Slide 1: WG BAL workshop on aFRR elastic demand
WG BAL workshop on aFRR elastic demand 29/2/2024
Slide 2: Agenda
Agenda • Reminder of the context • Elia’s proposal of the local rules for the application of the aFRR elastic demand in Belgium • Impact of the aFRR elastic demand as proposed by Elia • Planning and next steps 2
Slide 3: Reminder of the context
ria Reminder of the context
Slide 4: A brief overview of a not so brief history
A brief overview of a not so brief history 28/9/2022 October 2024 WG BAL approves Targeted 22/11/2021 compromise solution to 2/2/2024 connection to WG BAL decision to perform an observation round prior to connect to PICASSO All TSO’s submit the PICASSO connection to PICASSO to Q1/Q2 2023 with a prop
Slide 5: Reminder of the context
Reminder of the context • Belgian has a limited aFRR merit order that is currently fully activated on a regular basis • The connection to PICASSO comes with important design changes (mitigation measures not considered): • Paid-as-bid remuneration of aFRR Energy Bids paid-as-cleared remuneration •
Slide 6: Recall: simulations of the 2022 observation round indicated a high risk of significant cost increase
Recall: simulations of the 2022 observation round indicated a high risk of significant cost increase in Belgium in the absence of mitigation measures Focus of the proposed mitigation measures SI of -1000MW BRP costs increases with PICASSO Spike explained by because MIP increases to 3.000€/MWh select
Slide 7: A brief overview of a not so brief history
A brief overview of a not so brief history 28/9/2022 October 2024 WG BAL approves Targeted 22/11/2021 compromise solution to 2/2/2024 connection to WG BAL decision to perform an observation round prior to connect to PICASSO All TSO’s submit the PICASSO connection to PICASSO to Q1/Q2 2023 with a prop
Slide 8: Recall: 2022 WG BAL agreement to connect with a bid price cap of 1.000 €/MWh
Recall: 2022 WG BAL agreement to connect with a bid price cap of 1.000 €/MWh Extract from the 2022 Position of the WG BAL concerning the connection to the aFRR-Platform 8
Slide 9: A brief overview of a not so brief history
A brief overview of a not so brief history 28/9/2022 October 2024 WG BAL approves Targeted 22/11/2021 compromise solution to 2/2/2024 connection to WG BAL decision to perform an observation round prior to connect to PICASSO All TSO’s submit the PICASSO connection to PICASSO to Q1/Q2 2023 with a prop
Slide 10: Local mitigation measure
Recall Workshop of 19 September 2023 Local mitigation measure ▪ After discussion with the CREG, Elia proposes to define a local price cap on the Contracted aFRR Energy Bids ▪ The price cap would have a temporary character. The need to maintain a price cap would have to be periodically re-justified,
Slide 11: Local mitigation measure
Recall Workshop of 19 September 2023 Local mitigation measure ▪ The price cap would: ➢ Secure at least the contracted (=dimensioned) volume ➢ Mitigate the risk of inefficient dispatch where assets with low reservation costs and high activation costs are activated several times a day, without excludi
Slide 12: Combination of local price cap on contracted bids and elastic demand
Recall Workshop of 19 September 2023 Combination of local price cap on contracted bids and elastic demand Additional liquidity on aFRR-Platform Demand must be inelastic Demand can be elastic or inelastic As Elia’s contracted volume currently corresponds to the dimensioned Free bids in Belgium can ha
Slide 13: A brief overview of a not so brief history
A brief overview of a not so brief history 28/9/2022 October 2024 WG BAL approves Targeted 22/11/2021 compromise solution to 2/2/2024 connection to WG BAL decision to perform an observation round prior to connect to PICASSO All TSO’s submit the PICASSO connection to PICASSO to Q1/Q2 2023 with a prop
Slide 14: Proposal for the local rules for the application of the elastic aFRR demand
Proposal for the local rules for the application of the elastic aFRR demand
Slide 15: Regulatory framework – Proposed amendments to the aFRR IF
Regulatory framework – Proposed amendments to the aFRR IF Art. 2 “‘elastic aFRR demand’ is a TSO demand for activation of a standard aFRR balancing energy product bid of which the satisfaction depends on the aFRR cross-border marginal price;” “‘inelastic aFRR demand’ is a TSO demand for activation o
Slide 16: Local rules to define the volume of the (in)elastic aFRR demand
Local rules to define the volume of the (in)elastic aFRR demand Total aFRR No Yes demand > dimensioned Example: total aFRR Example: total aFRR need demand = 50 MW demand = 200 MW below the dimensioned need Set inelastic above the dimensioned need aFRR • Inelastic aFRR demand = Example: inelastic dem
Slide 17: Elia's proposal to define the volume of the (in)elastic aFRR demand
Elia’s proposal to define the volume of the (in)elastic aFRR demand*,** 𝑡𝑜𝑡𝑎𝑙 𝑎𝐹𝑅𝑅 𝑑𝑒𝑚𝑎𝑛𝑑 𝐼𝑛𝑒𝑙𝑎𝑠𝑡𝑖𝑐 𝑎𝐹𝑅𝑅 𝑑𝑒𝑚𝑎𝑛𝑑 = min ቊ Note: with aFRR dynamic 𝑑𝑖𝑚𝑒𝑛𝑠𝑖𝑜𝑛𝑒𝑑 𝑎𝐹𝑅𝑅 𝑛𝑒𝑒𝑑 dimensioning, this volume could vary from day to day 0 𝑒𝑙𝑎𝑠𝑡𝑖𝑐 𝑎𝐹𝑅𝑅…
Slide 18: Elia's proposal to define the price threshold of the elastic demand
Elia’s proposal to define the price threshold of the elastic demand Elia proposes to set the price threshold for elastic demand to +/- 1.000 €/MWh ✓ Ensures consistency with the temporary bid price cap for contracted energy bids ✓ Mitigates the risk of high prices coherent with the 2022 Position of
Slide 19: Impact of the proposal for the application of elastic demand
Impact of the proposal for the application of elastic demand
Slide 20: Elastic demand – illustrations
Elastic demand – illustrations Price Price (€/MWh) ATC (€/MWh) TSO A TSO B 10.000 €/MWh 1.000 8.000 € 500 € 100 € 80 €/MWh 200 €/MWh 300 €/MWh 120 150 180 Volume 150 250 400 450 Volume (MW) (MW) • Illustrations assume upward demands from TSO A and TSO B and the LMOLs illustrated above • TSO A (Belgi
Slide 21: Illustration 0: benefits from the connection to PICASSO
Illustration 0: benefits from the connection to PICASSO aFRR demand curve TSO A w/o Price elastic demand (€/MWh) No ATC restrictions Price (€/MWh) TSO A TSO B 10.000 €/MWh 500 € Demand = 200MW Demand = 300MW 100 € 80 €/MWh 200 €/MWh 300 €/MWh 120 150 180 Volume 150 250 400 450 Volume (MW) (MW) Witho
Slide 22: Illustration 0: benefits from the connection to PICASSO
Illustration 0: benefits from the connection to PICASSO aFRR demand aFRR demand curve TSO A with curve TSO A w/o elastic demand elastic demand Price (€/MWh) No ATC restrictions Price (€/MWh) TSO A TSO B 10.000 €/MWh 1.000 8.000 € 500 € Demand = 200MW Demand = 300MW 100 € 80 €/MWh 200 €/MWh 300 €/MWh
Slide 23: Key take-aways
Key take-aways When ATC is available, the connection to the aFRR Platform provides opportunities in terms of both costs and regulation quality 23
Slide 24: Illustration 1: high demand from TSO A while no ATC is available
Illustration 1: high demand from TSO A while no ATC is available (= main risk identified in the observation round) aFRR demand curve TSO A w/o Price elastic demand (€/MWh) ATC = 0 MW Price (€/MWh) TSO A TSO B 10.000 €/MWh 8.000 € 500 € Demand = 170MW Demand = 200MW 100 € 80 €/MWh 200 €/MWh 300 €/MWh
Slide 25: Illustration 1: high demand from TSO A while no ATC is available
Illustration 1: high demand from TSO A while no ATC is available (= main risk identified in the observation round) aFRR demand aFRR demand curve TSO A with curve TSO A w/o Price elastic demand elastic demand (€/MWh) ATC = 0 MW Price (€/MWh) TSO A TSO B 10.000 €/MWh 1.000 8.000 € 500 € Demand = 170MW
Slide 26: Illustration 2: high demand from TSO A & B while ATC is available
Illustration 2: high demand from TSO A & B while ATC is available aFRR demand curve TSO A w/o Price elastic demand (€/MWh) No ATC restrictions Price (€/MWh) TSO A TSO B 10.000 €/MWh 8.000 € 500 € Demand = 220 MW Demand = 380 MW 100 € 80 €/MWh 200 €/MWh 300 €/MWh 120 150 180 Volume 150 250 400 450 Vo
Slide 27: Illustration 2: high demand from TSO A & B while ATC is available
Illustration 2: high demand from TSO A & B while ATC is available aFRR demand aFRR demand curve TSO A with curve TSO A w/o Price elastic demand elastic demand (€/MWh) No ATC restrictions Price (€/MWh) TSO A TSO B 10.000 €/MWh 1.000 8.000 € 500 € Demand = 220MW Demand = 380MW 100 € 80 €/MWh 200 €/MWh
Slide 28: Key take-aways
Key take-aways When ATC is available, the connection to the aFRR Platform provides opportunities in terms of both costs and regulation quality The application of elastic demand as proposed by Elia (in combination with the bid price cap for contracted energy bids) is effective in mitigating the r
Slide 29: Illustration 3: low demand from TSO A & high demand TSO B
Illustration 3: low demand from TSO A & high demand TSO B Price (€/MWh) No ATC restrictions Price (€/MWh) TSO A TSO B 10.000 €/MWh 8.000 € 500 € Demand = 50MW Demand = 550MW 100 € 80 €/MWh 200 €/MWh 300 €/MWh 120 150 180 Volume 150 250 400 450 Volume (MW) (MW) Inelastic demand TSO A + TSO B (= total
Slide 30: Illustration 4: high demand from TSO A & TSO B
Illustration 4: high demand from TSO A & TSO B aFRR demand curve TSO A w/o Price elastic demand (€/MWh) No ATC restrictions Price (€/MWh) TSO A TSO B 10.000 €/MWh 8.000 € 500 € Demand = 400MW Demand = 500MW 100 € 80 €/MWh 200 €/MWh 300 €/MWh 120 150 180 Volume 150 250 400 450 Volume (MW) (MW) Withou
Slide 31: Illustration 4: very high demand from TSO A & TSO B
Illustration 4: very high demand from TSO A & TSO B aFRR demand aFRR demand curve TSO A with curve TSO A w/o Price elastic demand elastic demand (€/MWh) No ATC restrictions Price (€/MWh) TSO A TSO B 10.000 €/MWh 8.000 € 500 € Demand = 400MW Demand = 500MW 100 € 80 €/MWh 200 €/MWh 300 €/MWh 120 150 1
Slide 32: Key take-aways
Key take-aways When ATC is available, the connection to the aFRR Platform provides opportunities in terms of both costs and regulation quality The application of elastic demand as proposed by Elia (in combination with the bid price cap for contracted energy bids) is effective in mitigating the r
Slide 33: Planning & next steps
lia Planning & next steps
Slide 34: Planning and next steps
ACER Decision Elastic Demand (expected) Aug 2 Formal submission BR Targeted Approval BR Submission PfA T&C BSP aFRR Aug 30 Targeted approval T&C BSP aFRR Go-Live aFRR design evolutions (and aFRR dynamic dimensioning) Workshop elastic demand Informal submission BR Feb 29 Jun 17 Go-live connection PIC