Approach was used.
CURRENTLY:
• The MW-KM (flow-based) Approach adopted from 2003:
– All assets that wheel at least 1MW for 100 MW injection are identified ex-ante on the
wheeler’s network and are compensated in proportion to the level of usage.
PROPOSED CHANGE OF METHODOLOGY:
• Horizontal Network methodology:
– In view of introducing the DAM market (since previous method requires that the
counterparty is known for each trade);
– Developed but not implemented (probably due to significant changes in the payments &
allocation pattern).
• Nodal pricing methodology:
– Developed and currently a tender for consultant to develop the software and update the
1/22/2021 standard costs database. 8TRANSMISSION WHEELING IN SAPP
CountryA
Horizontal network of the
100 MW
country
Country C
100 MW
Country B
All Transmission equipment used for wheeling is identified in
1/22/2021
Country C 9ALLEGED REASONS TO CHANGE THE CURRENT
METHODOLOGY
• There is need to review the current wheeling methodology to address some
weaknesses identified. The proposed methodology should include but not limited to
the following:
– A move to charge all users of the transmission system whether for wheeling
or for internal supply on a common basis;
– Charges should signal the costs of using the systems on a non-discriminatory
basis, as the distinction between international and domestic users is ended;
– The need to apply charges in a competitive environment where the counter
parties to trade are not known (e.g., DAM);
– The pricing method should reflect the cost of an efficient service provision
that will promote investment in new transmission infrastructure development.
1/22/2021 10PROPOSED NEW METHODOLOGY
• Each generator and each demand in the inter-connected cross-country network may
impact network flows in networks in the jurisdiction of other interconnected
countries. The contribution of each generator and load in each network line is
therefore proposed to be computed based on the Marginal Participation method,
with multiple slack nodes;
• Three alternatives on how to establish the transactions between the multiple slack
nodes were analyzed ,and the recommended alternative is:
– Network Utilization is computed using the Marginal Participation Method,
where 1 MW is sequentially injected (withdrawn) at various generator (load)
buses and corresponding distributed amounts of power are withdrawn
(injected) at various load (generator) buses identified using the Average
Participation Method;
– Then marginal participation is used, where each injection (withdrawal is
balanced in the nodes identified with the Average Participation Method.
1/22/2021 11PROPOSED NEW METHODOLOGY - CONTINUED
• The network utilization as determined above allows the computation of the extent of
network utilization in each country by each generator/demand of foreign countries;
• This allows the flexibility of not charging the generators / loads for network utilization in
their own country. Therefore, the WC is be determined based on the network
utilization which excludes the network utilization in the country where the generator /
load is physically located;
• The nodal charges for all generators (loads) located in a country should be aggregated to
determine the zonal (or country-wide) WCs;
• It is assumed that the cost recovered by transactions is a percentage of each facility cost
given by the relationship between the flow in each typical load flow and the facility
capacity;
• The charges computed above are converted into charges in ($/MW) by dividing the total
charges computed by injection (withdrawal) as used in the underlying load flow analysis.
Since load flow analysis is carried out for a particular “snapshot” of the grid, different
1/22/2021
identified “snapshots” should be given weights based on the load duration curves. 12USE OF STANDARD COSTS
• The current practice in SAPP is to use standard costs for the components of the
transmission system;
• The database is updated annually using the US-PPI index for the previous 12 months.
The database is divided into the following parts:
– Transmission Line costs;
– Transformer costs;
– Switch Bay costs;
– Compensation costs.
• For the purposes of the new methodology, the costs of transformers, compensation
equipment and switch bays are allocated to the lines to which they are connected;
• The cost of each network element is computed as the sum of Depreciation, Interest
and Operation and Maintenance Cost.
1/22/2021 13OUTLINE
SOTHERN AFRICA POWER POOL;
UNITED STATES OF AMERICA.
1/22/2021 14ELECTRICITY MARKETS IN THE US
There is no single federal electricity market in
the US. A trifurcated situation:
1. More than half the country is served by
competitive markets (run by Independent
System Operators or Regional
Transmission Organizations - ISOs/RTOs)
covering ~60% of electricity traded in the
country;
2. Almost half is served by legacy state-
regulated, vertically integrated utilities
controlling Generation & Transmission;
3. A smaller portion, consists of government-
owned and customer-owned utilities.
1/22/2021 15WHEELING CHARGES IN SOME OF USA MARKETS
• Transmission owners are required to provide open access for their systems to
wholesale customers under a regulated Open Access Transmission Tariff (FERC issued
Order 888 / 1996);
• Regarding network costs (CAPEX, OPEX), the Federal legislation does not provide
for guidance about the allocation of transmission costs between the different types of
transmission services. As a result, final tariffs depend on the companies’ criteria;
• In any case generators and specifically renewable generators could only be subject to
(network only) transmission charges under point-to-point services, given that under
network integration services the charges are paid by the load in proportion to its
monthly maximum demand. Under point-to-point services, the allocation of
transmission costs between the load and the generators will depend on specific
agreements between them;
• In all markets there are Locational Marginal Pricing, auctions for financial transmission
rights, and the settlement surplus (or collection for allocation of FTRs) is partially
allocated to reduce WCs.
1/22/2021 16WHEELING CHARGES IN SOME OF USA MARKETS -
CONTINUED
In California (CAISO):
• Uses a postage stamp method for cost allocation; the wheeling access charge is determined at
the point the energy leaves the ISO for various cases, e.g.:
– Wheel-through energy is imported into the region, across the control area, and then exported
out of the ISO control area;
– Wheel-out-energy is produced or sourced in the ISO control area and exported out of the
control area.
• Current HV Wheeling Access Rates of CAISO are in the order of 12 USD/MWh.
In New York (NYISO):
• Substantial wheeling takes place through the New York City area, including from Canada and PJM;
• There are seven transmission owners in the ISO with varying tariffs (since they are based on cost
recovery of particular transmission assets);
• Transmission pricing: based on the postage stamp method.
1/22/2021 17TRANSMISSION SYSTEM EXPANSIONS IN USA
Some innovative approaches are used in USA for transmission expansion:
• Beneficiaries method, previously explained (session 1);
• Initiatives of market participants, whom through some mechanism are enabled to promote
the building of transmission facilities necessary for injecting or withdrawing energy that they
produce or consume;
• Open seasons: is a new methodology in electricity to identify users of a transmission
expansion, and to allocate the corresponding costs to them. The convenience of the
expansion is identified, and in the open season participants interested in financing the
expansion (because they expect to benefit) are selected;
• Merchant: The underlying idea of “merchant investments in transmission facilities” is that an
investor builds and operates transmission facilities with the aim of benefitting by selling
transmission services to agents and/or own use and/or collection of the settlement surplus.
The key issue is that the investor assumes all the project risks, including revenues. No
transmission costs are charged to customers that do not use the merchant facility.
1/22/2021 18CENTRAL ASIA REGIONAL ELECTRICITY
MARKET
CHIEF OF PARTY ARMEN ARZUMANYAN
INFO.CAREM@TETRATECH.COM
WWW.PTFCAR.ORG/CAREM
1/22/2021 19You can also read
