REALISEGRID: a FP7 project for assessing the REALISEGRID: a FP7 - - PowerPoint PPT Presentation

REALISEGRID: a FP7 project for assessing the REALISEGRID: a FP7 project for assessing the benefits provided by infrastructure development in benefits provided by infrastructure development in a pan a pan-

• European power system

European power system

Gianluigi Migliavacca

CESI RICERCA S.p.A. Project Coordinator

IEA ENARD Annex IV Kick-off – 28 April 2009 – Milano, Italy

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Presentation outline Presentation outline

Motivation of the project REALISEGRID Description of research activities and expected results: new methodological perspectives and possible operative impact Cost-benefit analysis of transmission grid investments: present approaches and the new methodology proposed by REALISEGRID

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The EU Energy Policy The EU Energy Policy

• Green Paper “A European Strategy

for competitive, sustainable and secure energy” (2006)

• Communication “An Energy Policy

for Europe” (2007)

• Third Liberalization Package (2007)
• Communication on Strategic Energy

Technology Plan (SET-Plan, 2007)

• Climate and Energy Package (2008)

Climate change mitigation:

• reducing CO2 emissions;
• promoting green generation;
• boosting efficiency in the

consumption (energy saving) Increasing security of supply Promoting competition:

• eliminating cross-border

bottlenecks;

• harmonizing market

regulation throughout Europe;

• promoting the creation of a

common Internal Energy Market

• Necessity to invest in the grid:
• the PIP (Jan.2007) underlined that electricity and gas networks are the “heart” of

a well-functioning energy market;

• The Second Strategic Energy Review (Nov.2008) clarified that EU will never

realize its objectives unless the grid will be soon significantly expanded.

• Green Paper “Towards a secure, sustainable and competitive European energy

network” (Nov.2008)

• TEN-E Guidelines: 32 projects labeled as “of European interest”: only 5

completed, 13 in the authorization path, 14 in the study phase.

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Need to invest in the transmission grid Need to invest in the transmission grid

The last years: strong demand increase vs reduced grid development It is generally agreed that new investments are needed, motivated

• n the basis of a technical-economical evaluation comparing costs

with benefits for the system (market competitiveness, interests of consumers and other market players)

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• =

=

− =

NC i NG j

• ffGj

Gj

• ffCi

Ci

P Q P Q SW

1 1

Load offer prices are indicative

• f the value of the goods produced

Generators bid prices should be indicative

• f the costs for producing energy
• The merchandise surplus corresponds

to the congestion rent extracted by the TSO.

• The dead-weight loss is an indicator of

efficiency loss in the market due to congestion.

Congestion means lower market efficiency

Congestion and social welfare Congestion and social welfare

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• Increasing the capacity of

congested tie-lines decreases the dead-weight loss and increases the social welfare. The market solution is more efficient.

• However, the increase of social

welfare (A>B) is not necessarily matched with a reduction of loads

• payments. In this example:

– if pure zonal market: loads in the export zone pay price p2 >p1, those in import zone pay the same; – if a Uniform Purchase Price is introduced (Italy): all the loads pay more (the weighed average grows).

Effects of increasing interconnection capacity Effects of increasing interconnection capacity

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Cost Cost-

• benefit analysis of new investments

benefit analysis of new investments

A realistic cost-benefit analysis should take into account the improvements in terms of both reliability and market competitiveness, as well as the interests of consumers and other market players. Unlike what happened in old vertical integrated markets, grid expansions are now a controversial issue:

• They can advantage some stakeholder on others, enhancing or

reducing producers’ possibility to exercise market power;

• They can advantage a zone on another (especially for cross-border

investments) and provide diversified incentives to new generation.

Therefore a valuable cost-benefit analysis should be able to evaluate the advantages of new investments both system-wide and locally, considering both the point of view of the consumers, the producers and the TSOs. Finally, a thorough evaluation of all grid investment options cannot neglect the opportunities offered by the new grid technologies (including WAMS, FACTS, HVDC), allowing to better control the grid and to optimize its exploitation.

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Goals of REALISEGRID Goals of REALISEGRID

REALISEGRID stands for “REseArch, methodoLogIes and technologieS for the effective development of pan-European key GRID infrastructures to support the achievement of a reliable, competitive and sustainable electricity supply” The ultimate objective of REALISEGRID is to develop a set of criteria, metrics, methods and tools to assess how the transmission infrastructure should be optimally developed to support the achievement of a reliable, competitive and sustainable electricity supply in the EU

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Identification of technical performances, economic benefits and costs of novel technologies aimed at increasing capacity, reliability and flexibility of the transmission infrastructure Definition of long term scenarios for the EU power sector, characterized by different evolutions of demand and supply, such as the integration of a large amount of intermittent renewable energy sources (e.g. wind power), meeting specific targets concerning security of supply and sustainability Implementation of a framework to facilitate harmonisation of pan-European approaches to electricity infrastructure evolution and to evaluate benefits of transmission investments

Activities of REALISEGRID Activities of REALISEGRID

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WP4 Coordination and dissemination WP3.7 Consensus WP3.2 Investment signals WP3.3 Implement. benefits tool WP3.1 Reliability WP3.6 Investment incentives WP5 Admin. management WP3.5 Application benefits tool WP1 Performances and costs

• f innovative grid technologies

WP2 Long term scenarios for European power systems WP3 Transmission Investments WP3.4 coordination gas&power WP4 Coordination and dissemination WP3.7 Consensus WP3.2 Investment signals WP3.3 Implement. benefits tool WP3.1 Reliability WP3.6 Investment incentives WP5 Admin. management WP3.5 Application benefits tool WP1 Performances and costs

• f innovative grid technologies

WP2 Long term scenarios for European power systems WP3 Transmission Investments WP3.4 coordination gas&power

Structure of REALISEGRID Structure of REALISEGRID

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scanning the technology options, including WAMS, FACTS, HVDC, that will be available to the European TSOs, identifying their effectiveness and efficiency at guaranteeing reliability and controllability of the increasingly interconnected European transmission system assessing the possible impact of such new technologies on the power system (cost/benefit analysis) developing a roadmap for the incorporation of new transmission technologies in the electricity grids analyzing perspectives of interconnecting the IPS/UPS system to the UCTE system, for improving stability and reliability of the pan-European power system

Work Package 1 Work Package 1 “ “Innovative grid technologies Innovative grid technologies” ”

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Work Package 2 Work Package 2 “ “Long term energy scenarios Long term energy scenarios” ”

developing quantitative long term pan-European scenarios based on the tool TIMES-MARKAL (ETSAP, Implementing Agreement of IEA). Considered countries: EU27 plus Norway, Switzerland, Iceland and Balkan Countries. The latter are important since interested by important pan-European energy infrastructure extensions. adapting the modelling tool so as to perform scenario analyses considering both electricity and natural gas infrastructures analyzing impacts of different scenarios on future electricity and gas exchanges between European countries, with a particular eye to system reliability

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Work Package 3 Work Package 3 “ “Transmission investments Transmission investments” ”

developing a robust set of criteria for improved transmission planning in presence of a large penetration of RES-E generation. analyzing the impact of regulation and incentive mechanisms on transmission investment. providing policy recommendations to allow TSOs to address more efficiently the challenges related to interconnection development deriving a benefit-based approach to improve consensus on new infrastructures

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Modeling tools Modeling tools Regulation Regulation Planning Practice Planning Practice Testing Bed Testing Bed

Work Package 3 Work Package 3 “ “Transmission investments Transmission investments” ”

WP3

WP3.1 Analyzing current practice and developing a robust set of criteria for improved transmission planning in presence of a large penetration

• f RES-E generation

WP3.2 Evaluate bottlenecks and investment needs in cross- border capacities in the European Electricity markets WP3.3 Set up a methodology and a supporting tool to carry out multi-criteria cost-benefit analysis supporting the development of trans-European transmission infrastructure WP3.4 Creation of a tool to support coordinated investment in electricity and gas infrastructure WP3.5 Validation of the cost- benefit methodology set up in WP3.3 on a real case concerning the TEN-E priority axis EL2 WP3.6 analyzing the impact of regulation and incentive mechanisms on transmission investment WP3.7 deriving a benefit-based approach to improve consensus

• n new infrastructures

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Work Package 3 Work Package 3 “ “Transmission investments Transmission investments” ”

Proposed cost-benefit Methodology (WP3.3) criticities analysis candidates selection cost-benefits analysis environmental analysis authorization path RES-E Penetration (WP3.1-3.3) Smartgrid evolution (WP3.3) Incentivization, consensus (WP3.6-3.7) Interaction between electricity and gas (WP3.4) Analysis of TSO planning practice (WP3.1) (WP3.3) Analysis bottlenecks and criticities (WP3.2)

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Work Package 3 Work Package 3 “ “Transmission investments Transmission investments” ”

• REALISEGRID uses a new methodology to carry out a cost/benefits

classification of the most important projects belonging to Trans European Network priority axis "EL.2. Borders of Italy with France, Austria, Slovenia and Switzerland: increasing electricity interconnection capacities". This region is one of the most interesting

• nes to assess the impact and the benefits of future cross-border

transmission projects.

• Lienz (AT) - Cordignano (IT) line
• New interconnection between Italy and

Slovenia

• Udine Ovest (IT) - Okroglo (SI) line
• S. Fiorano (IT) - Nave (IT) - Gorlago (IT) line

[reinforcements completed]

• S. Fiorano (IT) - Robbia (CH) line [completed]
• Venezia Nord (IT) - Cordignano (IT) line
• St. Peter (AT) - Tauern (AT) line
• Südburgenland (AT) - Kainachtal (AT) line
• Austria - Italy (Thaur-Brixen) interconnection

through the Brenner rail tunnel.

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Cost Cost-

• benefit analysis of grid investments

benefit analysis of grid investments

Literature approaches

Power system System uncertainty Time horizon

Deterministic Probabilistic Static Dynamic Regulated Deregulated

• ViTAL (London Economics):
• Social welfare (effect on strategic behavior) and production efficiency in the long

term; incomplete model of the transmission network

• TEAM (adopted by CAISO):
• Market-based, different points of view (consumers, producers, TSOs,…),

complete representation of the grid, modeling of uncertainty

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The REMARK approach The REMARK approach

probabilistic simulation of one year of operation of the electric power system using the non-sequential Monte Carlo method. For each random system configuration it calculates: load-shedding, social welfare, producers- and consumers-surplus, congestion revenue quantitative assessment of the overall economic benefits (both substitution and strategic effect) through the calculation of the Social Welfare Indicator possibility to assess the benefits for each market zone and for each market player (consumers, producers, TSOs) full network representation adopting the simplified direct current model. Four incremental steps: simple busbar, only interzonal constraints, full representation of interzonal lines, full representation with internal grids quantitative assessment of the reliability benefits through the EENS index simulation of the strategic behaviour of suppliers using a simplified model that correlates the price cost mark-up to the structural market variables Residual Supply Index and demand

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REALISEGRID: the consortium REALISEGRID: the consortium

Research centers and universities

• CESI RICERCA (I), Coord & WP3
• Politecnico di Torino (I), WP2
• Technische Universiteit Delft (NL)
• Universität Dortmund (D)
• Technische Universität Dresden (D)
• EC Joint Research Centre - Inst. Energy
• Univerza v Ljubljani (SL)
• The University of Manchester (UK)
• Observatoire Méditerranéen Energie (F)
• R&D Center for Power Engineering (RU)
• Vienna University of Technology, EEG (A)

TSOs

• RTE (F)
• Verbund-APG (A)
• Terna (I)
• TenneT (NL)

Industry

• Technofi (F), WP1
• ASATREM (I)
• KANLO (F)
• Prysmian (I)
• RIECADO (A)

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REALISEGRID: data and numbers REALISEGRID: data and numbers

Start: September 2008 Duration: 30 months Beneficiaries: 20 Co-ordinator: CESI RICERCA Client: EC, DG Energy and Transport Engagement: 335 person-months Budget: €4.21 million Web: http://realisegrid.cesiricerca.it

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REALISEGRID: the stakeholders board REALISEGRID: the stakeholders board

• The opinion of the most important European stakeholders

is vital for ensuring:

• full compatibility of the proposed methodologies with the real
• perative constraints,
• the possibility of a real follow-up of the project into the TSOs practice.
• In addition to the TSOs members of the project, the

REALISEGRID Consortium is currently setting up an advisory board of important European stakeholders interested to follow the project and put their precious know-how available to address the issues coming up from the activities of REALISEGRID.

• Specific meeting will be set up for the advisory board in

conjunction with the main meeting of REALISEGRID. First meeting: September in Paris.

• Interested stakeholders can communicate their

willingness to participate directly to the project coordinator.

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• Gianluigi Migliavacca

REALISEGRID Project Coordinator

via Rubattino,54 20134 Milano (Italy) E-mail: gianluigi.migliavacca@cesiricerca.it