Ga renewable energy club - 4 dec 2014 - presentation boris schucht ceo 50 hertz

The German “Energiewende”

General Assembly of the “Renewable Energy Club”

Brussels, 04.12.2014, Boris Schucht, CEO 50Hertz

Agenda

1 50Hertz and its role in the German Energiewende

2 RES generation – high expansion speed

3

System balance – challenges imposed by RES4

6 Outlook – challenges ahead

5 Control power – maintaining balance between load and generation

Grid Extension Projects – necessary to implement Energiewende

3 / 58General Assembly of the Renewables Energy Club / Brussels, 04.12.2014 / Boris Schucht, CEO 50Hertz: „The German Energiewende“

� 50Hertz is a fully unbundled TSO and part of the Elia Group

� Our shareholders are the Belgian TSO Elia(60% of shares) and the Australian infra-structure fund IFM Investors (40% of shares)

� 50Hertz operates in eight German federal

states: Berlin, Hamburg, Brandenburg, Mecklenburg Western Pomerania, Saxony, Saxony-Anhalt, Thuringia and Schleswig-Holstein

� We ensure the supply of electricity to over 18 million people in Germany

50Hertz – regionally rooted and part of an international group

Amprion

Transnet

BW

TenneTTenneT

Energinet.dk

Source: 50Hertz


The history of 50Hertz

1995 2002 2010200119901964 20082006

VerbundnetzElektroenergie

VEAGCreation

Electricalreunification VEAG bought

by Vattenfall

VE Transmission Set-up 50Hertz saleto Elia and IFM

Asset Transfer vonHH und B HV-Grids VE T Carve Out


50Hertz’ core figures at a glance – a renewable energy TSO par excellence

109,360 km² (31%)

9,995 km (29%)

~98 TWh (20%)

~16 GW (21%)

Surface area

Total length of lines

Maximum load

Energy consumption (based on electricity supplied to final consumers acc. to EEG)

Installed capacity:

- Renewables

- Wind

Turnover

- Grid

Values 2013 (Share in GER)

44,539 MW (~24%)22,727 MW (~28%)13,408 MW (~40%)

8.6 billion €0.9 billion €

Workforce 821

Source: 50Hertz, as at 31.12.2013


50Hertz‘ responsibility for the society includes secure system operations, RES integration and market development

Market facilitator

Trustee for RES processes

Catalyst of the electricity market development, esp. in northern and central-eastern Europe

Responsible for the financial management of the renewable energy processes

Source: 50Hertz

System operator Responsible for the control and balancing of the transmission system, 24/7: frequency and voltage control, congestion management

Transmission grid operator Responsible for the operation, maintenance and expansion of ultra-high voltage lines and connection of offshore wind farms


The main challenges of the “Energiewende” for the electricity system

Energiewende

Fossile Welt

Rapid growth of renewable and decentralised generation

Decreasing profitability of conventional generation within the current market design

Legal and procedural framework must be further developed to keep pace with renewables expansion(first important steps have been made in 2014)

Increasing gap between grid development and renewables development

Limited public acceptance for the consequences of the “Energiewende” (Infrastructure, costs)

Competitiveness of energy prices and inefficiencies in the former development


Agenda



3






RES generation in Germany is rapidly increasing, this trend is likely to continue in the future

wind photovoltaics biomass

Coloured area proportional to installed capacity

2000 2006 2013

Source: 50Hertz, TenneT, Amprion, TransnetBW, Google Earth

EEG figures end of 2013:

� Capacity: >83 GW

� Energy: ~125 TWh

EEG figures end of 2013:

� Capacity: >83 GW

� Energy: ~125 TWh


Forecasted RES capacity in Germany

Wind and photovoltaics remain dominant players in RES development.

34 39 42 45 48 511

2 3 5 6 73235

3739

4142

66

66

67

0

20

40

60

80

100

120

2013 2014 2015 2016 2017 2018

others

biomass

wind onshore

wind offshore

photovoltaics

Installed capacityin GW

Trend-Scenario to determine the RES-surcharge in 2014Source: r2b


0

5000

10000

15000

20000

25000

2008 2009 2010 2011 2012 2013

Photovoltaics Wind Biomass Other RE

EEG generations units in the 50Hertz grid area:Installed capacity and feed-in

As

at

31/1

2/2

013;

Sourc

e: 50H

ert

z

Successful development in the 50Hertz grid area. Electricity production from

renewable energies covers approx. 37 % (36,7 TWh) of electricity consumption.

1130413395

1510118008

2191523309

22,823,7 24,8

28,2 35,036,7

0,0

10,0

20,0

30,0

40,0

2008 2009 2010 2011 2012 2013

Feed-in in TWh

Inst

alle

dca

pa

city

in M

WF

ee

d-in

in T

Wh

As

at: 3

1/1

2/2

013;

Sourc

e: E

EG

-Anla

gest

am

mdate

n


0

5000

10000

15000

20000

25000

30000

35000

40000

2000 2005 2010 2015 2020 2025

others

biomass

wind onshore

wind offshore

photovoltaics

Renewables energies in the 50Hertz grid area:Present situation and forecast of installed capacity

Installed capacity in MW

As at 31/12/20132013 EEG mid-term forecast scenario „trend“

ForecastCurrent

situation

Installed capacity late 2013*

wind 13564 MW

photovoltaics 7758 MW

biomass 1707 MW

others 280 MW

Total 23309 MW

2100

8100

15130

26530

32650

37380

* As at July 2014, Source: 50Hertz


Agenda



3






Grid extension projects at 50Hertz

Projects since 2009

Completed 250 km

Under construction 240 km

Approval procedure ~ 290 km

Existing gridPlanning procedureApproval procedureApprovedUnder constructionCompletedSubstation (construction)Substation (50Hertz)

ApprovedApproved 240 km


Development of offshore projects in the Baltic Sea

2011: Start operation Baltic 1

2012: Start construction Baltic 2

2014: Grid link Baltic 2shortly before completion

2014: Contracting of wind farm operatorsat „westlich Adlergrund“

Potential wind energy (Baltic Sea):Approximately 5,000 MW

Grid link at planning stage

Grid link under construction

Operating grid link

Grid connection under construction

Operating grid connection

Reduced offshore goals are compatible

with a consistent extension in the Baltic Sea.


The Federal Requirement Plan asfoundation for the grid expansion

- Basis: 2012 Grid Development Plan of the TSOs

- 36 projects confirmed

- 3 HVDC corridors

- Current Grid Development Plan confirms FRP

- Law of FRP about to be updated in 2016

2012 Federal Requirement Plan

Act adopted by German

Bundestag in June 2013


RESULTS 2. DRAFT NEP 2014 C

In spite of an intensive public consultation and a clear agreement

to the grid extension of all federal states in Germany in 2013,

the grid development plan is now put into question in principal !

... AND SOME MEDIA HEADLINES


Congestion Management / Bidding Zones

� Studies show that price differences between Germany North and Germany South of 6 €/MWhcould be expected.

Germany

North

Germany

South

Austria

If structural congestions persist and redispatch volumes exceed certain limits (>5% of load), market splitting could be an option.

While reducing redispatch costs, this can have significant drawbacks in the market:

− Higher costs for RES integration due to lower market prices in areas with high RES infeed.

− Inefficient dispatch and higher overall system costs

− Lower liquidity and higher risk premiums

− Higher costs for balancing due to missing portfolio effects and lower liquidity.

Advantages are a better international coordination due to market coupling and better price signals to include all possible market options.

Activities Finish

ENTSO-E Bidding

Zone Study

2016

Committee work on

market design

continuous

Coordination with Elia on

market design issues

continuous


Agenda



3






High speed of RES development imposes significant challenges on system balance

RES forecasts inaccuracy, very short-term PV forecast changes

Steeper RES power ramps in the future

RES trading errors because of RES trading on an hourly basis

Price spikes in the intraday market

High frequency volatility and challenging frequency control

1h

¼h

C..


Frequency control is getting more and more challenging due to steep RES power ramps and RES forecasts inaccuracy

Source: 50Hertz

49,92

49,94

49,96

49,98

50

50,02

50,04

50,06

50,08

~0,07Hz

~0,09Hz

Average intraday frequency volatility October – December 2013

Hz


Frequency control is getting more and more challenging especially at hour change

Source: 50Hertz

Extreme frequency spikes on 17th October 2013

49,90

49,95

50,00

50,05

50,10

50,15

Maximum

Minimu

Critical frequency spikes (50.13 Hz) at hour change

Hz


Fluctuating wind power

Feed-in wind energy (01/12/2013 – 07/12/2013)Data feed-in of wind energy at 50Hertz (2013)

Maximum feed-in 11,064 MW

Minimal feed-in 0 MW

Biggest increase within ¼ hour +1,431 MW

Biggest decrease within ¼ hour -901 MW

Biggest difference betweenMin and Max within one day

9,675 MW 0

2000

4000

6000

8000

10000

12000

0 24 48 72 96 120 144 168

Feed-in in M

W

Time in h

Prognose HochtrechnungForecast Extrapolated feed-in


Fluctuating photovoltaics

Data feed-in of pv at 50Hertz (2013)

Maximum feed-in 5.346 MW

Minimal feed-in 0 MW

Biggest increase within ¼ hour 1.594 MW

Biggest decrease within ¼ hour 752 MW

Biggest difference betweenMin and Max within one day

5.346 MW

pv-feed-in (01/06/2013 – 07/06/2013)

0

1000

2000

3000

4000

5000

0 24 48 72 96 120 144 168

Feed-in in M

W

Time in h

Prognose HochrechnungForecast Extrapolated feed-in


� Challenge

Increasing gradients in short timeframes are getting more and more relevant, due to:

1) Stronger gradients from superposition of load, wind and solar generation

2) Short term adjustments due to forecast changes

� Position 50Hertz

1) Strengthen incentives for generators to be balanced by Imbalance Settlement Prices and create more efficient balancing markets

2) Enforce intraday trading by liquid markets and 15min products

Challenges regarding System Balance –example Solar eclipse

Solar Infeed(DE)

Time

Historical max. (wind + solar) at 9 Nov 2013: 10.5 GW / 90min

Clear sky – no eclipse

Clear sky – eclipse

Cloudy sky – no eclipse

Cloudy sky – eclipse

Example: Solar eclipse on March 20th 2015

19,2 GW

/ 90min


0

100

200

300

400

500

600

700

800

900

-10 -7,5 -5 -2,5 0 2,5 5 7,5 10 12,5

Last

Last - Wind

Last - Wind - PV

Power ramps Germany 2013 – load still dominating but

this will change with further RES increase

As at 31/12/2013

GW/h

Negative max. power ramp Positive max. power ramp

Load

Load – Wind

Load – Wind – PV

Frequency


Power ramps caused by RES already amount to > 5 GW/h and are expected to increase to max. ~15 GW/h in 2023

[GW] 2012 2023 2033

Maximum power ramps caused by wind and PV Consequences for the energy system

� Very high volatility of RES feed-in

� Extremely steep RES power ramps (>1,000 MW in 15 min in 2012)

� Only limited feed-in stabilisation via geographical distribution of RES facilities

� Flexible, non-volatile power plants required

� High requirements on RES forecasts, controllability of RES generation facilities and system operations

Maximum ramps per ¼ hourMaximum ramps per hour

Source: 50Hertz


Trading of RES on an hourly base is a serious problem because of steep power ramps

Source: 50Hertz

Load and trading products

Trading errors


0

200

400

600

800

1000

1200

1400

1600

P

P - Wind

P - Wind - PV

GW/h

Power ramps Germany 2013Calculated based on 100% hourly RE-trading (no ¼-h-products used)

As at 31/12/2013

Marketing of PV via

One-hour-products would

have become a big problem

at the end of 2013 already.

Frequency


RES Forecasts

� Rather inaccurate day-ahead forecasts for wind and solar, improving intraday� An up-to-date database and online availability of feed-in data is crucial� German TSOs still rely much on estimates because of missing real time data� There are only few service providers for online data and forecasts in the

German market that supply all TSOs and market participants

Enhanced RES forecasts are key for secure system operations

and a well functioning German market!

Plant DatabaseWeather Forecast Feed-in calculation Feed-in forecast

Sophisticated RES forecasts in place, further improvements are needed


Day-ahead PV forecasts can be highly inaccurate in case of adverse weather conditions

0

5

10

15

20

3. Apr. 4. Apr. 5. Apr. 6. Apr.

Day-ahead PV forecast

Last intraday PV forecast

GW

Situation beginning of April 2013 (05/04/2013) Consequences of forecast errors

� Major errors in the day-ahead PV forecast (up to 8800 MW in Germany)

� Reasons for errors: dense fog

� Last intraday forecast similar to PV extrapolation

PV extrapolation

Source: 50Hertz


TSOs have to deal with very short-term PV forecast changes which amount to several GW

6:00 9:00 12:00

0

2.000

4.000

6.000

8.000

10.000

0:00 6:00 12:00 18:00

MW

3,1 GW 1,2 GW

Source: 50Hertz

Intraday PV forecasts Intraday forecast changes for 12 pm


Inaccuracy of PV forecasts and very short-term PV forecast changes lead to price spikes in the intraday market

0

100

200

300

400

3-Apr 4-Apr 5-Apr 6-Apr

ID-Min

ID-Max

ID-Average

Day-ahead

€/MWh

Intraday pices, situation beginning of April 2013


Agenda



3






Three control power types exist to keep frequency of 50Hz

Reserve Regelung durch ÜNB

Reserve

30 s 15 min 60 minT0

Reserveby suppliers

Inertia

aFRR mFRRPC

5 min

PC: Primary controlaFRR : Automatic Frequency Restoration Reserve = secondary controlmFRR: Manual Frequency Restoration Reserve = tertiary control (minute reserve)

Control by TSOs

Source: 50Hertz

So far there has been no need for significant changes in control power products, as control power prices

have been steadily decreasing in recent years. This might change as the Energiewende is gaining pace.


Despite a slight downward trend in the recent years, control power volumes are expected to increase in the future

-

2

4

6

8

10

12

2009 2010 2011 2012 2013

GW

MRL_NEG

MRL_POS

SRL_NEG

SRL_POS

PRL

Development of control power volumes

Grid Control Cooperation (GCC) made it possible to reduce control power volumes in the recent years.

Despite GCC we expect an increase of control power in the future as RES share will continue to rise.

Source: 50Hertz


Increase of RES share has a strong impact on balancing energy demand

0

1

2

3

4

5

6

7

0 20 40 60 80 100

Installed RES capaity, [GW]

Balancing energy, [GW]

today

Increase of installed RES capacity by 1 GW leads to increase of balancing energy demand by 50-60 MW

Model: Normally distributed load forecast mistakes, normally distributed RES forecast mistakes

Source: 50Hertz

Impact of RES on balancing energy demand


� Integration of renewable

energies in control

power markets

� Reduction of

conventional must

run capacity

Challenges regarding Renewables – Market integration

29.01.2011 31.01.2011 02.02.2011 04.02.2011 06.02.2011-4.000

-2.000

0

2.000

4.000

6.000

8.000

10.000

12.000

14.000

Le

istu

ng

[M

W]

Windeinspeisung Lippendorf Reuter Preilack Boxberg Schkopau Schwarze Pumpe Rostock PSW Goldisthal PSW Hohenwarte PSW Markersbach

Wind

Power infeed[M

W]

Coal

Water

Thermal generation during a winter storm


Control power prices are highly volatile and their development is difficult to predict

0

100

200

300

400

500

600

700

800

900

2009 2010 2011 2012 2013

m€

MRL_NEG MRL_POS SRL_NEG SRL_POS PRL

-

50

100

150

200

250

2009 2010 2011 2012 2013

T€/MW*a

PRL SRL_POS SRL_NEG MRL_POS MRL_NEG

Development of control power costs Development of control power prices

Source: 50Hertz


In situations with major imbalances available control power can be fully exhausted

0

1000

2000

3000

4000

5000

6000

00:00

01:00

02:00

03:00

04:00

05:00

06:00

07:00

08:00

09:00

10:00

11:00

12:00

13:00

14:00

15:00

16:00

17:00

18:00

19:00

20:00

21:00

22:00

23:00

Area Control Error (ACE) IGCC imbalance nettingSRL MRLNotreserven Grenze der Regelfähigkeit von Deutschland

Control not possible any more

Control possible

ACE peaks (primary control energy of neighbour countries used) MW

Secondary control

Emergency reservePrimary controlLimit of control capability in Germany

Source: 50Hertz

Activation of control power in Germany on 5th April 2013


New providers of control power are very welcome: Electric boilers and a steel mill prequalified in the 50Hertz control area

Electric boilers Stadtwerke Schwerin

� Three electric boilers prequalified for secondary control (aFRR) provision

� Up to 10 MW aFRR

� Start of aFRR marketing in December 2013

Steel mill Hamburg

� Electric furnace 3 of ArcelorMittal Hamburg GmbH prequalified for tertiary control provision (mFRR)

� Up to 70 MW mFRR

� Start of mFRR marketing in 2010

Sources: Stadtwerke Schwerin, ArcelorMittal Hamburg GmbH


New providers of control power are very welcome: Batteries prequalified in the 50Hertz control area

Source: YOUNICOS

Battery Berlin-Adlershof

� Power: 1 MW

� Capacity: 6.2 MWh

� Technology: Lithium-Ion Sodium-Sulphur

� Commissioning: 01/2012

� Usage: primary control

Battery Schwerin

� Power: 5 MW

� Capacity: 5 MWh

� Technology: Lithium-Ion

� Commissioning: 09/2014

� Usage: primary control


New providers of control power are very welcome: aluminium electrolysis and Zuhausekraftwerke in the 50Hertz control area

Lichtblick pilot (Zuhausekraftwerke)

� Joint project of LichtBlick Energie und Innovation GmbH and German TSOs

� Start in 2014 with 5 MW secondary control (aFRR)

� Potential of up to 100 MW control power

� Utilisation of storage potentials of the so-called Zuhausekraftwerke (Home power plants)

Trimet project (aluminium electrolysis)

� Provision of 30 MW primary control by TRIMET Aluminium AG via aluminium electrolysis

� Start of primary control marketing in 2011

� Thanks to technology applied best control quality in the 50Hertz control area

Sources: LichtBlick Energie und Innovation GmbH, TRIMET Aluminium AG


Integration of balancing markets to foster competition and promote exchange of balancing services

Network code on Electricity Balancing

� Integration, coordination and harmonisation of

electricity balancing rules

� Harmonisation of products

� Move from balancing on a national level to larger markets allowing effective resources usage

� Code submitted to ACER in December 2013

Pilot projects with 50Hertz participation

� International Grid Control Cooperation (IGCC) for imbalance netting in DE, BE, AT, DK, NL, SH, CZ

� Joint procurement of primary control with Switzerland (25 MW) and Netherlands (35 MW)

Source: ENTSO-E; network codes.eu, Wikipedia


Agenda



3






Operational challenges ahead

The quality of RES and load forecasts has increased, but still should be further developed.

Online data exchange between TSOs and their customers is to be further improved, controllability of generators and loads in underlying grids should be ensured.

Large gradients of RES and changing weather forecasts are drivers for intraday markets and ¼ hour products. Trading of ¼ hour products should be strengthened, liquidity is to be further increased.

Source: 50Hertz

Those responsible for balancing groups should be motivated to improve balancing

group management. Higher penalties should ensure that balancing group deviations are significantly reduced or are supporting a current situation.


Strategic challenges ahead

RES generators should participate in provision of control power and other ancillary services.

To further promote decarbonisation of the electricity supply, new options for ancillary services and flexibility tools must be made available.

Source: 50Hertz

Necessary preconditions should be established to increase demand flexibility, especially in industrial and business customers segment.

Tendering of control power should be further developed towards new products and market-oriented solutions.

Value of flexibility needs to be increased and supported by future market design.

Many thanks for your attention!

Boris Schucht

CEO 50Hertz

50Hertz Transmission GmbH

Eichenstraße 3A

12435 Berlin

www.50Hertz.com


Back up

Physical flow vs. commercial flow 50Hertz <-> PSE

Stress on European neighbour grids due to unplanned load flows – 50Hertz-measures

Grid expansion

− reduces SoS-relevant flows

− ensuring efficiency and cost effectiveness = challenge

− reduces SoS-relevant flows

− investment required

− ensures SoS in entire system

− enables integrated European market

Redispatch

(„virtual PST“)

Phase shifters

(physical PST)

short-term middle-term long-term

Findings from vPST pilot phase

− helpful tool

− limitation of available redispatch capacity

− additional trading capacity was used

− installation of Phase Shift Transformers at the

German-Polish border

�

�

�

�

Charge by unplanned

power flows

Discharge by virtual PST

measures

Change of power plant

output� �

Trigger Power Flow Limit

Pow

er

Flo

w

vPS

T M

easu

re

vPST – first activation and main conclusions

Growing distributed generation goes along with increasing system complexity

380 kV

110 kV

30 kV

0,4 kV

Electricity supply system – tomorrow

500 kV HVDC

• 149 DSOs in 50Hertz area

• More than 1400 wind farms on different voltage levels

• Other RES generators (mainly solar) with limited availability of data

• Changing load flow patterns with bi-directional flows

• New IT and communication tasks among a huge number of players

50Hertz control area is an example for such challenging environment

Principles for online data exchange and control

TSO

DSO 1 C n

neighbourTSOs

consumption

DSO 1 C n

consumption

consumption

• Each network operator responsible for his network

• Full transparency across networks and voltage levels needed

• Online interaction between network operators via connection points

• Data aggregation at connection points possible in order to reduce complexity

• Intense coordination necessary to avoid counter productive actions

• Support from German Regulator based on a common data list and a stepwise approach

Common understanding of German market participants (BDEW consensus)

German market splitting is a realistic threat

- Without North-South grid extension,

congestion cannot be avoided (resp.

between 50Hertz and Tennet).

- Enduring congestion would call for

German market splitting:

- BNetzA and German TSOs are investigating German-Austrian market splitting.

- Science and also EU are discussing market splitting within Germany (see ENTSO-E report).

- Swedish infringement case: Outcome has been a market splitting in 4 areas according to a EC decision.

- Strongest counter argument up to now

has been the planned grid extension.

Source: ENTSO-E Technical Report 2011/2012

Bottlenecks in German grid 2012

� A German market splitting would make further grid extension across

different bidding areas extremely difficult.

Scenario for market splitting simulation 2023

NTC borderline

255 320

220

ElectricityGeneration

ElectricityDemand

75

25070

ElectricityGeneration

ElectricityDemand

RES –Generation

ConventionalGeneration TWh

TWh

TWh

TWh

Generation 2023

Base: NEP Scenario B2023; NTC 12,5 GW

12,5 GW

NTC

RES –Generation

ConventionalGeneration

- Market Splitting North-South as widely discussed*

- German Grid Development Plan (scenario B2023) assumed, leaving out South East DC line.

- In order to avoid major redispatchvolumes, an NTC of 10 to 15 GW is needed

- Rather low NTC needed to reduce also lignite generation in 50Hertz area with lowest variable costs

- Not necessarily the most efficient bidding area cut.

* See ENTSO-e Bidding-Zone-Study, APG-Study 2012, Bettzüge 2014

Results of market splitting simulation 2023Energy only market, German Grid Development Plan, Scenario B2023

40GW

12,5 GW

Average spot market price

40€/MWh

46€/MWh

� electricity price increase in Southern Germany.

NTC at

� about 600 m€ p.a. additional costs because of less efficient generation dispatch.

� less production in Northern German, lower profitability of plants and CHP. More reduction of wind power in the North.

Overview: Impacts of inner-german price zones

Power exchange

prices

Increasing Power exchange prices

(+6 €/MWh) due to missing production

capacity and expensive technologies

(Gas, Hydro, PS, PV, ])

Capacity markets

Significant higher capacity prices due

to need of new plants/capacity deficit

(+2-3 €/MWh)

Market split for different types of control power/Ancillary services leading to higher

prices in North and South.

Markets for

Ancillary Services

Slightly decreasing power exchange

prices due to cheap exceeding

production (wind, lignite); Conventional

and CHP are used more seldom

Lower capacity prices due to over

capacity

in South-Germany in North-Germany

EEGCosts for EEG-support grow in North and South due to decreasing power

exchange prices leading to lower wind electricity value.

Higher production costs in North and South due to inefficiencies from about 600

Millionen Euro per year.

Environment

Ga renewable energy club - 4 dec 2014 - presentation boris schucht ceo 50 hertz