Elia Group SA/NV · EURONEXT:ELI
Elia Group SA/NV — Technical Presentation (October 2020)
56 slides from Elia Group SA/NV's technical presentation, Oct 30, 2020
Slide 1: Adequacy & Flexibility study 2022-32
Adequacy & Flexibility study 2022-32 Ad-hoc Task Force 30 October 2020
Slide 2: Generalities
Generalities Presented by Kristof Sleurs
Slide 3: For a smooth teleconference with 30+ people
For a smooth teleconference with 30+ people … Some rules apply - Please put yourself on mute at any time that you are not speaking to avoid background noise. - If you receive a call, please ensure that you do not put this meeting on hold. - You can quit and reconnect later on. - You will be muted or
Slide 4: Agenda
Agenda Timeline, process, regulatory framework Methodology description General description Flexibility Economic viability Climate years Detailed scenario assumptions Public consultation details Adequacy & Flexibility study 2022-32 4
Slide 5: Timeline, process, regulatory framework
Timeline, process, regulatory framework Presented by Rafael Feito Kiczak
Slide 6: Belgian legal & regulatory framework related to this study
Belgian legal & regulatory framework related to this study Adequacy & Flexibility 2017 - 2027 At the request of the Minister for Energy, an ad-hoc study covering the adequacy and APR flexibility of Belgium was published in April 2016. An Addendum (September 2016) 2016 requested by the authorities wa
Slide 7: High level timeline for the study delivery
High level timeline for the study delivery TODAY 2020 2021 OCT NOV DEC JAN FEB MAR APR MAY JUN Task Task Task Force Force Force 1 month 30/06 public consultation Legal publication date Consultation report Comité de Collaboration - CdC (Plan Bureau, FOD, CREG as observer) Concertation with CREG Adequ
Slide 8: Link with the recently approved ERAA methodology
Link with the recently approved ERAA methodology - The ERAA methodology was approved by ACER and published on 5th of October 2020 - The ERAA methodology applies to the ERAA assessment, conducted by ENTSO-E. No ERAA assessment will be published before the next national adequacy & flexibility study.
Slide 9: Scenario, methodology and sensitivities submitted for public consultation
The scenario, methodology and request for sensitivities are submitted for a public consultation of 1 month starting today. – The methodology from the previous study will be used as basis (any comments on it are also welcomed); – A document describes the methodological changes we propose for the next
Slide 10: Methodology description
lia Methodology description
Slide 11: General methodology description
General methodology description Presented by Bilal Hahati
Slide 12: The study will consist of several parts which are interlinked
The study will consist of several parts which are interlinked Flexibility assessment Scenario Flexibility needs Flexibility Flexibility means reservation Economic dispatch Adequacy Economic Economic results viability results Adequacy assessment Economic assessment 12
Slide 13: Five time horizons within the 10 years timeframe
Within the 10 years timeframe, 5 time horizons are proposed to be quantified following a central scenario with additional possible sensitivities based on the ouputs from public consultation Coal/Nuclear Coal/Nuclear policies abroad policies abroad -2 GW 4 GW EU targets More RES -1 GW Current planned
Slide 14: One central scenario with additional sensitivities
Construction of the scenario 1 CENTRAL scenario will be constructed for all proposed time horizons • The CENTRAL scenario will be aligned with the latest Belgian NECP and other countries’ NECPs/MAF study • The CENTRAL can be seen as a ‘current/stated policies’ based on Belgian/European ambitions Add
Slide 15: ANTARES used for market simulations
Economic ANTARES will be used to perform the market simulations in order to dispatch derive adequacy and economic indicators For all simulated countries ANTARES is a perfect foresight economic dispatch model, also used by RTE and ENTSO-E for adequacy and electricity market simulations. The tool is u
Slide 16: Large amount of Monte-Carlo years simulated at each iteration
Economic dispatch A large amount of Monte-Carlo years will be simulated at each iteration M climate conditions M wind time M solar time M hydro time M load time series series series series In addition to the previous study, a convergence criteria as suggested in the ERAA methodology will be used for
Slide 17: Iterative process in steps of 100 MW
Adequacy An iterative process per steps of 100 MW to determine the needed volume to be results adequate is performed Adequacy & Flexibility study 2022-32 17
Slide 18: Structural block, GAP volume and not viable GAP
Adequacy The study consists in identifying the structural block, the GAP volume and the not results Viable GAP capacity and characteristics to satisfy the adequacy criteria The assessment starts from the evaluation of the consumption for Belgium increased by the 1 flexibility needs during scarcity r
Slide 19: Flexibility
Flexibility Presented by Kristof De Vos
Slide 20: The flexibility assessment consists of 3 parts
The flexibility assessment consists of 3 parts Flexibility 1 needs Flexibility assessment Scenario Flexibility determine needs all flexibility needs (for BRPs and TSO) required after 2 Flexibility means 3 day-ahead market Flexibility closure reservations assess available flexibility resulting from t
Slide 21: Proposed methodology modification
Proposed methodology modification EERA Methodology Article 4(6)g - Reserve requirements shall be set separately for FCR, FRR and RR. i. For each target year, the dimensioning of FCR and FRR, and the contribution of each TSO, shall reflect reserve needs to cover imbalances in line with Articles 153 a
Slide 22: Public consultation on the methodology
Public consultation on the methodology •As it concerned a new methodology, it was extensively described in the report of the adequacy and flexibility study 2019, and also presented in specific TF iSR workshops. •A mail to request feedback was launched by Elia on March 17, 2020 to request inputs befo
Slide 23: Public consultation on the data
Public consultation on the data In the adequacy and flexibility study of 2019, Elia made assumptions on technical flexibility characteristics of generation, storage, demand-side and interconnection technologies . This was based on literature studies, Elia’s expert view and information received from
Slide 24: Economic viability
Economic viability Presented by Julie Van Steen
Slide 25: Economic viability in the ERAA
Economic viability in the ERAA • As long as forward prices are available, these may be assumed to reflect expected prices and hence used to consider hedging against risk. • Additional approaches (such as “value at risk”) may be used to account for the price risk, when & due to lack of such forward p
Slide 26: Update of the Economic Viability methodology in AdeqFlex
Update of the Economic Viability methodology in AdeqFlex Main questions to be answered: Which metric would replicate as closely as possible the actual decision making of investors/market players, also taking into account the ERAA methodology and allowing a feasible integration in the overall mod
Slide 27: Theoretical framework of risk aversion translated into pragmatic approach
General conclusion of the preliminary study: A theoretical framework illustrates the impact of risk aversion and is translated into a pragmatic approach Scope of the study * Limitations of a “pure” CAPM approach : THEORETICAL FRAMEWORK ON RISK AVERSION HYPOTHESIS - CAPM starts from the assumption of
Slide 28: Practical methodologies based on cost of capital model (CAPM)
While utility functions and prospect theory confirm the need for a risk framework, practical methodologies are more often based on the cost of capital model (CAPM) Proposed practical methodology takes WACC (CAPM-oriented) as a starting point (cf. ERAA) Where the expected utility theory and the prosp
Slide 29: Calibration of the hurdle rate is key
Calibration of the hurdle rate (reference WACC + hurdle premium) is key 1. Calibration of an industry-wide reference WACC (CAPM based), in line with the ERAA methodology For the calibration of the industry-wide reference WACC (real & pre-tax), the Fichtner study “Cost of Capacity for Calibration o
Slide 30: Scope of the public consultation
Scope of the public consultation In the methodology description of the public consultation, a summary of the proposed EVA methodology can be found. The following two documents are added to the public consultation document : Note from economic consultant FTI-Compass Lexecon: “Memo on risk model
Slide 31: Climate years
Climate years Presented by Rafael Feito Kiczak
Slide 32: Climate years and requirements from the ERAA
Climate years and requirements from the ERAA Source: ERAA methodology: Article 4, paragraph 1 (f) Our proposal • Elia aims to comply with option 1 as it seems the most preferred and statistically sound alternative; • Elia is currently investigating the implementation of the ‘200 synthetic climate ye
Slide 33: Using the RTE/MéteoFrance database of 200 climate years
Elia has taken the initiative to see how the RTE/MéteoFrance database of 200 climate years could be used for the next AdFlex study 200 synthetic climate years ≠ historical climate years For one given target time horizon, ‘200 climate years’ are generated by the climate model. These 200 climate years
Slide 34: Three time horizons generated by MeteoFrance exist
Three time horizons generated by MeteoFrance exist Different sets of climate years were generated by MeteoFrance for RTE: two sets for the time horizon 2050 (based on two Representative Concentration Pathway) and one for the time horizon 2000. A scenario for 2025 was also deducted based on the resul
Slide 35: From weather variables to generation variables
From weather variables to generation variables • The climatic database contains data such as temperatures, precipitation, wind, solar radiation, etc. for thousands of points in Europe. This is therefore suitable for the analysis conducted in this study; • In order to construct time series of electri
Slide 36: Additional information on this database
Additional information on this database can be found online (public working document from RTE) More information regarding this RTE/MeteoFrance database can be found in the following document created by RTE: « Groupe de travail “Référentiel climatique” – Représentation des effets du climat sur le sys
Slide 37: Detailed reference scenario assumptions
Detailed reference scenario assumptions Presented by Bilal Hahati
Slide 38: Scenario definition elements
Scenario definition elements Electricity demand and demand side response Available generation Reference grid and XB capacities Economics Adequacy & Flexibility study 2022-32 38
Slide 39: Total electricity demand based on last input from FPB June 2020
Total electricity demand based on last input from FPB June 2020 Main macro-trends assumptions Climact tool Tertiary Added Value Based on publication from Federal Plan Bureau in June 2020 (COVID impact included) Industry Added Value Based on publication from Federal Plan Bureau in June 2020 (COVID im
Slide 40: Electric vehicles and heat pumps
Additional electrification of transport and heating All assumptions are expressed at the end of the mentioned year 2.0 1.8 Electric vehicles* 1.6 1.4 1.2 # EV [Mio] 1.0 0.8 0.6 0.4 0.2 Legend 0.0 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 Proposed central scenario Year Extrapol
Slide 41: Total electricity demand based on latest input from BfP
All assumptions are expressed at Total electricity demand based on latest input from BfP June 2020 the end of the mentioned year Total electricity demand for Belgium based on BfP data from June 2020 and with WEM and WAM scenarios as electrification ambitions 100 95 90 85.7 85 [TWh] 80 75 70 65 60 20
Slide 42: Demand Side Response
All assumptions are expressed at Demand Side Response the end of the mentioned year Shedding capacity (including the ones participating to the ancillary services today) E-CUBE 2020 (SR) … interpolation … EP 3000 2500 No limit For 2020-2023: volume is based on E- 2000 CUBE 2020 market response quanti
Slide 43: Scenario definition elements
Scenario definition elements Electricity demand and demand side response Available generation Reference grid and XB capacities Economics Adequacy & Flexibility study 2022-32 43
Slide 44: Pumped-storage and batteries
Pumped-storage and batteries All assumptions are expressed at the end of the mentioned year Pumped-storage Turbining capacity of 1224 MW is assumed for all time horizons Available storage of 5300 MWh for economical dispatch Evolution of installed capacity of "other storage facilities" - split per ca
Slide 45: Evolution of nuclear generation fleet in Belgium
The evolution of nuclear generation fleet in Belgium is based on the current Belgian law for nuclear phase-out Assumption for nuclear capacity from 2022 to 2032 Adequacy & Flexibility study 2022-32 45
Slide 46: Renewable energy sources
Renewable energy sources Extract from national government agreement Evolution of wind and PV installed capacity The scenarios are based on the NECP (WAM), which foresees 8.9 GW wind and 11 GW PV by 2030 The latest national government agreement is confirming 4GW of installed wind offshore capacity by
Slide 47: Thermal generation
Thermal generation All existing generation units will be considered available unless closure officially known. Those will be subject to an economic viability assessment. All thermal generations units were clustered in 4 categories: CAT 1: Units that will not be part of the EVA unless are indicated b
Slide 48: Outage parameters
Outage parameters Forced outages 10 last years (2010-2019) will be used for the determination of the forced outage rates The public data from ENTSO-E Transparency Data is used for historical data when available (i.e. only 2015-2019) Proposal: 2011-2020 (to be update in Jan 2020 with the latest data)
Slide 49: Scenario definition elements
Scenario definition elements Electricity demand and demand side response Available generation Reference grid and XB capacities Economics Adequacy & Flexibility study 2022-32 49
Slide 50: Flow-based perimeter and bidding zone definition
Flow-based perimeter and bidding zone definition The bidding zones are assumed to be the same ones that we have today for all future time horizons. Major improvements were done to extend the flow-based domains from CWE to CORE region and to include the possibility of ‘Advanced Hybrid Coupling’ (AHC)
Slide 51: Scenario definition elements
Scenario definition elements Electricity demand and demand side response Available generation Reference grid and XB capacities Economics Adequacy & Flexibility study 2022-32 51
Slide 52: Fuel and CO2 price assumptions
The assumptions for the fuel and CO2 prices are based on the “Stated Policies” scenario from WEO published in October 2020 Stated Policies scenario Price in €2019 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 Gas TTF [€/GJ] 5.7 5.7 5.7 5.7 5.8 5.9 6.1 6.2 6.3 6.4 6.5 Coal ARA [€/GJ] 1.9 2 2
Slide 53: Proposal for fixed costs (CAPEX/FOM)
Proposal for fixed costs (CAPEX/FOM) are based on several sources • We are requesting stakeholders to provide any relevant source/input for those values. • Note that for a better granularity and to better reflect reality, CCGT and OCGT were split into several sizes and demand response into a merit o
Slide 54: Public consultation details
Public consultation details Presented by Rafael Feito Kiczak
Slide 55: Public consultation on data & methodology: How?
Public consultation on data & methodology: How ? From 30/10 until 30/11/2020 6 PM – Data: – Excel file with the central scenario data for the different parameters. – The current slideset with visualization of the data. – Sensitivities: WHAT ? – As for the previous study, we are open for quantified s
Slide 56: Thank you for your attention
Thank you for your attention and have a nice week-end !