April 15 Stockholm Arlanda airport - Nordic Regional · Baltic countries Central West Europe (Germany, Belgium, Netherlands, France) Great Britain Poland Russia (Import/export capacity

Nordic FB Stakeholder

Group meeting

April 15

Stockholm Arlanda airport

http://www.fingrid.fi/en/

Agenda 1. Welcome and tour de table (9.00-9.20)

2. Objective and agenda (9.20-9.30)

3. Status update of the Nordic FB project (9.30-10.00)

4. Presentation of some FB capacity calculation and allocation examples (10.00-11.00)

5. Coffee break (11.00-11.20)

6. Presentation by the NRAs (11.20-11.30)

7. Presentation on the CNTC approach (11.30-12.00)

8. Presentation on the impact assessment and CCM proposal (12.00-12.30)

9. Lunch (12.30-13.30)

10. Feedback from Stakeholders on the market information tool and set out actions (13.30-14.30)

11. Step-by-step walk through the FB and CNTC process (14.30-15.00)

12. Open discussion (15.00-15.30)






5. Coffee break (11.00-11.20)




9. Lunch (12.30-13.30)









5. Coffee break (11.00-11.20)




9. Lunch (12.30-13.30)





The Nordic Flow Based Project

Status

April 15 - Arlanda

[email protected]


Why does FB make a difference?

All flows induced by commercial exchanges, including transit flows, are controlled by the market mechanism. Transit flows are not controlled by the market mechanism in (C)NTC

No need to "hold back" capacity in FB due to uncontrolled and uncertain commercial transit flows – More of the grid capacity might be offered to the market

The TSO does not have to prioritize where to assign capacity in advance of the market solution due to uncertainty – All technically feasible trade options are offered to the market

The market might be offered more commercial trade opportunities in FB than in (C)NTC provided an equal level of operational security

export

import

Transit flow


The scope has changed

1. The FB project has been given responsibility for the

CNTC prototype development, CNTC market simulation

and comparison to FB. A new WG4 has been established

to develop and manage this

2. A Nordic RSCI/RSC (Regional Security Coordination

Initiative) is being established.

The boundaries between the FB project and the RSCI in terms of

IT-development is currently not clear, including responsibility for the

development of the industrialized FB tool


Current main focus in the FB project

1. Make the FB parameter calculation, validation and market simulation process work continuously, and with sufficient accuracy:

1. Create the hourly common grid models Upload hourly IGMs

Merge IGMs to create CGMs

2. Determine available grid capacity Define hourly grid capacities (CNE-limits)

3. Calculate and validate the flow based parameters Calculate hourly PTDF matrixes

Verify the resulting hourly security domain and extract PX data

4. Perform the simulations and compare results Upload PX data and calculate hourly market equilibriums

Compare FB/NTC/CNTC market results

2. Develop a CNTC prototype tool based on the FB GSKs, Grid Model and CNEs

3. Define the FB specific requirements for an industrialized FB tool


Tooling issues

The hourly grid models are not of industry quality until the upcoming European CGM is ready. Mitigation actions have been put in place

Topology changes are necessary for creating a base case, but causes convergence problems in the prototype CGM Forecasting is not developed

FRM methodology is developed but not implemented

Remedial actions/system protection schemes are implemented


Dec. 2013

Oct. 2014

Aug 2015

Nov 2015

May 2016

March 2017

FB Project Roadmap

PFS

• Welfare estimates

• Road map FB

FS-I

• FB Methodology • Prel. Protot. tool • Economic

indicators

FS-II

• Final protot. tool • Market

assessment • SH communication

Project Phases

Timeline - CACM

Sept 2017

Prepare for implementation

• Internal and external market simulations • Improving the prototype FB tool • Prepare for an industrialized FB tool • Stakeholder acceptance

Implementation

• Parallel runs • Develop an industrialized FB tool • NRA Approvals and TSO agreements • Trained operational personnel • Final stakeholder acceptance

Oct 2015: Continuous FB market simulation

June 2016: Continuous CNTC market simulation

March 2017

March 2018: Parallel runs

Sep. 2013

Compare FB/NTC Compare FB/NTC/CNTC

CNTC

Uncertainty towards timings






5. Coffee break (11.00-11.20)




9. Lunch (12.30-13.30)





FB capacity calculation and

allocation examples

Nordic FB Stakeholder group -

April 15 2016, 9.00-15.30 (Stockholm Arlanda airport)

FBG


Content

Basic FB pricing principles

Simplified example calculation of price differences

Scope of market simulations

Case 1: 1st of January 2015 05:00-06:00



Basic FB pricing principles (1/3)

Same price coupling algorithm in both FB and NTC

MAX Welfare =

Subject to constraints

Consumer surplus

Producer surplus

Congestion revenue

Example of an exchange from a low price area to a high price area



FB constraints Power Transfer Distribution Factor (PTDF) -

indicates how much MWs are used by the net

positions resulting from the trades

Remaining Available Margin (RAM) - number

of MWs that can be used by the trades

PTDF matrix Area A (SE2) Area B (SE1) Area C (NO3) RAM

Line X 0,11 0,098 0,15 15

• An exchange of 1 MW from C to A uses (0,15 – 0,11)= 0,04 MW 15/0,04= 355 MW can be exchanged • An exchange of 1 MW from B to A uses (0,098 -0,11)= - 0,012 MW relieves the congestion on line X with 0,012 MW Each 1 MW between

B to A enables 0,3 MW (0,012/0,04) exchange from C to A

C

A

B



Equilibrium condition

Marginal Price A – Marginal Price B = (PTDFB – PTDFA ) x

Shadow price

For a solution to be optimal, this condition must be fulfilled

Uniform prices in FB

No congestion (or/and) shadow price equals zero

Same impact on CNE (usage of margin) same PTDF-value


Simplified example calculation of price

differences

Exchange from B to A: • the difference between the PTDFs is

-0,012 • the shadow price on line X is 100 €/MW • the price difference between area A and B

can then be calculated: • Marginal Price A – Marginal Price B =

(PTDFB – PTDFA ) x Shadow price = -0,012*100= -1,2 €/MWh

Exchange from C to A: • the difference between the PTDFs is 0,04 • the shadow price on line X is 100 €/MW • the price difference between area A and C

can then be calculated: • Marginal Price A – Marginal Price C =

(PTDFC – PTDFA ) x Shadow price = 0,04*100= 4 €/MWh

PTDF matrix Area A (SE2) Area B (SE1) Area C (NO3) RAM

Line X 0,11 0,098 0,15 15

C

A

B


Scope of market simulations

The Euphemia algorithm is used for market simulations

Geographical scope is limited to:

Nordic countries

Baltic countries

Central West Europe (Germany, Belgium, Netherlands, France)

Great Britain

Poland

Russia (Import/export capacity to Nordic and Baltic countries)

Belarus (Import/export capacity to Baltic countries)

Flow Based parameters available only for Nordic countries,

the HVDC interconnectors, and the CWE region

The market simulation results are only preliminary



Summary

General observations FB manages the west-coast cut more efficiently by taking into account the

impact on the specific CNE in the allocation

Import flow from continental Europe to Nordic synchronous system • SwePol link capacity set to 0

• Import on Baltic Cable reduced by TSOs

High wind power output (3 GWh in Denmark)

NTC results: SE and FI constitute one price area,

NO3 and NO4 constitute one price area,

NO1, NO5 and NO2 one price area,

DK constitutes one price area

FB results: Higher welfare in the FB solution

Different prices in all Nordic areas

More import from Germany, transit through Denmark


1 januari 2015

1st of January 2015 h 5



Summary

General observations This case shows how prices are affected in the whole Nordic region by a

CNE with a high shadow price

The FB approach manages to lower the prices compared to the NTC approach in most bidding zones due to a different way of managing the congestion

High consumption in Nordic countries (68 GW)

Low wind output 618 MW SE, 347 MW DK

Capacity on SwePol link from PL to SE4 set to 0

NTC results EE, DK2, FI, NO1, NO3, NO4, SE1-4 constitute one price area

NO2, NO5 and DK1 constitute one price area

FB results Higher welfare in FB solution

Different prices in all Nordic bidding zones

More import to Nordic region

High shadow prices on some CNEs


c 2016-01-21 16:00:00


Example price difference between areas

and impact of shadow prices

Explanation of price difference SE4-DK2 in FB

The price difference is explained by one CNE in Sweden with

a high shadow price

The price difference between DK2 and SE4 is 5,65 €/MWh

Small difference in usage of margin / difference in PTDFs

between DK2 and SE4

Price difference SE4 – DK2 = Shadow Price x difference in

PTDF = 5,65 = 770 x (-0.06479 – (-0.07212))

PTDF matrix PTDF DK2 PTDF SE4 Shadow price

CNE X

-0.06479 -0.07212 770.4


Thank you for your attention!






5. Coffee break (11.00-11.20)




9. Lunch (12.30-13.30)









5. Coffee break (11.00-11.20)




9. Lunch (12.30-13.30)





Comments to the process Nordic FB Stakeholder group meeting

Stockolm/Arlanda

15 April 2016

Mandate: Capacity Calculation project

• Follow closely TSOs work on Capacity Calculation, ref. CACM

• Process towards proposal Common Methodology • selection process starts 2016/17?

• Flow Based or Coordinated NTC?

• Prepare recommendations, decisions, etc. for NordREG Board

• ensure stakeholder involvement

• include CWE experience

Progress made on CM process

Basic elements of Nordic CNTC

CNTC roadmap

Short period for public parallell simulations CNTC/FB

Ensure SH involvement … ?

• When publication of simulations:

How to provide explanations of CNTC&FB models ..?

• Broader SH Forum? • Available on web site?

Thank you for your attention! Senior Advisor Toril Naustvoll Gange/NVE

[email protected]

mailto:[email protected]





5. Coffee break (11.00-11.20)




9. Lunch (12.30-13.30)





CNTC Approach

April 15'th, 2016, Stockholm

Nordic FB SG meeting


Content

1. Background

2. Framework

3. Pros and cons


Background (1/2)

According to CACM guideline, there are two permissible approaches for cross zonal capacity calculation Flow based (FB)

Coordinated net transmission capacity (CNTC)

FB approach should be used as a primary approach in regions where cross zonal capacity between bidding zones is highly interdependent

CNTC approach should only be applied in regions where cross zonal capacity is less interdependent and

it can be shown that FB approach would not bring added value


Background (2/2)

Flow Based project has been assigned to

develop a prototype version of the CNTC methodology

compare FB and CNTC approaches


Framework for CNTC approach

The aim is to develop current NTC approach to fulfill the requirements of CACM guideline for the purpose of comparing efficiency between FB and CNTC approaches

Same common grid model (CGM) as in FB

Same critical network elements (CNEs) as in FB Same level of operational security

Same max capacities, security margins, remedial actions etc

Cross zonal capacities calculated separately for each hour

Target: Highly automated CNTC calculation process


Pros and cons of CNTC approach

Pros: Requirements of CACM are addressed

Current operational experience is maintained

Simple • the use of NTC values and the values itself are well-

established

Cons: Some manual workload for operational planning






5. Coffee break (11.00-11.20)




9. Lunch (12.30-13.30)





The Nordic Flow Based Project

Approach to NRA approval of CCM and stakeholder

acceptance

FB Stakeholder Group meeting

April 15 - Arlanda


Dec. 2013

Oct. 2014

Aug 2015

Nov 2015

May 2016

March 2017

Re-cap FB Project Roadmap

PFS

• Welfare estimates

• Road map FB

FS-I

• FB Methodology • Prel. Protot. tool • Economic

indicators

FS-II

• Final protot. tool • Market

assessment • SH communication

Project Phases

Timeline - CACM

Sept 2017

Prepare for implementation

• Internal and external market simulations • Improving the prototype FB tool • Prepare for an industrialized FB tool • Stakeholder acceptance

Implementation

• Parallel runs • Develop an industrialized FB tool • NRA Approvals and TSO agreements • Trained operational personnel • Final stakeholder acceptance

Oct 2015: Continuous FB market simulation

June 2016: Continuous CNTC market simulation

March 2017

March 2018: Parallel runs

Sep. 2013

Compare FB/NTC Compare FB/NTC/CNTC

CNTC

Uncertainty towards timings

Increased focus on the delivery

for the CCM


The Nordic TSOs go beyond the legal

obligation

According to the CACM flow based shall be the default capacity

calculation methodology, cf. article 20,1

No legal obligation to demonstrate that FB would be more efficient

compared to the coordinated C-NTC approach and assuming the

same level of operational security in the concerned region.

However, the TSOs concerned shall still submit a proposal for capacity

calculation methodology including a detailed explanation for key parameters, cf.

article 21-25 of CACM

The Nordic TSOs go beyond the scope of CACM and provide for the

stakeholders and NRAs a throughout demonstration of FB

application, including an estimate for the socioeconomic benefit of

FB


Document for NRA approval and

stakeholder acceptance

Start working on a document for NRA approval and stakeholder acceptance

Purpose: To present the comparison of FB and C-NTC

What are we going to compare?

The socioeconomic surplus of FB, NTC and C-NTC

A stakeholder consultation documentation will be provided in due time


Draft (high-level) outline of the

explanatory document

Main chapters:

1. Introduction and executive summary

2. Legal obligation

3. Proposal of the proposed methodology

4. Description of the expected impact on the relevant

objectives of the Guideline/Network code (comparison

and impact assessment)

5. Timescale for the implementation

6. ANNEX (outcome of stakeholder consultation)


Preliminary content of the report

Objective: To demonstrate for NRAs and stakeholders the socioeconomic

benefit and the functioning of different capacity calculation methodologies (FB and C-NTC)

Content: The methodology of FB compared to C-NTC

Socioeconomic surplus: impact on PS, CS and CR

Impact on XB exchange, capacity and spot prices

Quantitative impact indicators: XB exchange, capacity and spot prices – including special features of flow based;

• Possible non-intuitive flows

• Impact on transit flow; from non-allocated to allocated flows

• Explicit treatment of Critical Network Element

Qualitative impact indicators: impact on other markets, bidding zone delimitation ……other?


Stakeholder contribution to report

We would like your feedback on

content!






5. Coffee break (11.00-11.20)




9. Lunch (12.30-13.30)









5. Coffee break (11.00-11.20)




9. Lunch (12.30-13.30)





Feedback received so far (1/4) - Fortum

Raimo Peltola

“The example idea that is on wishlist is good and why

comment also. Unfortunately no more ideas from me.”

# Need / idea / wish Explanation why this is useful for you

1 Publication of those FB constraints that are

limiting the trading opportunities for the

market

This is comparable to the NTCs published

today, and is needed as an input for the

price-forecasting tools that we use


Feedback received so far (2/4) - NPS


1 Hourly PTDF matrix Fundamental market parameter

2 Hourly RAM Fundamental market parameter

3 Hourly prices Important

4 Hourly max transfer capacity between

bidding areas

Getting an overview of transfer capacities

between bidding areas is difficult when

only looking at PTDFs. (Q: How is this

capacity calculated?)

5 Hourly flow between bidding areas after

market coupling

In order to give actors an overview of how

power flows between areas. Enables easier

comparison with ATC volumes (Q: How is

this calculated?)

6 Overview of GSK strategies used GSK strategies have a significant impact on

the calculated PTDFs. Should be reported

for transparency reasons.

7 UMM – Urgent Market Message reporting?

8 How will flowbased be handled in Intraday

market?


Feedback received so far (3/4) – Energy Norway


1 Publication of those FB

constraints that are

limiting the trading

opportunities for the

market

This is comparable to the NTCs published today, and is needed as an input

for the price-forecasting tools that we use

2 RAM and the

components to

calculate the RAM ie

Fmax, FRM, FAV og Fref

with special emphasis

on FRM og FAV

Compared to todays NTC we need to understand which RAMs are chosen for the relevant grid elements and how they are derived. If: 𝑅𝐴𝑀=𝐹𝑚𝑎𝑥−𝐹𝑅𝑀−𝐹𝐴𝑉−𝐹𝑟𝑒𝑓 Fmax (max allowed flow) and Fref (flow at zero net positions) are technical terms, which need to be known, but we need to understand how the FRM (the reliability margin) and the FAV (the ability to manually adjust the RAM) are chosen.

3 CNE In order to understand how the flow based grid model reacts to different

situations, we need to know about the critical branches, in which or

between which zones they are located, when and why they are activated.

We also need to understand the connection between UMMs (REMIT

relevant information) and the CNEs: otherwise information in the UMMs

about grid maintenance will be difficult to use to predict the impact of

grid maintenance on the market.


Feedback received so far (4/4) – Energy Norway


4 GSK We need to have a basic understanding of how the GSK for all price areas

are derived and which assumption they follow. Since the GSK will affect

how the PDTF will react to the different situations, producers should at

least have a basic idea how they were set up. Since producers understand

best their own production logic, TSOs would also profit from the

producers input to set up realistic GSKs.

5 PDTF We need the PDTF to model the system and the prices. We do not just

need a PDTF for the next day but hydropoducers need also to have a

certain idea about price developments in the next week/month/quarter

and season in order to plan their reservoir use correctly.

6 Max Net Position /

Price zone

Important to give all stakeholders information about TSOs calculations on

import/export capacities per price zone. This is necessary for the

optimization of the hydropower reservoirs.

7 Capacities forecasts

between price zones

Both short term and long term forecasts are important for water value

calculations for hydro power producers

8 NTC and Max NTC This will give all stakeholders the opportunity to evaluate the FB results.


Set out next steps






5. Coffee break (11.00-11.20)




9. Lunch (12.30-13.30)





FB & CNTC Process

Nordic Flow-based Project


Day Ahead (Conceptual)

RSCI RSCI PX

• IGM • CNEs • GSKs

• Merge CGM • Initial adjustments • Calculate

preliminary market domain

• Verify market domain

• Adjustments

• Final market domain

D-2 D-1

TSO TSO TSO TSO TSO TSO TSO TSO

NOTE! No conceptual difference between FB and CNTC!


High Level Process

CGM Capacity

Calculations

CNEs CNEs

CNEs CNEs

Domain Verification

PX

CNEs CNEs

CNEs IGM

CNEs CNEs

CNEs GSKs


Capacity Calculation Process (1/3)

• Complete national Grid Model • Forecasted states per hour

CNEs CNEs CNEs CNEs

• Calculated capacities for specific network elements

• Includes N-1, operator adjustments & dynamic calculations

TSOs RSCI (CCC)

CGM

• Merges IGMs to a CGM • Verifies integrity • Determines forecasted border flows

Merge

CNEs CNEs CNEs GSKs

CNEs CNEs CNEs IGMs

• Translation of net position changes into generation / load infeed



RSCI (CCC)

CGM

CNEs CNEs

CNEs CNEs

FB PTDF Calculations

• Calculates PTDF Matrix

• Removes redundant constraints

CNTC Calculations

• Creates NTC capacities from CNEs

Either/or

CNEs CNEs

CNEs GSKs



• Validate Domain • Make adjustments if

needed for Operational Security

TSOs RSCI (CCC)

Market Domain

Final Market Domain

• Finalize domain after adjustments

• Iterative process

PX

Market Clearing

Market Results


Flow-based PTDF Calculations

FB PTDF Calculations

FB domainNet balance A

Net balance B1000

1000

1500

-1000

-1500

-1500

1500

-1000

FB constraints

Constrained by B>C

Constrained by A>C

Constrained by B>A

Line Maximum

flow

Influence

from area A

Influence

from area B

Influence

from area C

A>B 1000 MW 33 % - 33 % 0

B>C 1000 MW 33 % 67 % 0

A>C 1000 MW 67 % 33 % 0

B>A 1000 MW - 33 % 33 % 0

C>B 1000 MW - 33 % - 67 % 0

C>A 1000 MW - 67 % - 33 % 0

A B

C

+100 MW

-100 MW

67 MW

33 MW


CNTC Calculations – Prototype Approach CNTC Calculations

Define CNE capacities (RAMs) and calculate

the security domain (The same as in Flow

Based)

Start with Max 𝑁𝑇𝐶𝐵𝑜𝑟𝑑𝑒𝑟

Define rules to adjust the Max 𝑁𝑇𝐶𝐵𝑜𝑟𝑑𝑒𝑟 to

fit the security domain

For both FB and CNTC, create rule to adjust

𝐹𝐴𝑉𝐶𝑁𝐸 to improve CNTCs if no relevant

overload-situations occur

Define rules for accepting some "unsecure"

NTCs in "unrealistic" market positions in

cases where "not accepting those NTCs" is

severely blocking relevant trades

Secure unsecure NTC values

Improve NTC values when possible

Allow for "unsecure" NTC in

"unrealistic" market situations if this

improve NTC values

1

2

3






5. Coffee break (11.00-11.20)




9. Lunch (12.30-13.30)





Stakeholder Information Platform

Nordic Flow-based Project


Content (1/2)

FB Project publishes content readable for all White Papers

Newsletters

Calculation Results

Presentations

Agendas/Minutes

Invitations

Schedules

…

Stakeholder Group collaborates on documents, not readable for regular users SHG Topics

Agendas/Minutes

Presentations

…


Content (2/2)

Discussion forum

FB Project moderates

Rules for approving/rejecting topics TBD

FB Project commits to answering questions within a

predetermined time


Proposed platform

SharePoint Project Site

Hosted by Energinet.DK

Many technical possibilities Different permissions/groups

Document sharing

Discussions

Calendar

Announcements

Surveys

Custom Pages

Etc.


End-of-Life

Decommissioning of platform at end of project

New, permanent Stakeholder Tool

Functionality TBD

The “Market Information Wish list” is important design input

Relevant information from transfers to new tool


Documents

April 15 Stockholm Arlanda airport - Nordic Regional · Baltic countries Central West Europe (Germany, Belgium, Netherlands, France) Great Britain Poland Russia (Import/export capacity