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Network Code on
Electricity Balancing
Ebadge Workshop
Trieste, 17 September 2014
Contents
• Development and Overview of Network Codes
• Key concepts of the NC EB
• Background and Status Quo of the NC EB
• European Pilot Projects on Cross Border Balancing
• Timing
Contents
Development and Overview of Network Codes
Na
tio
nal R
egula
tory
Au
tho
rities / A
CE
R
Ma
rke
t P
art
icip
ants
an
d o
the
r S
take
ho
lders
Legislation
„How should
it be done?“
„What needs to
be done?“ Framework
Guidelines
Network
Codes
Comitology
Identification
of main code
principles
Specification
of detailed rules
Legally binding
for Market
Participants
Development of Network Codes
(legal background 3rd Package)
Overview Network Codes
• Requirements for Generators (RfG)
• Demand Connection Code (DCC)
• HVDC Connection Code (HVDC)
• Connection Procedures (CP)
Connection Related Codes
• Operational Security Network (OS)
• Operational Planning & Scheduling (OPS)
• Load Frequency Control & Reserves (LFCR)
• Operational Procedures in an Emergency (EP)
• Staff Training (ST)
System Operation
Related Codes
• Capacity Allocation & Congestion Management (CACM)
• Forward Capacity Allocation (FCA)
• Balancing Network Code (BAL)
Market Related Codes
An example from today: Diversity across Europe
Source: 2013 Survey on Ancillary Services
Procurement and Electricity Balancing Market Design
Contents
Key concepts of the NC EB
Goals of the Network Code on Electricity Balancing
The Electricity Balancing Network Code establishes common rules for Electricity Balancing including the establishment of common principles for procurement and settlement of Frequency Containment Reserves, Frequency Restoration Reserves and Replacement Reserves and common methodology for the activation of Frequency Restoration Reserves and Replacement Reserves.
t
Power /
Frequency
Frequency Containment Process Frequency Restoration Process
Reserve Replacement Process
RRFRRFCR manual FRR
Time to Restore Frequency
reserve activation
frequency
occurrence of the
disturbance
Joint Action within
Synchronous AreaLFC Area
Regional & European targets:
Implementation of harmonized
processes
Goals:
• Maintain the system balance
(Compliant with NC LFC&R
requirements)
• Promote Competition
Non discriminatory, flexible
Open to conventional, RES,
demand sources
What is the harmonization scope?
RR process mFRR
process aFRR
process
Imbalance netting process
Imbalance settlement
Typically for
units with
activation
time up to
hours
Typically for
units with
activation
time up to
15minutes
with manual
activation
Typically for
units with
activation
time up to
minutes with
automatic
activation
For real-time
avoidance of
counter-
activation of
units by
different TSOs
Legislation and
financial
incentivisation
to market
participants for
a „good
behavior“
EU
Balancing
market
Entry into
force of the
NC EB
Implementation of
the regional
integration model
Implementation of
the European
integration model
Principal steps on the way to implement the target model
Implementation
framework for the
regional integration
model
Implementation
framework for the
European
integration model
Implementation framework:
• List of TSOs
(CoBA configuration)
• Implementation timeline
• Principles for algorithm
and methodologies
2. European integration model 1. Regional integration model
Modification of the
European integration
model (via CBA based
on the gained
experience)
CBA … Cost-Benefit analysis
• Stepwise approach to develop the Common European Balancing
Market by using the Regional and European Integration Model
• Allow for additional Balancing Energy Bids, next to those based on
Balancing Reserve Contracts
• Limit the number of standard products as much as possible to allow
exchange
• Use a common merit order list (CMOL) for activation of Balancing
Energy
• TSO-TSO model to ease processes (e.g. procurement, activation,
settlement)
Activation of Balancing Energy
Coordinated Balancing Areas
Concept of a
Coordinated
Balancing Area
• Each TSO shall form at least one Coordinated
Balancing Area (CoBA) with two or more TSOs
operating in different Member States
• Each CoBA includes the Exchange of Balancing
Energy from at least one Standard Product or the
Imbalance Netting Process
• Flexibility on the way to reach the FWGL targets is
ensured by not detailing which cooperation is to be
done with which TSO
• Functions are performing central tasks
• All TSOs of a CoBa shall establish a common
proposal, detailing Terms & Conditions, etc.
Coordinated
Balancing Area
TSO 1
TSO 4
TSO 2
TSO 3
wid
en
coopera
tion
Chapter 2: CoBAs - Promoting Integration & Flexibility
Concept allows for early
cooperation due to its flexibility Integration of CoBAs allows for
reaching the FWGL targets
Obligation for cooperation in
CoBAs fosters integration
t
Coordinated
Balancing Area
TSO y
TSO x
Coordinated
Balancing Area
TSO z
cooperate
Coordinated
Balancing Area
merg
e
Coordinated
Balancing Area
merg
e
Coordinated Balancing
Area = Target
e.g. FWGL target of a
single pan-European
CMO for the activation of
RR energy form
fo
rm
form
TSOs may cooperate with
different TSOs in CoBAs for
different products
CoBAs serve as intermediary
steps and vehicles to reach
the FWGL targets
Ensuring available CZC for Exchange of Balancing Capacity
and Sharing of Reserves
Probabilistic Approach
Reservation Chapter 4, section 1
Exchange and Sharing of Balancing Services requires available
Cross Zonal Capacity
Co-optimisation process
Market based reservation process
Economic efficiency analyses
Available CZC for exchange
of Balancing Energy or Imbalance Netting Process
(Chapter 4, section 2)
Available after intra day GCT
Reserved Available after intra day GCT Released
Settlement
TSO-BSP Settlement TSO-TSO Settlement TSO-BRP Settlement
• Frequency
Containment Process
(optional)
• Frequency
Restoration Process
• Reserve Replacement
Process
• Intended exchange
• Unintended exchange
• Imbalance Settlement
Period
• Imbalance Calculation
• Imbalance Price
Target Outcome of Settlement
• Financial neutrality for the TSO
• Fair and equal distribution of energy settlement cost/benefit
• No perverse incentives, e.g. BSP non-delivery, BRP gaming, TSO free
riding
Contents
Background and Status Quo of the NC EB
Background and Status Quo of NC EB
Sep 2012
ACER publishes Framework
Guideline on Electricity
Balancing
Dec 2012
EC asks ENTSO-E to develop
NC EB Dec 2013
ENTSO-E sends NC EB to
ACER
Mar 2014
ACER gives Feedback to
ENTSO-E
Sep 2014
ENTSO-E sends NC EB
back to ACER
End 2014
ACER sends NC to EC
2014/2015
EC comitology
process;
with entry into force in
Sep 2015
European Pilot Projects on Cross Border Balancing
How do the Pilot Projects represent the Balancing Processes across Europe?
A. Imbalance Netting (IN)
B. Replacement Reserve (RR)
C. Manual Frequency
Restoration (mFRR)
D. Automatic Frequency
Restoration (aFRR)
E. Frequency Containment
Reserve (FCR)
A B C
D E
The Cross Border Pilot Projects on Electricity Balancing
1
2 3
3
4
4
5
7
8
9
9
4 4
8
8
9
5
5 5
5 5
1 CMOs for mFRR and aFRR with real Time Flow Based
congestion management
9 IGCC Imbalance Netting, aFRR-Assistance and Flow-
Based Congestion Management.
2 Cross-border market for FCR based on TSO-TSO model
3 E-GCC
4 TERRE: Trans-European Replacement Reserves
Exchange
5 Development of the Nordic RPM
7
Design and evaluation of a harmonised reactive
balancing market with XB optimisation of Frequency
Restoration while keeping control areas, bid zones, and
Regulatory oversight
8 BritNed / TenneT / National Grid Balancing Services
TSOs involved
TSO possible future involvement
2
9
New developments: Project 2: German TSOs and TTB join APG and swissgrid in Project 2; APG joins
IGCC in Project 9.
NC EB, Timing
X+6 X+5 X+4 X+3 X+2 X+1 X
A stepwise approach to the implementation of targets: 1 year
TSOs’ proposal for
standard balancing
energy / reserve
products
En
try in
to fo
rce
of N
C E
B
TSOs’ proposal for the pricing method for Balancing Energy (initial marginal pricing)
Time [years]
1. TSOs’ proposal for the pricing method based on
marginal pricing
2. TSOs’ proposal for standard balancing energy /
reserve products
Legend:
BE Balancing Energy
CA Control Area
CMO Common Merit Order (all bids are shared)
CMOm Common Merit Order list with margins (a certain
amount of most expensive balancing energy bids
can be not shared)
FG EB Framework Guideline on Electricity Balancing
a/mFRR automatic/manual Frequency Restoration
Reserve
NC EB Network Code on Electricity Balancing
RR Replacement Reserve
targets manual
targets automatic
targets settlement
X+6 X+5 X+4 X+3 X+2 X+1 X
A stepwise approach to the implementation of targets: 2 years
TSOs’ proposal for
standard balancing
energy / reserve
products
En
try in
to fo
rce
of N
C E
B
TSOs’ proposal for the pricing method for Balancing Energy (initial marginal pricing)
Time [years]
Legend:
BE Balancing Energy
CA Control Area
CMO Common Merit Order (all bids are shared)
CMOm Common Merit Order list with margins (a certain
amount of most expensive balancing energy bids
can be not shared)
FG EB Framework Guideline on Electricity Balancing
a/mFRR automatic/manual Frequency Restoration
Reserve
NC EB Network Code on Electricity Balancing
RR Replacement Reserve
targets manual
targets automatic
targets settlement
Entry into force of the multilateral TSO-TSO model with CMOm of Balancing Energy from RR
Minim. of counteracting activation of balancing energy between CA (imb. netting)
3. Entry into force of the regional multilateral TSO-TSO
model with CMOm for Balancing Energy from RR
4. Minimisation of counteracting activation of
Balancing Energy between Control Areas (Imbalance
Netting).
X+6 X+5 X+4 X+3 X+2 X+1 X
A stepwise approach to the implementation of targets: 3 years
TSOs’ proposal for
standard balancing
energy / reserve
products
En
try in
to fo
rce
of N
C E
B
TSOs’ proposal for the pricing method for Balancing Energy (initial marginal pricing)
Time [years]
Legend:
BE Balancing Energy
CA Control Area
CMO Common Merit Order (all bids are shared)
CMOm Common Merit Order list with margins (a certain
amount of most expensive balancing energy bids
can be not shared)
FG EB Framework Guideline on Electricity Balancing
a/mFRR automatic/manual Frequency Restoration
Reserve
NC EB Network Code on Electricity Balancing
RR Replacement Reserve
targets manual
targets automatic
targets settlement
Entry into force of the multilateral TSO-TSO model with CMOm of BE from RR
Minim. of counteracting activation of balancing energy between CA (imb. netting)
TSOs’ proposal for target model for the exchanges of balancing energy from aFRR
Harmonisation of the main features of the imbalance settlement
TSOs’ proposal for modification of the FG EB’s multilateral TSO-TSO model with CMO of BE from RR and mFRR
5. TSOs’ proposal for modification of the FG EB’s
multilateral TSO-TSO model with CMO of Balancing
Energy from RR and mFRR
6. TSOs’ proposal for target model for the exchanges
of Balancing Energy from aFRR
7. Harmonisation of the main features of the Imbalance
Settlement
X+6 X+5 X+4 X+3 X+2 X+1 X
A stepwise approach to the implementation of targets: 4 years
TSOs’ proposal for
standard balancing
energy / reserve
products
En
try in
to fo
rce
of N
C E
B
TSOs’ proposal for the pricing method for Balancing Energy (initial marginal pricing)
Time [years]
Legend:
BE Balancing Energy
CA Control Area
CMO Common Merit Order (all bids are shared)
CMOm Common Merit Order list with margins (a certain
amount of most expensive balancing energy bids
can be not shared)
FG EB Framework Guideline on Electricity Balancing
a/mFRR automatic/manual Frequency Restoration
Reserve
NC EB Network Code on Electricity Balancing
RR Replacement Reserve
targets manual
targets automatic
targets settlement
Entry into force of the multilateral TSO-TSO model with CMOm of BE from RR
Minim. of counteracting activation of balancing energy between CA (imb. netting)
TSOs’ proposal for target model for the exchanges of balancing energy from aFRR
Harmonisation of the main features of the imbalance settlement
Entry into force of the multilateral TSO-TSO model with CMOm of balancing energy from RR and mFRR
Coordination between TSOs in activation of balancing energy from aFRR (also includes coordination of aFRR with RR and mFRR)
TSOs’ proposal for modification of the FG EB’s multilateral TSO-TSO model with CMO of BE from RR and mFRR
8. Coordination between TSOs in activation of
Balancing Energy from aFRR (also includes
coordination of aFRR with RR and mFRR)
9. TSOs’ proposal for modification of the FG EB’s
multilateral TSO-TSO model with CMO of Balancing
Energy from RR and mFRR
X+6 X+5 X+4 X+3 X+2 X+1 X
A stepwise approach to the implementation of targets: 6 years
TSOs’ proposal for
standard balancing
energy / reserve
products
En
try in
to fo
rce
of N
C E
B
TSOs’ proposal for the pricing method for Balancing Energy (initial marginal pricing)
Time [years]
Legend:
BE Balancing Energy
CA Control Area
CMO Common Merit Order (all bids are shared)
CMOm Common Merit Order list with margins (a certain
amount of most expensive balancing energy bids
can be not shared)
FG EB Framework Guideline on Electricity Balancing
a/mFRR automatic/manual Frequency Restoration
Reserve
NC EB Network Code on Electricity Balancing
RR Replacement Reserve
targets manual
targets automatic
targets settlement
Entry into force of the multilateral TSO-TSO model with CMOm of BE from RR
Minim. of counteracting activation of balancing energy between CA (imb. netting)
TSOs’ proposal for target model for the exchanges of balancing energy from aFRR
Harmonisation of the main features of the imbalance settlement
Entry into force of the multilateral TSO-TSO model with CMOm of balancing energy from RR and mFRR
Coordination between TSOs in activation of balancing energy from aFRR (also includes coordination of aFRR with RR and mFRR)
TSOs’ proposal for modification of the FG EB’s multilateral TSO-TSO model with CMO of BE from RR and mFRR
Entry into force of the multilateral TSO-TSO model with CMO of balancing energy from RR and mFRR
Implementation of the target model for aFRR
10.Entry into force of the multilateral TSO-TSO model
with CMO of Balancing Energy from RR and mFRR
11. Implementation of the target model for aFRR
Thank you for your attention