Elia Group SA/NV · EURONEXT:ELI
Elia Group SA/NV — Investor Presentation (October 2015)
65 slides from Elia Group SA/NV's investor presentation, Oct 12, 2015
Slide 1: Task Force Balancing
Task Force Balancing October 12th, 2015
Slide 2: Agenda
Agenda 1. R1 Cross-Border with Germany 2. Bidding Obligations R1 & R2 3. R2- wind: conclusions of project 4. Publications 2016 5. R3 STS 2016: status update 6. ICH new design 2017 7. Amendment of Billable Margin calculation
Slide 3: Agenda
Agenda 1. R1 Cross-Border with Germany 2. Bidding Obligations R1 & R2 3. R2- wind: conclusions of project 4. Publications 2016 5. R3 STS 2016: status update 6. ICH new design 2017 7. Amendment of Billable Margin calculation
Slide 4: Weekly Tendering of FCR1 & aFRR2 via STAR and XB-FCR
Weekly Tendering of FCR1 & aFRR2 via STAR And XB – FCR cooperation with PRL3 Project “R1XBGE” – TF Balancing 12/10/2015 1 Frequency Containment Reserves or ‘primary reserves (R1)’ 2 Automatic Frequency Restoration Reserves or ‘secondary reserves (R2)’ 3 PRL = “Primärregelleistung” with Germany (D),
Slide 5: R1XBGE project
Weekly STAR & XB-FCR Cooperation “R1XBGE” project 1. Context & Background 2. FCR-Tender Design Proposal 3. Key Design Issues 4. Next Steps R1XBGE / Brussels, 12.10.2015 / Pieter-Jan Marsboom 5
Slide 6: Context & background – R1XBGE
1. Context & background – R1XBGE FCR-Tendering STAR - BE PRL – DACHNL* Anno 2015 - ELIA (Belgium - BE) - GE-TSO’s (Germany - GE) - TenneT (Netherlands - NL) - Swissgrid (Switzerland - CH) - APG (Austria - AU) FCR-demand 83MW 783MW = 578(GE) + 67(NL) + 71(CH) + 67(AU) Tendering Frequency & Monthly We
Slide 7: Context & background – FCR Cooperation
1. Context & background – FCR Cooperation Belgian FCR provided mainly by gas-fired powerplants => hence prices are clean spark spread (CSS) driven: If CSS>0; FCR-prices in range of PRL DACHNL & potentially even lower If CSS<0; higher FCR-prices expected PRL DACHNL common procurement on weekl
Slide 8: FCR Tender Design Proposal – R1XBGE
2. FCR Tender Design Proposal – R1XBGE Motivation for FCR-cooperation: XB-FCR-cooperation allows to foster an increase of overall competition & volume liquidity so as to further reduce total procurement costs. The overall FCR-market size for both Belgian & PRL-DACHNL bidders will increase. Align
Slide 9: FCR Tender Design Proposal – R1XBGE
2. FCR Tender Design Proposal – R1XBGE German/Swiss/ French BSP’s Belgian BSP’s Dutch BSP’s Austrian BSP’s FR-bids BE-bids NL-bids GE-forecast GCT = Tuesday 9h 58MW divisible GCT =Tuesday 9h FCR-BE = 83MW @x€/MW/h FCR-NL = 29MW Timeline BE-bids GE/CH/AU-bids NL-bids Legend GCT = Tuesday 15h Weekly F
Slide 10: FCR Tender Design Proposal – R1XBGE
2. FCR Tender Design Proposal – R1XBGE (1) Short-term FCR-cooperation Implementation of a partial merge with PRL-DACHNL common FCR-tender, similarly as the a.o. the Netherlands, this implies: Organization of a weekly local Belgian FCR-tender first (as-is STAR: with aFRR & local FCR not std produ
Slide 11: Key Design Issues – R1XBGE
3. Key Design Issues – R1XBGE Main design contours are identified, however project implementation is subject to key issues illustrated here below: Move from monthly to weekly procurement – market & TSO feasibility assessment Operational impact analysis on-going Initial Belgian providers’ consu
Slide 12: Next Steps – R1XBGE
4. Next Steps – R1XBGE Feedback requested <28/10/2015 via pieterjan.marsboom@elia.be Request for providers to analyze & give feedback on the following specific points: 1. Pro’s & con’s for both weekly STAR as well as the XB procurement 2. Listing of pricing & organisational impacts Concrete (q
Slide 13: Further developments in R1
Further developments in R1 ELIA is investigating the feasibility to develop R1 asymmetric delivered from DSO-access points in 2016. FCR-Cooperation / Brussels, 27.03.2015 / Pieter-Jan Marsboom 13
Slide 14: Agenda
Agenda 1. R1 Cross-Border with Germany 2. Bidding Obligations R1 & R2 3. R2- wind: conclusions of project 4. Publications 2016 5. R3 STS 2016: status update 6. ICH new design 2017 7. Amendment of Billable Margin calculation
Slide 15: Bidding obligations
Bidding obligations 1. Basic principles 2. Timing
Slide 16: Bidding Obligations R1 & R2: Basic Principles
Bidding Obligations R1 & R2 Basic Principles 1. Obligation 1 – Smallest offered volume: The smallest offered volume should not exceed a maximum value 2. Obligation 2 – Volume Granularity: When sorting the Capacity Bids in terms of offered volume, the difference between 2 Capacity Bids can be maximum
Slide 17: Bidding Obligations R1 & R2
Bidding Obligations R1 & R2 4 Obligations 1. Obligation 1 – Smallest offered volume 2. Obligation 2 – Volume Granularity 3. Obligation 3 – Base offer available: When offering both in Peak and Long Offpeak, the Supplier must submit a BASE Capacity Bid, for a volume that is at least minimum of the max
Slide 18: Bidding Obligations R1 & R2
Bidding Obligations R1 & R2 4 Obligations 1. Obligation 1 – Smallest offered volume 2. Obligation 2 – Volume Granularity 3. Obligation 3 – Base offer available: 4. Obligation 4 - Total cost check: The total cost (unit price * volume) of the smallest volume that can be retained resulting from a Capac
Slide 19: Bidding Obligations R1 & R2
Bidding Obligations R1 & R2 4 Obligations, only applicable to BASE offers 1. Obligation 1 – Smallest offered volume can be maximum X MW 2. Obligation 2 – Volume increments: Increase offered volume by a maximum volume X MW 3. Obligation 3 – Base offer available 4. Obligation 4 - Total cost check • Of
Slide 20: Timing
Timing TF balancing —_@ Update Bidding Instructions Modification of Bidding — | instructions R1 R2 ome 2018 Go Live new bidding © nov 2015 instructions Monitoring bidding rr 10 2015 - 112016 instructions ppaate GFA R1, R2, —_ EE 10 2015 Consultation GFA Rt, ME o> 2015 = Signature updated GFA PE (20
Slide 21: Agenda
Agenda 1. R1 Cross-Border with Germany 2. Bidding Obligations R1 & R2 3. R2- wind: conclusions of project 4. Publications 2016 5. R3 STS 2016: status update 6. ICH new design 2017 7. Amendment of Billable Margin calculation
Slide 22: Delivery of secondary control (aFRR) by wind farms
Delivery of secondary control (aFRR) by wind farms TF Balancing 12/10/2015 Jan Voet
Slide 23: Agenda
Agenda Introduction to aFRR- Wind technical pilot project Ancillary services in Belgium • Context • aFRR product aFRR provision by windfarms • Concept & challenges • Technical results • Relevance of forecasting & market results General conclusions
Slide 24: aFRR-Wind project: technical pilot project
aFRR- Wind project: technical pilot project Involved parties Owner wind farm Manufacturer BRP TSO of Estinnes wind farm R2 contract 24 Scope of pilot • Check technical capability of wind farms to provide downward aFRR project • Focus on downward regulation due to loss of green certificates • Perform
Slide 25: Agenda
Agenda Introduction to aFRR- Wind pilot project Ancillary services in Belgium • Context • aFRR product aFRR provision by windfarms • Concept & challenges • Technical results • Relevance of forecasting & market results General conclusions
Slide 26: Ancillary services in Belgium: context (1)
Ancillary services in Belgium: context (1) Keeping the balance between generation and offtake Large scale integration of intermittent renewables represents a balancing challenge… … intermittent renewables CAN BE flexible and With increasing volumes of renewables in the grid should be part of the sol
Slide 27: Ancillary services in Belgium: context (2)
Ancillary services in Belgium: context (2) TSO contracts reserve capacity for balancing its control area Fast • Primary reserves (Frequency Containment Reserves, FCR) • Secondary Reserves (Automatic Frequency Containment Reserves, aFRR) Slow • Tertiary Reserves (Manual Frequency Restoration Reserves
Slide 28: Ancillary services in Belgium: aFRR product
Ancillary services in Belgium: aFRR product Pref power profile (defined by producer for own purposes) Elia aFRR setpoint (delta_P) power profile + • Providers must deliver the Elia aFRR delta_P setpoint (power profile) on top of their Pref (for own purposes) • Elia aFRR delta_P setpoint • is sent ev
Slide 29: Agenda
Agenda Introduction to aFRR- Wind pilot project Ancillary services in Belgium • Context • aFRR product aFRR provision by windfarms • Concept & challenges • Technical results • Relevance of forecasting & market results General conclusions
Slide 30: aFRR-delivery by wind: concept
aFRR- delivery by wind: concept Baselining: for a windfarm the Pref isn’t known Balancing control mechanism: • Continuous de-rating towards Pref (starting point for regulation) with high forecasting reliability Active Available Power (AAP) mechanism: • Calculation of the Pref on the basis of power i
Slide 31: aFRR-delivery by wind: challenges
aFRR- delivery by wind: challenges Loss of green certificates in case of downward curtailment Intermittency of wind production / reliability of R2 nominations Curtailment on specific windmill can impact (increase) production of other windmills in the park (windfarm effect) 8 m/s 10 m/s
Slide 32: aFRR-delivery by wind: challenges
aFRR- delivery by wind: challenges Quality of delivered service is determined by both the AAP error and the control error which are difficult to identify Pilot project developed methodology to verify AAP quality under stable wind conditions in case of curtailment (wind farm effect) 32
Slide 33: aFRR-delivery by wind: technical results
aFRR- delivery by wind: technical results AAP Infeed Error Elia aFRR setpoint Wind farms are highly flexible (low Pmin, high ramp rates,…) and can follow a set-point • Promising performance of wind farm of Estinnes in providing aFRR- service to Elia AAP quality, both under curtailed and non-curtaile
Slide 34: aFRR-delivery by wind: relevance of forecasting
aFRR- delivery by wind: relevance of forecasting TSOs require a reliable delivery of aFRR- service • Ex-ante contracted aFRR- volume on a wind farm should be effectively available in RT • Correction based on Production forecast observed and expected inaccuracies (unstable clime production conditions
Slide 35: Relevance of forecasting & market results
Relevance of forecasting & market results • High reliability of D-1 nominations: up to 99% reliable nominations for single windfarm Temporary halted (no technical reason) 35
Slide 36: Bidding gate closure time & product resolution
Bidding gate closure time & product resolution Today in Belgium: • Monthly procurement of aFRR capacity (obligation to submit aFRR energy bids in D-1) • Product resolution: peak and long offpeak (incl. WE) • GCT for aFRR energy bids: day-1 at 15h00 Pilot project shows that higher procurement cycle a
Slide 37: Different cost structure for wind farms to provide aFRR (1)
Different cost structure for wind farms to provide aFRR (1) • Focus on downward aFRR capacity (loss of green certificates & sold energy to market) for delivery of upward mFRR capacity • Energy based support scheme acts as barrier for participation of wind farms in aFRR- capacity Loss of green certif
Slide 38: Different cost structure for wind farms to provide aFRR (2)
Different cost structure for wind farms to provide aFRR (2) • Energy based support scheme acts as barrier for participation of wind farms in aFRR- capacity Loss of green certificates cannot (under current market conditions) be priced in in aFRR energy price. • Potential solution: merit order activat
Slide 39: Agenda
Agenda Introduction to aFRR- Wind pilot project Ancillary services in Belgium • Context • aFRR product aFRR provision by windfarms • Concept & challenges • Technical results • Relevance of forecasting & market results General conclusions
Slide 40: Technical pilot project: general conclusions
Technical pilot project: general conclusions Wind farms are highly flexible and can provide ancillaries to the grid • High ramping / low minimum power / … AAP method very promising to ensure efficient delivery of aFRR capacity by windfarms • Pilot project elaborates some testing methods for AAP qual
Slide 41: Agenda
Agenda 1. R1 Cross-Border with Germany 2. Bidding Obligations R1 & R2 3. R2- wind: conclusions of project 4. Publications 2016 5. R3 STS 2016: status update 6. ICH new design 2017 7. Amendment of Billable Margin calculation
Slide 42: Publications
Publications Total offered volume per Publication of auction results: new column reserve product is the sum of the maximal offered volume (base) of all suppliers. Tendering & Delivery Reserve Reserve Total Average Total Tariff Period Symmetry Generation/ Contracting Period Type Product Contracted Pr
Slide 43: Publication of Frequency / R1 data
Publication of Frequency / R1 data Data of the frequency and R1 will be downloadable on the website • Data will be provided on a 10 second basis • Main objective is to enable future providers of primary reserves to elaborate a business case based on historical values • Data will be uploaded by Elia
Slide 44: Minute publication of SI and NRV
Minute publication of SI and NRV Publication of SI and NRV data in real-time on minute-basis (within the quarter-hour). • Main objective is to increase transparency and stimulate reactive balancing by ARPs • Additional publication to the current system imbalance • Table with detailed information of
Slide 45: Agenda
Agenda 1. R1 Cross-Border with Germany 2. Bidding Obligations R1 & R2 3. R2- wind: conclusions of project 4. Publications 2016 5. R3 STS 2016: status update 6. ICH new design 2017 7. Amendment of Billable Margin calculation
Slide 46: Short Term Sourcing R3
Short Term Sourcing R3 As European trends is to move towards short term sourcing and this could increase liquidity in the balancing market, the goal is to move to short term sourcing for balancing products in the next years. 2016 R3 tendering 770MW Volumes contracted in the yearly tendering = 700M
Slide 47: STS R3 Timeline
STS R3 Timeline Training sessions STAR Training session – “experienced STAR users” – 25/11/2016 – 13h00 till 15h00. • Introduction • Differences between R3 and R1/R2 • Bidding sheet assistance + Bidding obligations • Questions & Answers Training session – “new STAR users” – 26/11/2016 – 13h00 till 1
Slide 48: Calendar
Calendar Auction calendar R1/R2/R3 already online Grid data – extranet – STAR Tendering organised the week of the 15th (with exceptions) R3 auction will take place after R1/R2 tendering on Thursday No secondary round for R3 New version of the ‘auction rules, bidding instruction and manual’ w
Slide 49: Submetering
Submetering Applicable rules for GU participating in R3PD-submetering If you have a Delivery Point with submetering on the ELIA grid: 1. Introduce an offer request. If not already done, you are invited to introduce your offer request(s) without delay. 2. Please provide the needed information to ELIA
Slide 50: Activation of R3 DP
Activation of R3 DP Clarification of the contractual provisions Clarification needed of activation rules mail will be sent to all providers • R3 DP is a product with the specific characteristics : maximum 2hours activation, max number of activations 40/y or 8/m, 12 hours between two activations. •
Slide 51: Agenda
Agenda 1. R1 Cross-Border with Germany 2. Bidding Obligations R1 & R2 3. R2- wind: conclusions of project 4. Publications 2016 5. R3 STS 2016: status update 6. ICH new design 2017 7. Amendment of Billable Margin calculation
Slide 52: ICH Workshop
ICH Worshop Challenges ahead … Evolution of ICH product EU integration and evolution toward Short Workshop with industrials and term sourcing aggregators on product design (summer • EU trend to STS NC on balancing 2015). • Evolution of R1/R2 & partial R3 prod/DP to monthly • Objective to create mo
Slide 53: Main conclusion of the ICH workshops
Main conclusion of the ICH workshops • Product characteristics (SLA 2-4-8) + availability: The current product characteristics (average availability and drop to) will be maintained. However a review is needed when transiting to STS. • Activation price: Discussion on the possibility to have a free ac
Slide 54: ICH proposed product design
ICH proposed product design ICH currently designed as a yearly product • Small number of activation (4 or 12 per year) • Availability requirement on yearly basis to take into account seasonal/monthly/weekly trends A review of the product design is needed to enable monthly sourcing of ICH • Note that
Slide 55: ICH proposed product design - activations
ICH proposed product design - activations For monthly tendering design: change only the number of activations per month • SLA2: activation duration 2h & [new] max 4 activations/month & 24h between activation & total duration 8h • SLA4: activation duration 4h & [new] max 2 activations/month & 24h bet
Slide 56: ICH proposed product design - availability
ICH proposed product design - availability Change the availability requirements in order to enable monthly sourcing. AS IS: only yearly TO BE yearly + monthly Availability remuneration: based on average availability 1. Final counting: Comparison of « Average Power Available RM » and « Reference Po
Slide 57: ICH proposed product design - pool
ICH proposed product design - pool Assuming yearly and monthly tendering will take place, use the pool principle (identical to R3 DP product): • The access points are considered as part of one pool • The volume can vary each month depending on the monthly tendering results. The volume to be availabl
Slide 58: ICH proposed product design - pool
ICH proposed product design - pool One shedding limit for the pool (site 1+2) Additional change to enable pooling effect (alignment with R3 DP) Current formula base on one Shedding Limit Site1 Site2 Combo Site 1 + 2 Pref SL Rref Pref SL Rref Pref SL Rref Qh1 3 25 0 40 25 15 43 45 0 Qh2 50 25 25 40
Slide 59: ICH proposed product design – other changes
ICH proposed product design – other changes Proposal to change the activation price to free price • Current formula: max [€ 75,00 ; 108% Belpex] • Feedback workshop : industrial clients and aggregators favourable to a free activation price to better reflects the activation costs • In line with Europ
Slide 60: ICH proposed product design – other changes
ICH proposed product design – other changes Activation time • Current activation time is 3 minutes. This is one of the major characteristics of this product. • Most of industrials are able to fulfill this requirement. • This ensure a good quality for the system, especially when outages of nuclear un
Slide 61: Agenda
Agenda 1. R1 Cross-Border with Germany 2. Bidding Obligations R1 & R2 3. R2- wind: conclusions of project 4. Publications 2016 5. R3 STS 2016: status update 6. ICH new design 2017 7. Amendment of Billable Margin calculation
Slide 62: Problem definition
Problem definition I bid for BID 1 is no longer requested but still has an influence on IP causing too high Incremental Price if price of BID 1 is the marginal price This may induce an artificial price spike in the imbalance prices. Those imbalance prices will not reflect the selected bids of th
Slide 63: Proposals
Proposals In order to mitigate above risk, ELIA proposes, for manually activated bids with adjustment tail only, to no longer consider the price of the activated energy of the quarter hour(s) during which the adjustment tail occurs but to consider 1. the bidprice of the activated energy of the quart
Slide 64: Proposals
Proposals Today Last price – proposed solution Min (last & current price) Tail not valued 80 – 4000 – 130 80 – 130 – 130 80 – 130 – 130 80 –130 – 130 4000 does not give 80 4000 4000 correct signal 130 130 130 A 80 – 4000 – 60 80 – 80 - 60 80 – 60 - 60 80 – 60 - 60 4000 does not give correct signal 8
Slide 65: Many thanks for your attention!
Many thanks for your attention! ELIA SYSTEM OPERATOR Boulevard de l'Empereur 20 1000 Brussels +32 2 546 70 11 info@ elia.be www.elia.be An Elia Group company