Abstract
The development and growing integration of power markets and the rapid expansion of new renewable energy sources (RES) with less predictable output, will increase the need for balancing services in the near future. This is the background for the Competence Building (KMB) project “Balance Management”. This report discusses the special aspects related to exchange of balancing resources between the separate synchronous systems in Northern Europe. The discussion refers to the key principles published by the European Regulators’ Group ERGEG, and to the recently reported experiences from the exchange scheme between UK and France.
The most important differences from exchange between control areas within one synchronous system are related to the separation of the two systems by HVDC links and the fact that the exchange will affect the frequency in two systems.
The Nordic region acts as one control area with a common merit order list for balancing resources. This means that only congestions in the grid should cause deviation from the merit order in normal operation, and in principle could all HVDC links to the Northern Central European (NCE) system be utilized for balancing resources in parallel. The ongoing merging of control areas in NCE, initiated by Germany, indicates a potential future exchange of balancing resources between the common Nordic and a common NCE merit order lists. The benefit from the conflation of the originally 4 control areas in Germany is estimated to about 260 million EUR per year in total. This counts for large potential benefits from further integration.
The exchange of balancing resources between control areas is limited by the reserves needed for security of supply and to the forecast error related to consumption and wind in the respective area. The expected increase in wind production will affect the operational routines with regard to defining the need for local reserves. Forecasts on daily basis will most likely be needed.
The efficiency of utilizing different balancing control objects related to network losses and geographical location is not systematically considered by the Transmission System Operators (TSOs) today. Load flow calculations show that the difference from using a generator behind a congested corridor and alternatively a reducible load in a load centre could be up to 40 %. The share of control objects from industrial and/or residential consumption will most probably increase, which counts for control object efficiency assessments in real time operation.
6 different exchange schemes for exchange via HVDC connections are presented in this report, one related to imbalance netting, one between the TSO and a Balance Service Provider (BSP) in the opposite system and 4 alternative trading models where the TSOs on each side are mediators.
The TSO-TSO alternatives seem to represent the most cost efficient schemes with regard to the social economics. The TSO- BSP alternative does, however, provide economic incentives to central market players, which might be decisive for the development of future exchange corridors and schemes.
Two comprehensive models have been developed as a part of the PhD work in this project. The models are utilized in analyses of future exchange of balancing resources and integration of balancing markets in Northern Europe in this report
The most important differences from exchange between control areas within one synchronous system are related to the separation of the two systems by HVDC links and the fact that the exchange will affect the frequency in two systems.
The Nordic region acts as one control area with a common merit order list for balancing resources. This means that only congestions in the grid should cause deviation from the merit order in normal operation, and in principle could all HVDC links to the Northern Central European (NCE) system be utilized for balancing resources in parallel. The ongoing merging of control areas in NCE, initiated by Germany, indicates a potential future exchange of balancing resources between the common Nordic and a common NCE merit order lists. The benefit from the conflation of the originally 4 control areas in Germany is estimated to about 260 million EUR per year in total. This counts for large potential benefits from further integration.
The exchange of balancing resources between control areas is limited by the reserves needed for security of supply and to the forecast error related to consumption and wind in the respective area. The expected increase in wind production will affect the operational routines with regard to defining the need for local reserves. Forecasts on daily basis will most likely be needed.
The efficiency of utilizing different balancing control objects related to network losses and geographical location is not systematically considered by the Transmission System Operators (TSOs) today. Load flow calculations show that the difference from using a generator behind a congested corridor and alternatively a reducible load in a load centre could be up to 40 %. The share of control objects from industrial and/or residential consumption will most probably increase, which counts for control object efficiency assessments in real time operation.
6 different exchange schemes for exchange via HVDC connections are presented in this report, one related to imbalance netting, one between the TSO and a Balance Service Provider (BSP) in the opposite system and 4 alternative trading models where the TSOs on each side are mediators.
The TSO-TSO alternatives seem to represent the most cost efficient schemes with regard to the social economics. The TSO- BSP alternative does, however, provide economic incentives to central market players, which might be decisive for the development of future exchange corridors and schemes.
Two comprehensive models have been developed as a part of the PhD work in this project. The models are utilized in analyses of future exchange of balancing resources and integration of balancing markets in Northern Europe in this report
