Nordic mFRR energy activation market project1st stakeholder webinarMay 25 2020

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Agenda

1. Introduction, Erika Zvingilaite (Energinet)

2. Background – The problem to be solved and the job to be done, Martin Møller (Energinet)

3. mFRR Energy Activation market – TSO milestones and stakeholders, Erika Zvingilaite (Energinet)

4. Memo on Process for activating products, Jesper Marklund (Svenska Kraftnät)

5. Products and processes – target model and parallel operation, Eivind Lindeberg (Statnett)

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Nordic Balancing Model Roadmap

The goals of the NBM program for updating Nordic balancing process:

• Facilitate increasing volumes of variable renewable energy in the electricity system

• Facilitate European market integration – common platforms

• Maintain operational security

• Ensure market efficiency and cost-effectiveness

NBM - The problem to be solved and the job to be done

Martin Møller

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Main problems to be solved

Nordic Frequency needs to be improved• More aFRR, higher volume and in all hours

Grid Congestions becoming more complex• Better control with flows and clear responsibilities• ACE based balancing, LFC controllers

EBGL and CEP implementation (legal compliancy)• Connection to EU Balancing Platforms• Change to 15 min ISP, new pricing rules…..

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The Generic European Balancing Market design

AOF

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Today’s operation in the Nordic part 1

Statnett SvK

NOISList

49.92 Hz

…The Frequency is low, we need to activate xx MW up for the next hour

…OK the cheapest bids on the NOIS list are located in NO2, NO5, SE2 and DK1…

….OK, but SE2 has internal congestions, we need to skip some bids, please activate 30 MW elsewhere...

….OK, we will inform Energinet to activate more bids in DK1…

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Today’s operation in the Nordic part 2

Statnett SvK

NOISList

49.98 Hz

…From 08:00-09:00 I calculated the regulating price to be xx in NO1, xx in NO2…. And xx in DK2

…I do not agree, because bid no 5 was activated for internal congestions…

Yes but in area SE4, you activated more 10 min later…….

1hour later OK – now we agree the price was x,y, and z

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A very Challenging Cocktail is arriving

new tools are needed in order to avoid the headache among the operators

• Nuclear and thermal powerplants are closing• Much more wind• Fast deployment of solar power• Lower bid sizes – more bids to consider • Shorter Gate Closure Time• From 24 to 96 gates per day• New borders and interconnectors• Prices to be published after max 30 min

How to optimise activationsacross 12 bidding zones ?

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The solution is more digitalisation – and establishment of an Activation Optimization Function (AOF)

New Nordic Balancing Model

AOF

The AOF is the key brick, and the one which generates most of the welfare

The AOF is able to optimize the bid selection, and can handle a very complex optimization problem.

Small bid sizes, more complex and linked bids and a fast calculation of prices

AOF uses 0100100 as input/output, hence other systems at the control center needs to be digitalized as well

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AOF – Activation Optimisation Function

AOF

Bid 3

Bid 1Bid 2

Bids from all areas, GCT T-25 min, 96 gates per day• Price, Euro/MWh• Volume, MW• Location• Potential constraints / links

Common Merit Order List

Balance need from the TSO’s

Instructions to TSO’s on what to activate

Gridmodel, with transmission capacities

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The job to be done

Bid filtering

From Frequency to ACE based inputmFRR: Proactive forecast per areaaFRR: LFC controllers

• Bid formats• 1 MW• Linked bids• 15 min• ….• …

New pricing rulesOne price modelNew imbalance settlement price, 15 min

Electronic activation

Big Data

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How to move from todays practise to tomorrows solution in a safe and economical way

Be careful not to ”destroy” the existing Nordic welfare of +200 mEUR/yearNordic TSO’s join the European Market, when all Nordic TSO’s are ready – not one by one

Huge changes are being proposed - Stepwise approach reduces risks but also creates a dilemmaDon´t do all the changes at the same time, but one by one and always directing towards the target model – reduce the technical risk

Be careful not to create “temporary” situations, with bad market design

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Nordic

Risk mitigation by starting with a Nordic AOF, that later will become a fall-back AOF

LIBRA AOF development for RR

8-10 TSO´s (Mainly South EU)

Go-live Q1,2020

Go-live Q3,2022

MARI will most likely be based LIBRA AOF software

MARI AOF development

EU mFRR platform

Nordic AOF dev. & stepwise impl.

Go-live xxxxxx

Nordic mFRR AOF

15 min ISP

Nordic AOF as Fall-back

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Will there be any difference between the Nordic and the MARI AOF – yes and noNordic is in fully control of a Nordic AOF development, and can tweak it to fit specific Nordic interim needs, so it can start assisting the operators already under the present market conditions

• ISP = 60 and 15 min• Gate Closure Time = 45 min• Utilize exiting settlement rules

Operators can learn how to send request to the AOF in a “safe” environment, where the system will not be affected by requests coming from outside the Nordic region

Bid filtering can be tested in a “safe” environment

By this, Market Participants will be gradually introduced to the new activation patterns

mFRR Energy Activation market – TSO milestones and stakeholders

Erika Zvingilaite

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Nordic Balancing Model Roadmap – mFRR energy activation market

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TSO milestones and stakeholder involvement

2020 2021 2022 2023

Preparation Stepwise implementation Parallel operation

Target model including:- Parallel operation

- Products and processes

IT implementation planfor market participants

Full scale electronic ordering

Activation optimisation function (AOF) gives

recommendations on bid selection

Automatic bid selection and ordering of mFRRscheduled activation

mACE based mFRR balancing

15 min Imbalance settlement – go life

Stakeholder meeting no. 1

Introduction

Stakeholder meeting no. 2

IT implementationParallel operation

Products and processes

Stakeholder meeting no. 3

Stakeholder meeting no. 4

Stakeholder meeting no. 5

Describing market design

Stakeholder consultation

Regulatory approval process

Stakeholder meeting no. 6

Stakeholder meeting no. 7

Start using Nordic AOFStart using Nordic AOF

Memo on Process for activating products

Jesper Marklund

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Memo – Process for activating products – overview

• Context: first version published autumn 2019 (link)

− When setting the NBM roadmap, the Nordic TSOs published a memo describing the TSO processes and mFRRproduct changes foreseen prior to Nordics joining MARI.

• Process: update memo when relevant

− As the NBM project continues, the memo can be updated taking into account new information and experience. Hence, the Nordic TSOs plan to publish the first update during the summer of 2020.

• Main updates: structure and detailed information

− The structure is somewhat updated. "Sub periods" prior to Nordics joining MARI are described in relatively high level. Focus is on detailing a number of topics.

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Memo – Process for activating products – content of 2020 Q2 update

• Introduction

• Current balancing process and product

• Sub periods in transition to Nordics joining MARI

− Preparation and stepwise implementation before parallel operation

− Parallel operation

− Period between 15 min ISP and joining MARI

• Important process and product changes (examples)

− Bid attributes, Period shift product, CIM bid format and other relevant market design features

Products and processes – target model and parallel operation

Eivind Lindeberg

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Step 1 Preperationfor parallel operation

Step 2

Parallel operation(new business model and 60-

minute ISP)

Step 3

15 minute ISP and preparation for

MARI

Step 4

Connection to European mFRRplatform (MARI)

Steps of target model

Work in progress

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Which market processes and products are included in the target model?

• mFRR –balancing energy market platform

− Scheduled activation

− Direct activation

− Process for bid filtering and determining locational activations for congestion

management (corresponding to today's special regulations) in advance of each ISP

• Period shift product in Norway and Sweden

− Need

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Which market processes and products are included in the target model?

• Open questions

− Need for process between Day-ahead market clearing and real time operational hour?

• Purpose: correcting cross-zonal flow (counter trade and redispatching)

• If needed can this be facilitated via XBID / ID auctions or is own product needed

− Need for faster direct activation than standard product?

• With larger incidents, the reaction time, platform time and activation of time of 12.5 minutes can be too slow to

• Many BSP able to react much faster than 12.5 minutes

− Need for product with longer FAT than standard product?

• Some BSPs will not comply with standard product. We need to assess how critical the access to these resources are and for what purposes they potentially can be used

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Step 1. Preparation for parallel operation

• In control centre

− Testing and training

• New IT tools, new roles and routines, fall back solutions

• Criteria and routines for moving from automatic to manual operation must be developed before parallel operation

• For BSPs

− Electronic ordering established

− New bid format and attributes

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Step 2. Parallel operation (new business model and 60-minute ISP)

• Purpose

− Giving time for new processes, organization and IT-systems to be used, adjusted and verified, before go-live of 15 min ISP and MTU.

• All activation processes planned for step 3 should be supported

− New solutions not necessarily used all the time, criteria are set for switching between "old" and "new" processes

− The scheduled mFRR activation process with the AOF is running every 15 minutes in this step, when working as intended

• For BSPs

− Mandatory with the new format and attributes for bids.

− Different activation dynamics

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Step 3. 15 minute ISP and preparation for MARI

• The major shift when entering this step is going live with 15-minute ISP

and MTU

• Nordics are now also fully mACE based regarding mFRR balancing

• The control centres are now dependent on the new IT-solutions,

including new fall-back processes and solutions

• Period shift product functionality is still running but after a settling

period it has to be reassessed if this is still needed

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Step 4. Connection to European mFRR platform (MARI)

• Move from Nordic platform the European platform for mFRR

− Nordic platform may serve as fall back functionality

• Standard mFRR product shall be fully implemented

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Parallell Operation

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Parallel operation – Go-live for new mFRR processes

− In "parallel operation" the TSOs will use the new systems and processes for mFRR – go live for the

new mFRR process

− In parallel operation it shall be possible to fall back to a more manual operation similar to what we do

today – but the new process shall be used as much as possible

− Parallel operation will build trust in new systems. After 15 minute time resolution switching back will not

be possible, and will only be used as fall-back.

As-is – full use To-be – full use

To-be solutions used as "decision support"

as-is and to-be

To-be – full use

• as-is solution – todays balancing processes

• to-be solution – processes and IT-solutions in the new mFRR activation market

• In the parallel operation phase both solution from as-is and to-bewill be used.

− In periods to-be solutions will be in full use

− In other periods there will be used a combination of as-is and to-be solutions.

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OptimizeAOF

Request ActivateImbalance prognosis

Every 15 min12 BZ ● 4Q ● 24h

= 1152 mFRR-loops per day in Norden!

BSP bids

Bid filtering& mgmt

ATC after ID

ATC adjustment

Pricing, Settlement & transparency

The TSO process for mFRR scheduled activation

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Timeline of the automatic process

Delivery period

AOF result

Bid filtering & mgmt

Bids to AOF BSP

activation

mFRR Requestand ATC

BSP GCT

Standard product

definition

ATC after ID

Imbalance prognosis (continous process)

ATC adjustment

Post-processingof AOF results

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Standard product for Scheduled activation

1. Preparation period

2. Ramping period

3. FAT – full activation time

4. Minimum duration of delivery period

5. Maximum duration of delivery period

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Standard product for direct activation

1. Preparation period

2. Ramping period

3. FAT – full activation time

4. Minimum duration of delivery period

5. Maximum duration of delivery period

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Automation requires new information in the bids

• Background

− To ensure automatic activation of bids we see that market participants must be able to give

sufficient information about the bid.

• Minimum activation volume, if bid is "all or nothing", start-up cost, location, etc.

• More bid attributes than is used today.

− This also requires a change in format and protocol for mFRR energy activations bids.

− The bid attributes we will propose to support, are attributes that MARI will support, or that do

not impact the use of MARI.

− Details in which attributes to support and implementation plan, will be discussed with market

participants in national reference groups before decided. When it is more clear which

attributes that will be supported, TSOs will update the memo "Process for activating

products".

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Automation requires changes in electronicordering (1/2)

• The new process for scheduled activation is sequential (first bid selection, then ordering) and

leaves very little time for ordering (30s).

• There will be an increasing number of activations due to smaller bid sizes, smaller bidding

objects and 15 min market period.

• Currently, approximately 2-10% of electronic activations fail. Usually the failures end up with

timeout due to IT system unavailability or missing manual BSP confirmation.

• When an order fails due to timeout, BSP preparation period (or even BSP ramping period)

have started, and it is too late to reorder within the scheduled activation process.

• Failed orders will in most cases generate need for direct activation or use of aFRR, at a higher

cost.

• It is important to reduce failed orders to a minimum

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Automation requires changes in electronic ordering (2/2) – proposed solutions

• Availability requirement for electronic ordering of bid activation should be stated in the T&C for the

market, e.g. 99 % availability.

− The consequences of not being able to fulfil the requirement should be regulated in the BSP T&C.

− The TSO should implement a scheme for monitoring and reporting of availability KPI.

− Detection of unavailable BSP can be used to filter bids from that BSP.

• Automation on BSP's side is important to avoid timeout due to human factors. Ideally the BSPs should

fully automate activation all the way to the AGC.

• The right incentives for desired BSP behaviour when it comes to availability for activation and reporting

of unavailability or failed activations to TSO is important. "Market development" should ensure that such

incentives are in place.

• Electronic ordering process and message definitions should be harmonised across the Nordics to support

a level playing field and to allow market participants and suppliers to operate efficiently.

− Other aspects of electronic ordering such as alternative channels (web/mobile) do not need to be harmonised.

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Transition period for new bid formats

• Timeline for the introduction of

new bid attributes.

• TSO will support bids with new

attributes in parallel with

existing bids for a given period.

• Red rectangle indicates

potential period with support for

new and existing bid formats

(but not necessarily using new

attributes)

Transition period

Support for existing format and bid attributesSupport for new format and bid attributes

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Assumption on bid attributes to be supported (1 of 4)

• Support for minimum activation volume

− attribute: Minimum offered volume

• Support for bids where volume is "all or nothing"

− attribute: Indivisible Bids

• Support for start-up costs

− attribute: Exclusive Bids

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Assumption on bid attributes to be supported (2 of 4)

• Where an activation in one quarter hour determines if bid are available in next quarter hour

− attribute: Conditional Bids

− Necessary to handle limited activation resources (empty reservoir) and other cases where an activation in one quarter hour determines if bid are available in next quarter hour.

− Needed to automatically adjust bids in QH1 and/or QH2 as a result of the outcome of the clearing during QH0, since balancing energy gate closure time (BE GCT) for QH1 or QH2 already have passed.

• Multipart (Parent/child)

− Child bids must be more expensive than parent bid

• This requirement reduces the use of this. Still discussions.

− Supported in MARI

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Assumption on bid attributes to be supported (3 of 4)

• Min. duration− If bids are only used for standard scheduled and direct activation, this attribute is not

necessary. But if there will be manual activation where it is possible that a deactivation can be made a "short" time after activation, this attribute is needed.

− Minimum duration longer than 15 minutes cannot be supported in the scheduled process

• Max. duration− This attribute is necessary to allow BSP to send in bids in advance so that they do not need

to update bid if they are activated.

− Resting time− This attribute is necessary to allow BSP to send in bids in advance so that they do not need

to update bid if they are activated.

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Assumption on bid attributes to be supported (4 of 4)

• Activation type− If bid is eligible for scheduled activation only or for both scheduled activation and direct

activation

• Inclusive− To handle bids from resource objects that also impacts other resource objects ("water way")

• Location/resource object − Information about where the activation will be injected in the grid

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Other potential attributes

• Available for faster activation / minimum activation time− To be used if we decide that faster activation is necessary

• Not standard FAT− For slower resources that cannot fulfil the standard product requirements, but still can be useful for the TSO in scarcity

situations or in case of local grid constraints

• Not electronic ordering− For resources that cannot be electronically activated, but still can be useful for the TSO in scarcity situations or in case

of local grid constraints

• Available for production shift− For a possible new production shift product

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Process changes

• Separate GCT for each quarter− Introduced together with 15 min ISP

• Electronic ordering a pre-requisite

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Standard product attributes that will be introduced before joining MARI but after 15 min ISP

• It is not decided when the following attributes will be introduced. They will be introduced before joining MARI, but probably after 15 min ISP

− FAT 12.5 minutes

− New prequalification requirements (for some TSOs)

− GCT 25 minutes

− 1 MW minimum bid size and 1 MW bid granularity

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NBM Roadmap – how will we use new attributes before parallel operation

• In a period before parallel operation the TSOs will test the new systems in "shadow operation". If BSPs include new attributes in their bids in this phase, it will be used in the "shadow operation", and increase the value of the testing.

• In the period with "Functional support …" before "Parallel operation", the TSOs will be able to use some of the new attributes also in the existing processes. Some new bid attributes will be less readable to a human and can not always be taken into account before the AOF is in use

Support for existing format and attributes for bids1) Mandatory with new format and

attributes for bids2)TSO use existing solution local MOL and CMOL

TSO use new solution for (local) MOL

1) Technical support for new format and attributes for bids2) Functional support for new attributes for bids

Thank you for your attention!

Questions?