Nordic Stakeholder reference group meeting Arlanda Airport May 21 th - - PowerPoint PPT Presentation

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 Time Resolution (HTR) 11:00 (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)

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AOB 15:00

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# 1 Opening the meeting, role and tasks of the reference group, introductions and expectations

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• 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

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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

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What are your expectations?

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# 2 Competition Act Rules to be taken into account in Nordic cooperation

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Prohibited restrictive measures

• all agreements between

undertakings, decisions by associations of undertakings and concerted practices which may affect trade, and

• which have as their object or

effect the prevention, restriction

• r distortion of competition
• directly or indirectly fix purchase
• r selling prices or any other

trading conditions

• limit or control production,

markets, technical development,

• r investment
• share markets or sources of

supply ... The following is prohibited Examples of prohibited arrangements

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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.

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# 3 What is Nordic Balancing Model and what are the dependencies between NBM and Higher Time Resolution (HTR)

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The common Nordic Balancing Market is very efficient

• For more than 15 years the Nordic TSO’s has
• perated 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

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15 minutes imbalance settlement period (ISP)

• 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 (...)

Phasing out of coal power plants Increasing share of wind and other intermittent energy resources Phasing out of Swedish nuclear power plants More interconnectors out of the Nordic synchronous area

Same main drivers as NBM

15 minutes imbalanse settlement period 15 minutes Intraday markets 15 minutes balaning markets

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Development for balancing philosophy

Frequency control mACE

~0

ACE in each country

~0 ~0 ~0 ~0

~0 ~0 ~0 ~0 ~0 ~0 ~0 ~0 ~0 ~0 ~0 Nordic AOF

More efficient use of resources Netting of imbalances Merit order bid list Digitalization of balancing Better control with flows Clearer responsibilities

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Automatic optimization function (AOF) efficient trade and netting

• ptimized use of grid capacity
• efficient exchange of balancing products
• fair settlement between buyers and sellers

Imbalances and available reserves in each bid-area are optimized in a central algorithm. This secures:

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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 system operation – to an ambitious and realistic plan for implementation.

1.Generation NBM 15 min Time Resolution 2.Generation NBM

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Digital support needed with 15 minute markets – Operational planning period changes from 1 hour to 15 minute

Proactive congestion handling and balancing Periode shift planning – Smooth production changes Monitoring and continues balancing and congestion handling Determine price

T+1 T T+2

Q4 Q3 Q2 Q4 Q3 Q2 Q1 Q1

For T+1 For T+1 For T+1 For T+0 For T+1 Q1 For T+1 Q1 For T0 Q3 For T+2 For T+2 For T+2 For T+1 Q2 For T+1 Q2 For T+1 Q1 For T+1 Q3 For T+1 Q3 For T+1 Q2 For T0 For T0 Q4 For T+1 Q4 For T+1 Q4 For T+2 Q1 For T+2 Q1

1 hour operational planning period 15 min operational planning period Label: "T+1 Q1" is operational planning for hour t+1 and quarter 1

For T Q3 For T Q4 For T+1 Q1 For T+1 Q2 For T+1 Q3 For T+1 Q4

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1 MW bid size and more standardized bids

• In the proposals for the implementation
• f 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

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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

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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

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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

2019 2020 2021 2022 NRA assessment 6 months Amendment 4 months? Implementration 18 months 15 min ISP New imbalance price One position?

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What will the delay of 15 minutes settlement imply for the datahubs?

2019 2020 2021 2022

• 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?

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The Clean Energy Package gives the NEMOs an obligation to

• ffer 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?

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# 4 Lunch (45 min)

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# 5 Results from the reference group members’ pre- assignment

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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

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RESULTS

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Role(s)

1 2 3 4 5 6 7 8 9 10 RE NEMO Industry associations DSO Consumers BSP BRP

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In which countries your company is operating?

1 2 3 4 5 6 7 8 9 Sweden Norway Finland Denmark

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How well the national energy industy in your country is prepared for the implementation of 15 min ISP?

1 2 3 4 5 6 7 8 5=very well 4=well 3=somewhat 2=poorly 1=very poorly

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How well the national energy industy in your country is prepared for the implementation of 15 min markets?

1 2 3 4 5 6 7 5=very well 4=well 3=somewhat 2=poorly 1=very poorly

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Do you prefer that the change to one-position (one price) balance is implemented:

1 2 3 4 5 6 7 8 simultaneously with 15 min ISP EBGL schedule 12/2020 does not have an influence on the business of the company after 15 min ISP

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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

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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

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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

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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

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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
• f 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

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# 6 NBM and HTR Roadmap

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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

39 NRA process

(exemption of 15 min ISP)

NBM roadmap update process

TSO replanning

First meeting of NBM reference group 21.5.

Stakeholder consultation

• pen until early August (tbc)

Updated NBM Roadmap considering the stakeholder feedback End of September (tbc) New TSO proposal for NBM roadmap 29.5. Stakeholder webinar

40 ACE based balancing European platforms MARI & PICASSO 15 min ISP go-live

The focus of the roadmap

2019

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• 1. Nordic aFRR capacity market
• 2. Nordic mFRR capacity market
• 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

Main building blocks of roadmap

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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

• 1. New Nordic aFRR Capacity

market go-live Q1/2020

• 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

DISCLAIMER Represents current TSO work in May 2019 Timelines subject to change

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• 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. Nordic aFRR capacity market

1 https://www.nordicenergyregulators.org/2019/05/consultation-on-proposals-for-nordic-afrr-capacity-market-and-cross-zonal-

capacity-allocation-methodology/

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• 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
• 2. Nordic mFRR capacity market

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• 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)

• 3. One price – One balance model

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• 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

• 4. Nordic mFRR energy activation market 1/2

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• 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
• 4. Nordic mFRR energy activation market 2/2

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• 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
• 5. 15 min time resolution

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• 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

• 6. Market transparency

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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

• 1. New Nordic aFRR Capacity

market go-live Q1/2020

• 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

DISCLAIMER Represents current TSO work in May 2019 Timelines subject to change

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# 7 Coffee break (30 min)

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# 8 Roadmap for stakeholder cooperation

53 NRA process

Consultation period

stakeholder consultation Updated NBM Roadmap considering the stakeholder feedback End of September (tbc) New TSO proposal for NBM roadmap 29.5. Stakeholder webinar

Consultation end early august

TSO review period

Statnett national reference group 18.6 Webinar for Finnish stakeholders 14.6 Energinet national reference group 6.6 Svenska kraftnät national reference group 19.6 Nordic Stakeholder reference group meeting September (tbc)

NRA meetings, common Nordic and national DRAFT

Fingrid national reference group 5.6

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Plan for Stakeholder reference group meetings

• May 21th, Stockholm (Arlanda)
• September, Helsinki
• December (early), Copenhagen or Oslo

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Nordic and national reference groups

Nordic National English Nordic languages Few representing on sector level Broader representation and a higher number Overall design, common Nordic processes and methodologies, common solutions (balancing energy and capacity markets), eSett, Transparency, Nordic regulatory processes and coordination, Intra-day and Day-ahead market In addition to Nordic topics: Detailed local implementation, datahub, metering, local balancing market solution interfaces, national regulatory processes, update of national terms and conditions

Language Participation Topics

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# 9 Next meeting and assignment for participants

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# 10 AOB