How to market your flexibilities - Febeliec · If open automation systems and data connexion are available on site We want to build long-term partnerships with you The modularity

© Actility – Confidential – Under NDA 1

How to market your flexibilities

Making Things Smart


Actility and the smart grids

International expertise in telecommunication and automation

Mass automation (ETSI M2M, Low Power – Long range RF)

Deployment of over 10 000 000 Triple play subscribers for 80 operators WW (NetCentrex)

One of the most innovative actors in the energy sector

Online optimization – Predictive optimization

Working in collaboration with leading companies (energy, water, grid operator…)

A good knowledge of industrial processes

Understanding your operational constraints is a the heart of our systems


Balancing the grid is a critical issue

Forecast of production and consumption are usually wrong! P≠C

Source: www.elia.be


Renewable energies are a challenge

Installed capacity wind and PV Belgium [MW]

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Wind [MW] Total

Solar [MW] Total

A summer day in 2020, clear sky + variable wind

Negative prices dd 26-05-2012

Source: www.elia.be


€/M

Wh

WIT

HO

UT

Renew

able

s

€/M

Wh

M1

M1

Capacities in GW

demand

WIT

H R

enew

able

s

EE M2

6

petroleum gas

hard coal lignite nuclear

Effects on merit order on energy markets


Why introducing load flexibility?

When running less than ~200h/year, traditional

gas-fired plants are no longer profitable

Processes that can be adjusted become more

competitive (& environmentally friendly) :

… vary consumption by a certain amount of power (MW),

… within a certain reaction time (min),

… during a certain amount of time (min),

… for a certain number of times during a year,

… at a certain price (€).


Valuing your flexibilities with Smart DR

Smart DR is :

- An online tool to compute and control flexibilities (TVPP)

- A multi-market interface for flexibility bids (CVPP)

TVPP

• Calculate optimal

nominal schedule

• Calculate options

volumes

• Calculate options

marginal prices

AP

I w

ith

yo

ur

pro

cesses

CVPP

• Aggregate different

options

• Calculate optimal

bidding price

Ancillary

services

SPOT

markets

Imbalance

market

Back-testing


Ancillary services in Belgium

Primary reserve (production, consumption experiments)

Secondary reserve (140 MW)

Free R3 up/down bids (Non contractual R3 -> bid ladder)

Contractual tertiary reserve (production) (400 MW)

ICH Contractual tertiary reserve (consumption) (261 MW)

R3 dynamic profile (consumption on DSO grid) (50 MW)

Ord

er

of activation

Inter-TSO emergency reserve

Frequency

controlled

~7.5 mn

response time

(Freq tuning)

Tertiary

reserve

~15mn

response time


Valuation mechanisms for your flexibilities

Markets Maturity Type

Primary reserve (experimental) Y-1 -

Secondary reserve (production) Y-1 Capacity (32€/MW*h~300k€/MW*yr)

and energy up/down

SPOT markets D-1 H-2 Energy only

Bid ladder (to come) H-1 Energy only

AVPP (with supplier) H-1 Energy only

Pass through contract Real time Energy only

Interruptibility tender (ICH) Y-1 Capacity and energy

R3 dynamic profile (2014) Y-1 Capacity

Many opportunities already exist to make the most out of your flexibilities


CAPACITY DRIVEN

MARKETS

- Participation motivated by capacity fee.

- Long term commitment which requires visibility

- Initially targeted to production, but can be adapted to « simple »

processes with long term visibility

- Solves peak power issue, but not the renewable issue

- Price formation not always public

- Political drive : lobbying for industrial competitiveness through

« boosted » capacity fees in many countries


Valorization on ICH mechanism

3 types of annual commitment format (TSO connected sites only)

A2 12 activations max for 2h max (max 16h total)



3 min to answer (curtailment of load) to a sollicitation


Valorization on R3 Dynamic Profile (2014)

One annual commitment format

40 activations maximum per year

2h maximum per activation

12h minimum between two activations

15 min to answer a sollicitation


Valorization on R3 Dynamic Profile

Availability (capacity) payment (€/MW) (tendering parameter)

DSO and TSO connected sites eligible

100% availability required (checked on every 15min timestep by ELIA)

Remuneration of activated energy within the capacity fee (capacity only mechanism)


ENERGY DRIVEN

MARKETS

- Participation motivated by arbitrage gains, up and down

- Very dynamic, adapted to most processes (no need for long

term visibility)

- A game changer for many industries (water, negative cold…)

- Price formation by audited open markets : transparency

- Technology driven : solves renewable and peak power issues.

Arguably THE direction of smartgrids… but high barrier to entry

(requires algorithms and IT)


Monetization of flexibility via pass-trough

contracts

Belgium uses a single marginal pricing (SMP) system for

imbalances between nominations and real consumption

Situation for

every 15mn

Grid pays for upward energy

(lack of power)

Grid sells cheap power

(excess of power)

Consumption

above forecast

Profit summation decreased by

SMP*excess energy

Profit summation increased by

SMP*excess energy

Consumption

below forecast

Profit summation increased by

SMP*curtailed energy

Profit summation decreased

by SMP*curtailed energy


The role of the ARP

Real consumption

FUTURES ENDEX baseload blocks

MWh

t

Negative

imbalances


How to profit from energy markets

1/ Understand the evolution of electricity prices at

various maturities

2/ Compute optimal load shifting to perform

long/short arbitrage


Energy sourcing prices for hour H

Intraday

H-45mn

Intraday

H-x closure

D-1 spot > 1 day

Intraday

H-x Intraday

H-x

$LT(hour) $D-1(hour) $H-x(hour) $last(hour)

Long term

sourcing

price

Long term

sourcing

price

Spot J-1 price

Long term

sourcing

price

Spot J-1 price

Intraday H-x

Intraday H-y

Intraday last

D-1 trade based

on D-1 forecast

H-45mn trade based

on last forecast

Long term

sourcing

price

Spot J-1 price

Intraday H-x

Intraday H-y

H-x trades based

on H-x forecasts

H-x trades based

on H-x forecasts

H

Optimization with

Smart-LS

Optimization with

Smart-LS


Life cycle of a downward adjustment

(1) Nomination

FUTURES baseload blocks

MWh

t

Optimal curve

computed by

Smart-LS



(2) Adjustment and optimal compensation

Decision to adjust

downward now (10am)

Marginal cost : SMP(now)


MWh

t

Forecast of compensation at 8pm

Marginal gain : $spot(8pm)

Smart-DR optimization:

Prediction of unbalance

Profit/risk analysis

Smart-DR

dynamically

recomputes

optimal future

nominations


Smart-DR balancing trend forecast

Probability of upward

balancing trend Actual regulation

volume



(3) Complete gain analysis of D/R cycle

Decision to adjust

downward now (10am)

Marginal cost : SMP(now)


MWh

t


Marginal gain : $spot(8pm)

Overall gain : α.$spot(8pm)-SMP(now)

If unbalance direction is guessed correctly, average

spread SMP versus spot about 10€/MWh

Maybe we can compensate more

favorably on adjustment market…

with probability (1-α)

This is the last

moment for adjusting


Life cycle of an upward adjustment

(planned compensation case)

Decision to adjust upward now

(10am)

Marginal gain : SMP(now)


MWh

t


Marginal cost : $spot(3pm)

Overall gain : SMP(now)-α.$spot(3pm)

If unbalance direction is guessed correctly, average

spread SMP versus spot about 10€/MWh


Financial gains over a year

Downward adjustments Upward adjustments

α.$spot(peak)-SMP(now) SMP(now)- α.$spot(offpeak)



Adj_MWh*(avgSMP_up-avgSMP_dn + α.($spot(peak)-$spot(offpeak))

Smaller αlarger

adjustement volume Ideal for 24h compensation

delay, get to 0 if no

compensation delay flex


Carbon gains : positive externalities not yet

valued in Belgium

Sell energy at peak :

Decrease need of marginal

power at peak :

high CO2/kWh

Buy energy at off-peak mix :

low CO2/kWh

Positive externalities :

CO2, cost of grid losses…

about 15-25€/MWh ?


Smart DR

Po

wer

Nomination vs Real Consumption Dynamic optimization of imbalances

Nomination

Real consumption

-150

-100

-50

0

50

100

1 7 13 19 25 31 37 43 49 55 61 67 73 79 85 91

Forecast of balancing situation and prices

Imbalance prices


Notes on our business model

Your best interest is ours Our business model is based on gain sharing : we only earn money if you do

Full transparency on flexibility revenues We are fully transparent on what we earn and what you earn.

IT developments to interface your systems are at our expense If open automation systems and data connexion are available on site

We want to build long-term partnerships with you The modularity of our solutions allows us to adapt to the evolution of your own processes


Thank you for your attention!

Actility / Enerflexy

Pierre Verbruggen ([email protected])

+32 475 25 47 28

mailto:[email protected]

Documents

How to market your flexibilities - Febeliec · If open automation systems and data connexion are available on site We want to build long-term partnerships with you The modularity