CWE Flow-Based Market Coupling: On The Eve Of .

CWE Flow-Based Market Coupling:on the Eve of ImplementationPieter Schavemaker andPhilippe NouryEuropean Market Coupling & Integration:Day-ahead and Intraday Energy Markets24-04-2012

Pieter SchavemakerPieter H. Schavemaker was born in Velsen, the Netherlands on November 30,1970. He obtained his M.Sc. in Electrical Engineering from the Delft University ofTechnology in 1994 and he obtained his Ph.D. in Electrical Engineering from theDelft University of Technology in 2002. He worked for ABB, in the field ofsubstation control systems and as an assistant professor in the Electrical PowerSystems group of the Delft University of Technology. The past five years Pieterworked for Tennet TSO B.V., the Dutch Transmission System Operator, where hewas actively involved in international capacity calculation and allocationprojects amongst others as convenor of the CWE inter-TSO workinggroup that is responsible for the design of the CWE coordinated ATCand CWE flow-based methodologies, as convenor of the flow-basedValidation task force in the CWE joint project of the TSOs and PXs,and as convenor of the multi-stakeholder Working Group CapacityCalculation in the Market Integration Design Project. Currently,Pieter works as senior manager Energy for Eurogroup Consulting.He is author of the book “Electrical Power System Essentials”,published by Wiley.2

Philippe NouryPhilippe Noury was born in Poitiers, France, on the 10th of December 1979. Heobtained his “Diplôme d’Ingénieur” (French equivalent of a Master of Engineering)at Ecole Centrale de Lyon end of 2002. Philippe Joined RTE in the beginning of2003 as a Shift Engineer in the South-East regional Control Center in Marseille.After 3 years in the control room, Philippe joined the South-East commercial teamof RTE, where he lead a team in charge of metering data analysis, customerinvoicing and electricity quality improvement. Since the beginning of 2010,Philippe is project manager within the European Market Integration Department inRTE’s headquarters, located at La Défense. Philippe’s current main activities arelinked to the implementation of market coupling, and especially within the CWEinitiative to lead the Flow Based Working Group, a TSO group of experts in chargeof designing and implementing the Flow based methodology.3

Contents CWE FB: status update, where are we now? CWE FB: a short summary CWE FB: FB in CWE and ATCs outside; how? CWE FB: FB for Day Ahead; what about ID?4

Contents CWE FB: status update, where are we now? CWE FB: a short summary CWE FB: FB in CWE and ATCs outside; how? CWE FB: FB for Day Ahead; what about ID?5

CWE (Central Western Europe)

CWE (Central Western Europe)where are we now?2007June 2007,MoU signedtargeting FBMC for CWEregion2008June 2008,Decision tostart withATC MC andfurther studyof FB MC2008 FBMCsimulationsbased on nonoperational FBdata issuesdetected werethat seemed tobe linked to thedata quality20092010Nov 9, 2010CWE ATC MCgo liveITVC CWENordic2011Sept 2012:Start of theFB externalparallel run2012End 2012:Go-live ofthe NWE MC2013Mid 2013:Go-live ofthe CWE FBMC!

CWE (Central Western Europe)where are we now?Public consultationInternal parallel run2012External parallel runSeptemberInteraction with market participants: CWE FB User Group Public consultation External //run Operational ATCMC; FBMC, FBIMC simulated based onoperational ATC order books and operational FB parameters Market participants to get acquainted to FB parameters andmarket impact To allow FB to establish a reference on its own

Contents CWE FB: status update, where are we now? CWE FB: a short summary CWE FB: FB in CWE and ATCs outside; how? CWE FB: FB for Day Ahead; what about ID?9

What is congestion?

What is congestion? commercial: more capacity requested by themarket than is available physical: overloaded transmission linesleading to outages

congestion management in thebroadest sensedetermination ids chedulesif needed:congestion relief

Assessment of the security ofsupply domaindetermination ids /reservationsNTC/ATC or FB constraintsrespecting the Securityof Supply domain13

How to approximate the securityof supply domain- example with 3 countries Country BCountry AMargin left(MW)Influence of exchangeon lines (PTDF)MonitoredlinesOutagescenarioLine 1Nooutage15010%Outage1 12020%A BA C Outage1Line 2 100 MWLine 3Country C line 1-100 MW14B C

The security of supply domainExchange(A C)400! Numbers are for illustration onlyInfluence of exchangeon lines (PTDF)MonitoredLinesOutagescenarioLine 1Nooutage150Outage 11205%20%1%Outage 21006%25%1%Nooutage150-2%05%Outage 3100-12%010%Line 2Margin left(MW)300A B1%A CB C10%3%200100Exchange(A B)0- 400-300- 200- 100- 100Line 3Nooutage- 200Outage 4- 300Constraints- 400Security of supply domainApril 20, 2012150100200300400

Assessment of the security domainDeterminationof availabletransmissioncapacitystep 1step 2Exchange(A C)400Security ofSupply domain300200100-200-300-400Bids /reservationsNTC/ATCconstraintsExchange(A B)0-400 -300 -200 -100 cation100200300400FBconstraints16

ATC & FB constraints – theory Security domain isobtained by taking intoaccount all the relevantphysical constraints ofthe gridExchange(A C)400300200100Given the securitydomain, NTC/ATCconstraints and thecorresponding NTC/ATCdomain are a choicemade by the TSOThe FB domain is thesecurity domain itselfExchange(A B)0- 400-300- 200- 1000100200300400- 100- 200- 300- 400constraints polyhedronNTC/ATCsecurity domainFlow-based17

ATC and FB domainDeterminationof availabletransmissioncapacitystep 1step 2Exchange(A C)400Security ofSupply domain300200100Bids /reservationsoutputATCExchange(A B)0-400 -300 -200 -100 100200300400FB-200-300-40018

ATC vs FB constraints – theory Exchange(A C)FB offers more tradingopportunities with thesame level of security ofsupply400300200100 In FB capacity split is nota choice of the TSO, butis market driven (at thetime of allocation)Exchange(A B)0- 400-300- 200- 1000100200300400- 100- 200- 300- 400constraints polyhedronNTC/ATCsecurity domainFlow-based19

FB experimental results CWE reported in Oct 2011 on their experimentalfindings with FBMC, based on 9 weeks of data (‘CWEEnhanced Flow-Based MC feasibility report’) FB offers more trading opportunities with the samelevel of SoS as the current coordinated ATC As such, FB market coupling results in higher welfareand better price convergence compared to thecurrent ATC MC ones Results included in the report are based on basicassumptions which have to be fine-tuned

FB domain: experimental resultsFB offers moretradingopportunitieswith the samelevel of SoS asthe currentcoordinatedATC

FB market impact: experimental results FB market coupling results in higher welfare andbetter price convergence compared to the currentATC MC ones 100%Full price convergence(9 weeks data)social welfare increaserelative to ATC (in MillionEuro for 9 weeks)12108642080%60%40%20%0%Intuit FBFBInfiniteATCIntuit FBFBInfinite

Contents CWE FB: status update, where are we now? CWE FB: a short summary CWE FB: FB in CWE and ATCs outside; how? CWE FB: FB for Day Ahead; what about ID?23

FB in CWE and ATCs outside; how?Hybrid coupling, two variants1.Standard: realized ATCtransactions are not takeninto account in the margin ofthe CBs TSOs need toreserve margins (worst-case)on their CBs for the possibleusage by the ATC area Just like today No competition for theuse of the scarce capacityin the allocationmechanism due to theex-ante split Not optimal: scarcecapacity not always fullyusedPrice couplingATCFB areaTotal marginon the CBATC areaMarginreservedfor the ATCMargin leftfor the FB24

FB in CWE and ATCs outside; how?Hybrid coupling, two variants1.2.StandardAdvanced: realized ATCtransactions are taken intoaccount in the margin of theCBs TSOs do not need toreserve margins on their CBs use of margin is marketdriven Competition for the useof the scarce capacity inthe allocation mechanism Optimal use of scarcecapacity Maximum social welfare ATC area is subject to FBprice propertiesPrice couplingATCFB areaTotal marginon the CBATC areaMarginavailablefor the FBand ATCtrades25

Contents CWE FB: status update, where are we now? CWE FB: a short summary CWE FB: FB in CWE and ATCs outside; how? CWE FB: FB for Day Ahead; what about ID?26

FB for Day-Ahead; what about ID? FB domain before the DA FBMCAfter theimplementation of FBDA, the logical next stepwill be the developmentof FB IDExchange(A C)400300200100Exchange(A B) Till then, the same basicprinciple like today:capacity left after the DAstage ID stage0- 400-300- 200- 1000100200300400- 100- 200- 300- 40027

FB for Day-Ahead; what about ID? FB domain after the DA FBMCAfter theimplementation of FBDA, the logical next stepwill be the developmentof FB IDExchange(A C)400300200100Exchange(A B) Till then, the same basicprinciple like today:capacity left after the DAstage ID stage0- 400-300- 200- 1000100200300400- 100- 200- 300- 40028

FB for Day-Ahead; what about ID? ID ATC taken from the FB domainAfter theimplementation of FBDA, the logical next stepwill be the developmentof FB IDExchange(A C)400300200100Exchange(A B) Till then, the same basicprinciple like today:capacity left after the DAstage ID stage0- 400-300- 200- 1000100200300400- 100- 200- 300- 40029

Questions

Thank you for your attention!In case of questions, do not hesitate to contact us: Philippe Nouryphilippe.noury@rte-france.com Pieter Schavemakerp.schavemaker@eurogroupconsulting.nl31

Back-up slides

FB domain – how to get a grip? (1/2) Exchange(A C)From the constraints itselfFigures obtained from thesearch space as defined bythe constraints:–––Maximum bilateral exchanges( ) feasible, given the FBdomainThe vertices of the FB domain(all the corner points at theboundary of the domain)Maximum net positionsfeasible, given the FB domain400300200100Exchange(A B)0-300- 200- 1000100200300400- 100- 200- 300- 400constraints polyhedronsecurity domainFlow-based33

FB domain – how to get a grip? (2/2) NTC/ATC and FB can/willshow different values forthe maximum bilateralexchanges that are feasibleFB– Exchange(A C)Maximum bilateral exchangesfeasible in the FB domain arenon-simultaneous values400300200100Exchange(A B)0-300- 2000100200300400- 100NTC/ATC–- 100- 200NTCs/ATCs are by definitionsimultaneous values thatlimit the bilateral exchanges- 300- 400constraints polyhedronNTC/ATCsecurity domainFlow-based34

External parallel run – Utility Tool snapshotsInteractive partValues entered by the user are checked onthe FB constraints of all 24 hours(non-simultaneous) indicators forthe hour selected

External parallel run – Utility Tool snapshotsCWE map showing the (non-simultaneous)indicators for the selected hour

External parallel run – Utility Tool snapshots24 hour overview graphs of the(non-simultaneous) indicators

External parallel run – Utility Tool snapshots24 hour overview graphs of the(non-simultaneous) indicators

Pieter Schavemaker Pieter H. Schavemaker was born in Velsen, the Netherlands on November 30, 1970. He obtained his M.Sc. in Electrical Engineering from the Delft University of Technology in 1994 and he obtained his Ph.D. in Electrical Engineering from the Delft University