Acknowledgements Mario Salazar Galvez

Transcription

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2 Acknowledgements Wth these smple lnes, I would lke to thanks the entre Energy Market team at the Energy Automaton & Informaton dvson at AREVA T&D n Massy, Pars. A very specal thanks to two wonderful persons, Sam Ammar and Jean-Chrstophe Passelergue, that have not only been two wonderful nternshp supervsors, but also very good frends. Maro Salazar Galvez September

3 Background... 4 Am of Project Day-Ahead Market (DAM) Introducton Submsson of Offers Market Clearng Prce Matchng Process Introducton Mert Order Extenson of Mert Order Acceptance of offers Determnaton of the Supply and Demand Volume Market Splttng Congeston Management Selecton of Offer and Trade Confrmaton Settlement - DAM Introducton Daly Settlement Calculaton Daly Settlement durng Transton phase Compensaton payments Dstrbuton of payments Transton rules Balancng Market Introducton Balancng Energy Prmary and Secondary Regulaton Tertary Regulaton Submsson of offers Avalable Balancng Capactes Selecton of offers Congeston Management Settlement Balancng Market Introducton Daly Settlement Calculaton Cost of System Balancng and Congeston Management Imbalance Calculaton Introducton Balance Responsblty Party BRP Net contractual poston and net metered poston Informaton Imbalance Implementaton Introducton Informaton flow and AIMMS Prototype Conclusons and future work APPENDIX A. Flow Chart of Matchng Process APPENDIX B. Matchng Process - Example REFERENCES

4 Background In the begnnng of the 20 th century, when electrcty started to be produced serously, the government-owned producers were the only ones that were allowed to provde energy to consumers. But n the begnnng of the 90 th, a new sort of revoluton started n Europe: The Deregulated Electrcty Market. It started n England n 1989 [1] and from that moment on, t have been more and more countres that have followed the same example. Fnland, Norway and Sweden are countres that have today a well developed deregulated energy system, wth Nordpool as market place. But the effects of deregulaton have not always been as expected. Experence has shown that deregulaton produces unexpected outcomes. In some countres the results are excellent and n others, chaotc and destablsng as n Germany and Calforna. In general, the prces have fallen and n some cases so dramatcally that the stablty of the ndustry s threatened [2]. Deregulaton s nowadays ntroduced n many countres and makes t possble for producers and consumers to sell and buy ther energy from each other. As n all other markets, the prce s determned by the demand and supply, and t s also possble to have transactons between countres. In some countres the development has reached a pont where you can go to your supermarket and buy your energy. Even though the mplementaton of an electrcty market can be done n many dfferent ways, the creaton of a centralsed marketplace for the sale and purchase of electrc power s mportant to: Facltate the establshment of a compettve, transparent and non-dscrmnatory wholesale market for electrc power, Reduce the cost of tradng electrc power, and Establsh relable reference prces for the wholesale market. Ths ncreasng n lberalsaton and deregulaton n the electrcal sectors across Europe, together wth the creaton of the EU Electrcty Drectve [3] n February 1999, are oblgng successvely many countres to create companes and ncorporate systems that allow the new stuaton. Wth the help from the European Unon, many east- European countres are startng to leave the old, government-owned and controlled system, to convert to ths new and modern method of buyng and sellng electrcty. 4

5 Am of Project As beng applyng to become a member of the European Unon, Romana must, among many other thngs, accept the EU Electrcty Drectve from 1999 that stpulates how the energy shall be treated wthn the Unon. In ths Drectve, t s clearly stated that all the countres wthn the European Unon have to have a deregulated electrcty market. The man objectve of deregulatng the wholesale electrcty market around the world s to mprove the effcency of the electrc power ndustry by encouragng competton. Or as t s wrtten n the Drectve; To ensure the free movement of electrcty whle mprovng the securty of supply and the compettveness of the European economy. [4] To be able to fulfl ths mandatory task, the Romanan Market Operator OPCOM, has today contracted the French company AREVA T&D, who s n charge of the mplementaton of a new deregulated electrcty market, wth ts man functon beng the Day-Ahead Market nfrastructure (web-based bddng nterface wth market partcpants, matchng process and settlement).ths market s supposed to be takng nto acton durng the summer of The scope of ths tranng can be summarzed n the followng ponts, Analyse the proposed natonal market rules of Romana. These rules ntegrate a Day- Ahead Market, a Balancng Market and Imbalance Calculaton. Analyze the formulaton of the Settlement of these markets. The Settlement has the object to determne the payments for transactons made under the dfferent markets by the market actors. Develop a prototype / smulator of these Settlement rules that wll allow verfyng ther consstence and that wll be used n testng and demonstraton envronment. It s mportant to menton that the analyses above wll be a theoretcal analyss on the rules snce the project s stll n a developng phase and has not been tested n a real envronment. The prototype / smulator wll be mplemented usng AIMMS mathematcal modellng language, where all settlement rules have to be mplemented. The dea of the prototype s to smulate how the rules wll behave and f the results are credble. To verfy that the rules have been mplemented n the rght manners, the results gven by AIMMS wll then be compared wth the results from the AREVAS s e-terra settlement products, whch s the smulator that s gong to be used n the future market. Except for the settlement rules, the developed prototype wll also nclude the matchng process wth ts offer-acceptance algorthm to determne the cleared energy and prce for each tradng nterval, and wll serve to gve feedback to the future matchng process. It ams also to valdate the results provded by the delvered algorthm. To be able to get a full vson, and as well to understand ther mplementaton, the three dfferent notons, Day-Ahead Market, Balancng Market and Imbalance Calculatons studed under ths project wll be explaned n detal, the role they play and why they are needed n a deregulated envronment. 5

6 Summarzng, ths report wll treat the followng markets and areas; Day-Ahead Market Balancng Market Imbalance Calculaton Settlement of these three processes Fnally, some screenshot wll be shown to vsualse the prototype and how the results are presented to the customer together wth some conclusons and the future work that can be done. 6

7 1. Day-Ahead Market (DAM) 1.1 Introducton The objectve wth the Day-Ahead Market [5] s to match the sell offers, send from producers to the Market Operator, together wth the buy offers send from supplers. The Market Operator has then the task to perform the matchng process to determne the market clearng prce and the amount of energy that shall be cleared for each one- hour nterval. Before the transton from the old system to the new one takes place, ANRE 1 has determned specal rules, called transton rules, whch shall be appled durng the transton perod and shall cease to apply afterwards. Durng ths perod, the partcpaton n the DAM s mandatory for all supplers and producers. Producers must submt sell offers for ther entre avalable producton capacty and planned mports, whle supplers must submt buy offers for ther entre expected demand and planned exports. The total sale and purchase quanttes wll then be determned from ther net physcal poston and the prelmnary transacton quanttes, terms whch are explaned n detal n chapter Durng the transton phase, the demand s estmated by the Market Operator, represented by OPCOM. For the estmaton of ths demand, OPCOM wll use ts own external forecast module, whch among other nputs, consders the compettve bds of purchase that the partcpant have carred out as addtonal nformaton. The transton perod, can be seen as a tranng perod for tradng partcpant buyng energy from the DAM. When these partcpants have consoldated ther partcpaton n the market, the demand can be establsh as an aggregaton of the consumpton bds. The settlement shall be carred out by the Settlement Admnstrator, whch has been establshed to avod that the party handlng the market also takes care of the payments and nvocng. To be able to perform hs task, the Market Operator must provde all needed nformaton. Snce ANRE has decded that the Day-Ahead Market shall adopt a system margnal prce, also known as market clearng prce for all trades, the settlement calculaton shall be based on ths prce and the quantty cleared n the DAM. The Settlement Admnstrator shall calculate the fnal amounts to pay or to get pad for each market partcpant that have concluded a transacton n the DAM. 1.2 Submsson of Offers All partcpants that have been approved by the Market Operator can send offers to the DAM. Dependng on the type of partcpants, the offers can be sell offers or buy offers. Wth buy offers, t s meant bds to purchase electrc power from the DAM whle sell offers are offers to sell electrc power to the DAM. Each offer may contan up to twenty-fve prce-quantty pars. For buy offers, the prcequantty pars defnes the maxmum prce that the partcpant s wllng to pay for an amount of electrc power not exceedng the quantty quoted n the prce-quantty par. In the same manner, the prce-quantty par for sell offers s the mnmum prce at whch a tradng 1 ANRE s an autonomous publc nsttuton of natonal nterest whose msson s to create and mplement far and ndependent regulaton. Also known as the Romanan Regulator. 7

8 partcpant s wllng to sell an amount of electrc power not exceedng the quantty quoted n the prce-quantty par. All prces shall be wthn the prce scale for the DAM that shall be establshed by the Market Operator and valdated by the regulator. The prce scale s lmted by a prce of zero and a hghest prce, for whch an offer can be submtted. The hghest prce shall at all tme be hgher than the expected market prce. Except for prce and quantty of the offers, the tradng partcpant shall provde the followng nformaton to the Market Operator when submttng an offer: DAM Identfcaton Code of the Tradng Partcpant Delvery Day, whch the offer apples to Tradng Interval, whch the offer apples to Tradng Zone, whch the offer apples to Type of offer,.e. buy or sell offer All markets have usually two tradng zones, referred to as the natonal tradng zone and the border tradng zone(s). As the names stpulates, the natonal tradng zone s the part of the natonal power system to whch producers and consumers are connected to, n ths case Romana, whlst the border tradng zone(s) are the neghbourng countres around. The tradng partcpant shall also verfy, that the followng condtons are met before submttng the offer to the Market Operator, In the case of buy offers, all prces shall be lsted n a decreasng order In the case of sell offers, all prces shall be lsted n a ncreasng order The tradng partcpants must submt offers for each nterval of the day and also separately for each tradng zone. In the Romanan market, each nterval s one hour, whle most of the countres have chosen 15- mnutes nterval. The fact of havng new bds each hour of the day can create problems for slow producton unts, as nuclear power plants. Imagne that a unt s selected to produce a gven quantty of energy the frst hour. For the second hour, the unt has been selected for an amount of energy much greater than the hour before, or even worse, he has not been selected at all. Snce the unt s slow, ths change n output may not be done durng the requred tme. Ths problem s up to every producer to handle and can be done by avodng large dfferences n the prcequantty pars gven n each offer. 1.3 Market Clearng Prce Market Clearng Prce s the prce at whch supply equals demand. Snce t s ths prce that s gong to be used when performng the settlement, t s very mportant to have well-defned rules for ts determnaton. Graphcally, the market clearng prce s the pont of ntersecton between the market supply and demand curves. Ths pont represents also the equlbrum between buy and sell offers. Strctly speakng, t s ntended to mean the prce for a gven commodty that nsures that all avalable supply s sold and all avalable demand s met. Ths defnton s vald for the Romanan market, whle other market defnes the Market Clearng Prce as the total cost devaton n case t s necessary to provde one more unt (.e. MW). 8

9 In an energy market, there are four types of ntersecton that can occur, a b P P Q Q c d P P Q Q Fgure 1.1a-c. The four types of ntersecton that can occur between demand and supply curve. If there s a unque pont of ntersecton lke fgure a, b or f all ponts of ntersecton have the same prce (fgure c), the prce at the pont of ntersecton shall become the market clearng prce. If there s no unque pont of ntersecton and f dfferent ponts of ntersecton have dfferent prces (fgure d), the rules stpulates that the market clearng prce shall be determned as, P max + P MCP = mn, (1) 2 where P max denotes the hghest prce where the market supply curve and the market demand curve ntersect, and P mn denotes the lowest prce where the market supply curve and the market demand ntersect. It s easy to understand that the equaton gven above s a compromse between choosng one of the two extremtes and thereby gvng the preference for ether the sellers or the buyers. Lke the market clearng prce, the cleared energy s also determned by the ntersecton of the two curves. For fgure a and b, where we have only one pont of ntersecton, the cleared energy shall become the energy at ths pont. Fgure d has several ponts of ntersecton wth the same quantty, whch shall also be the cleared quantty. If a stuaton lke fgure c occurs, the cleared quantty shall be the hghest possble. It s worth mentonng that the stuaton as fgure 1.1 c-d shows, can only occur f the market rules allows vertcally and horzontal so called starcases wth no nclnaton, gven that we can have several ponts of ntersecton between the two curves. Other markets, lke Nordpool, don t allow ths and therefore the ntersecton between the curves always occurs n one pont only. 9

10 1.4 Matchng Process Introducton The Matchng Process [6] s one of the most mportant procedures n an electrcty market and especally for the Day-Ahead Market. It s from ths process that the total amount of energy whch s gong to be produced and later on sell s gong to be determned. It s mportant to know that not all energy n a country comes from the Day-Ahead Market and that n some countres ths energy represents not more than 10% of the total energy consumed. In Romana, the energy sold n the Day-Ahead Market s the dfference of what a producer can produce and the blateral contracts that he has undergone wth a consumer. In the same manner, the energy bought at the Day-Ahead Market by a consumer, s the dfference between the quantty that ths consumer s gong to consume and the blateral transactons that ths consumer has undergone wth a producer. The am of the matchng process s to determne the prce of energy for the nterval and zone n queston. Ths wll eventually lead to a selecton and acceptance of offers omtted to the market. In the next chapters, the matchng process wll be explaned n detal and comments wll be done, explanng the dfferent steps. At the end, an example wll be gven, to better show ths mportant procedure. As mentoned n earler chapters, the Romanan market has two tradng zones, referred to as the natonal tradng zone and the border tradng zone(s). As the names stpulates, the natonal tradng zone s the part of the natonal power system to whch producers and consumers are connected to, n ths case Romana, whlst the border tradng zone(s) are the neghbourng countres around. When executng the matchng process, t s consdered that congeston can only occur n the lnes connectng the natonal tradng zone wth the border tradng zones and that the capacty of the lnes n the natonal tradng zone are much greater than the power transmtted on them. Ths s equvalent to say that congeston s only due to offers comng from abroad. Fgure 1.2 Congeston can only occur n the lnes connectng Romana wth ts neghbourng countres. 10

11 1.4.2 Mert Order After the market closng tme, whch s the tme when the Market Operator stops to receve buy and sell offers, the Market Operator has to create the mert order for all the sell and buy offers receved for the day and nterval n queston. For sell offers, the offer wth the lowest prce shall have the prorty and therefore be placed frst on the mert order for sell offers before the next lowest bd. The bd wth the hghest prce shall then be placed last on ths lst. For buy offers, the offer wth the hghest prce shall have the prorty and therefore shall be place frst on the lst. The last offer n the mert order for buy offers shall be the one wth the lowest prce. Graphcally, the mert order lst for both type of offers, can be represented as fgure 1. Fgure 1.2 Mert order lst for both buy and sell offers, represented graphcally Extenson of Mert Order If the most expensve sell offer has a prce whch s below the maxmum value of the reference level called prce scale, then the rules stpules that the mert order for sell offers shall be extended by the creaton of a fctve bd wth a prce equal to the maxmum prce of the reference level and wth a quantty of zero. In the same manners, f the prce of the cheapest buy offer s above the mnmum value of the reference value, normally set to zero, then the mert order for buy offers shall be extended by the creaton of a fctve bd whch has a prce equal to ths mnmum prce and wth a quantty equal to zero. To understand the purpose of ths, fgure 1.3 shows the mert order lst for two sell offers and three buy offers. As fgure 1.3 s drawn, we can not fnd an ntersecton between the two curves and therefore we can t determne the market clearng prce and no energy wll be cleared, even though t s obvous that all the supply can be met. After the extenson of the two mert order lst wth the fctve bds, we can see n fgure 1.4 that the determnaton of the market clearng prce and the energy cleared s now possble, snce we have an ntersecton. It s mportant to remember that the two fctve bds created by the Market Operator are there only to fnd the ntersecton of the two curves, and can never be nterpreted as real offers. 11

12 After the creaton of the Mert Order lsts, the ntal market clearng prce shall be determned as to secton 1.3. Prce Quantty Prce Part of bd that has been accepted Quantty Fgure 1.3 Mert Order wthout offer extenson. Fgure 1.4 Mert Order wth offer extenson Acceptance of offers After the determnaton of the ntal market clearng prce, the matchng process shall prelmnary accept offers. Graphcally, the prelmnary accepted sell offers are the ones that are placed at the same level and below, as the pont of ntersecton that leads to the determnaton of the ntal prce. For buy offers, the prelmnary accepted offers are the ones placed at the same level and above, as the pont of ntersecton. It s mportant to remember that for offers, placed graphcally at the same level as the pont of ntersecton, only a part of the offered quantty can be accepted (see fgure 1.4). Ths quantty s strctly determned by the matchng process and s done to mantan the energy balance n the natonal power system Determnaton of the Supply and Demand Volume. After the determnaton of the ntal prce and the prelmnary acceptance of offers, the matchng process shall determne the supply and demand volume separately for each zone. For the supply volume, ths s done by summarzng the quantty of all the prelmnary accepted sell offers, takng nto account the zone that they belong to. In the same manner, the demand volume s the total quantty of the prelmnary accepted buy offers, takng nto account the zone that they belong to. Havng the prelmnary volumes for each zone, the matchng process shall determne the contractual exchanges as the dfference between the supply volume and demand volume for each zone, not beng the natonal tradng zone. Ths s done to be able to see the amount of electrc power that s gong to transt on the lnes between the natonal tradng zone and each border tradng zone. These contractual exchanges shall then be compared to the maxmum value allowed, also called ATC 2 value, for each border tradng zone. All zones where the transt of power s greater than ts ATC lmt shall be named as congested zone and the market splttng procedure shall be appled. The notaton congested zone s not qute rght, snce congeston can only occur between zones due to the physcal lmts of the transmsson lnes that nterconnect the zones. Therefore, wth the term congeston zone t s meant that we have congeston between a border tradng zone and the natonal tradng zone and that the congested zone s the border tradng zone. 2 Avalable Transfer Capacty 12

13 The ATC values shall be provded by the Transmsson System Operator (TSO), who determnes the values for each nterval durng the day and also for each drecton (.e. export to and mport from the natonal tradng zone). Ths means that a transmsson lne doesn t necessary have the same ATC value for mports as exports. Ths depends on many factors and among them a phenomenon called wheelng, whch s the term used to descrbe the free movement of electrcty along nterconnected transmsson lnes. Ths phenomenon has become more common today n a deregulated energy envronment, whch encourages the communcaton and cooperaton between the TSOs of neghbourng countres Market Splttng Congeston Management When a zone has been found congested, the matchng process shall determne the mert order lst for ths zone, takng only nto account the offers that apples to the zone n queston. Ths shall be done for all the congested zones separately but also for the uncongested zones. Afterwards, the matchng process shall determne the ntal market clearng prce for all congested zones and for the uncongested zone. The prce at each congested zone shall then be compared wth the prce n the uncongested zone. The congested zone wth the largest dfference n prce shall become the selected zone and shall be treated frst. All other congested zones, shall be consdered as uncongested snce when releasng the congeston n the selected zone, the transt of power wll be modfed and a zone that was congested before can now become uncongested. If the contractual exchange of the selected zone s postve and larger than ts ATC value, the matchng process shall extend the mert order lst for the congested zone by an offer wth a prce equal to zero and wth a quantty equal to the ATC value. In addton, an offer shall be added to the mert order lst of the natonal tradng zone, wth a prce equal to the maxmum prce of the prce scale and wth a quantty equal to the ATC- value. If the contractual exchange s negatve and ts absolute value s larger than the ATC- value, then the matchng process shall extend the mert order lst of the congested zone by an offer wth a prce equal to zero and wth a quantty equal to the ATC- value. In addton, an offer shall be added to the mert order lst of the natonal tradng zone, wth a prce equal to the maxmum prce of the prce scale and wth a quantty equal to the ATC- value. Ths wll create two fctve bds, one n the congested zone and one n the natonal tradng zone that wll force the transt of power between the selected zone and the natonal tradng zone to be equal to the maxmum lmt of the lne that connects them together. At the end of ths chapter, an example s gven to show ths mechansm. The matchng process shall now contnue, by the determnaton of the new market clearng prce for the selected congested zone, takng nto account the fctve bd from the congeston management. A determnaton of the ntal market clearng prce shall also be done for the uncongested zone, takng nto account the new bd from the congeston management but also takng nto account the bds from the all the other congested zones whch have not been selected for congeston management. The market clearng prce for the selected zone shall become the fnal prce and ths zone, together wth ts offers, shall not be taken nto further account. The matchng process shall, one more tme calculate the supply and demand volume for the border tradng zones n the uncongested zone and verfy congeston. Whle the matchng process fnds congested zones, the congeston management shall be repeated untl there are no more congested zones left. 13

14 Start Market closng tme 1 Creaton of mert order 2 Determnaton of ntal market clearng prce. 3 Prelmnary acceptance of offers 4 Computng of Contractual Exchanges (C.E) for border tradng zones 5 C.E - ATC > 0 No 6 Intal MCP, becomes the fnal MCP 7 Prelmnary accepted offers, becomes fnal accepted offers Stop Trade confrmaton Yes 8 Creaton of the mert order separately for each congested zone and for the uncongested zone 9 Determnaton of ntal MCP, separately for congested zone and for the uncongested zone 10 Determnaton of Selected zone 11 Extenton of the mert order lst for the selected zone and the natonal tradng zone 12 Computng fnal MCP the for selected zone and ntal MCP for the uncongested zone 13 Fnal acceptance of offers for the selected zone Prelmnary acceptance of offers for the uncongested zone Trade confrmaton for selected zone Selected zone Uncongested zones Fgure 1.5 Flow chart of matchng process and congeston management Selecton of Offer and Trade Confrmaton Snce the congeston management s an teraton process, we are gong to have several market clearng prces durng the executon of the matchng process before arrvng to the requred 14

15 stuaton where we have no congeston. Therefore, the fnal selecton of offers shall be done accordngly to the mert order that leads to the fnal market clearng prce. Seen from a general perspectve, t s mportant that the demand volume s equal to the supply volume to have equlbrum n the power grd. Meanwhle, ths does not mean that the equlbrum shall be mantaned wthn a zone, snce energy can transmt between dfferent zones. After the fnal selecton of offers, the Market Operator shall create a trade confrmaton for each market partcpant, whch shall contan at least the followng nformaton; Name and Identfcaton code of the market partcpant n queston Delvery day and tradng nterval Tradng zone Quantty sold respectvely purchased by ths market partcpant Prce of the transacton, whch s the market clearng prce for the zone n queston The quantty and prce stpulated n the trade confrmaton shall later be used when performng the settlement calculatons. Therefore, the Market Operator must provde a copy of the tradng confrmaton to the Settlement Admnstrator when sendng t to each tradng partcpant that has undergone a transacton n the DAM. In order to better understand the matchng process, n appendx B a smple matchng process example can be found. 15

16 1.5 Settlement - DAM Introducton As menton n the am of the project, the settlement [7] has the object to determne the payments for transactons made under the dfferent markets by the market actors. The daly settlement [7] s run every tradng day by the Settlement Admnstrator, who s responsble for ths task. The Market Operator has to provde all necessary nformaton to the Settlement Admnstrator, so that he can be able to perform the calculaton and the nvocng correctly. The nformaton requred, and provded by the Market Operator through the tradng confrmaton s; Identfcaton code of the tradng partcpant Delvery day n queston Tradng nterval n queston Tradng zone Transacton quantty, and Transacton prce (.e. market clearng prce) On the other hand the Settlement Admnstrator shall provde, Market operator fees All applcable taxes The Settlement Admnstrator shall provde each tradng partcpant wth a daly statement. Ths statement ncludes: The daly settlement amount for the delvery day n queston The total volume and amounts of all sales by the tradng partcpant to the Market Operator The total volume and amount of all purchases by the tradng partcpant from the Market Operator The amount resultng from any applcable Market Operator fees The amount resultng from taxes The total amount to be debted or credted to ths party s account. Each Tradng Partcpant shall create a market clearng account, that the Settlement Admnstrator shall have total access to. Ths shall be used when dstrbutng the payments for transacton undergone n the DAM Daly Settlement Calculaton The Settlement Admnstrator shall determne for each tradng partcpant the daly settlement amount, by aggregatng the product of the quantty and the prce of all transacton that ths partcpant has undergone wth the Market Operator n the DAM for the day n queston. Mathematcally, ths can be expressed as, 16

17 DSA = Q t, P,, (2) t z where DSA s the daly settlement amount, Q t,z s the quantty of the transacton and P t,z s the prce of the transacton for the t-th tradng nterval and for tradng zone z. As mentoned before, the prce of the transacton s the market clearng prce for the nterval and zone n queston. The sum shall be done for all the zones and for all the ntervals durng the day n queston. To separate buy and sell transactons, the quanttes of purchases shall be expressed wth a negatve sgn and all sale transactons shall be expressed wth a postve sgn. Snce a tradng partcpant can be both a producer and a suppler, whch means that he can buy and sell energy to the DAM, the equaton above can be wrtten as, z t z DSA = ( PTQt, z MCPt, z + STQt, z MCPt, z ), (3) t z where DSA s the daly settlement amount, PTQ t,z stands for the purchased quantty (wth a negatve sgn), STQ t,z for the sale quantty and MCP t,z s the prce of the transacton for the t- th tradng nterval and for tradng zone z. For each transacted MWh, each market partcpant must pay a fee to the Market Operator whch can be expressed as, DAMOF = MOF t, z ( STQ t PTQ, (4), z t, z ) where MOF s the market operator fee and s a constant determned by the Settlement Admnstrator. The total amount to be debt, n case of a negatve value, or credt, n case of a postve value, to the market clearng account of the correspondng tradng partcpant, s then, DTSA = DSA DSA TDAM DAMOF, (5) where DTSA stands for daly total settlement amount and TDAM s the Day-Ahead Market taxes appled to the daly settlement value Daly Settlement durng Transton phase The settlement performed durng the transton phase, s qute dfferent from the settlement performed durng the fnal phase. The bggest dfference s that the settlement must be corrected at the end of the day, due to the fact that durng the transton phase the consumpton s based on estmatons. Another dfference s that durng the fnal phase, the settlement s based on the quanttes that each partcpant has been selected for and nothng more (see equaton 1-4), whle durng the transton phase other terms wll also ntervene as we shall later see. At the end of each day durng the transton phase, when recevng the metered values from the dfferent meterng ponts placed n the natonal power system, the Settlement Admnstrator must calculate the compensaton payments for the dfference between the 17

18 prelmnary settlement, based on the estmated consumpton and the fnal settlement, based on the metered consumpton for each nterval. Durng the transton phase, as mentoned n secton 1.1, a net physcal poston s determned for each tradng partcpant beng a producer whle a prelmnary transacton quantty s to be calculated for supplers. Ths nformaton s gong to determne the quantty that a producer / suppler s gong to delver, respectvely buy from the DAM. Mathematcally, these two expressons can be wrtten as, NPP = STQ ESTC ESTC TP CDF PTQ + RBE DBE + IMP EXP, (6) where STQ s the cleared energy n the DAM correspondng to the tradng partcpant n queston, EST s the consumpton estmaton for the tradng partcpant TP n queston, CDF s the centralsed demand forecast determned by the Market Operator, PTQ s the purchased energy, RBE s the net blateral exchange receved by the tradng partcpant, DBE s the net blateral exchange delvered by the tradng partcpant, IMP s the mport nomnated by the tradng partcpant and EXP s the mport nomnated by the tradng partcpant. The dfference between TP ESTC and CDF, s that n CDF the network losses are ncluded. Ths means that t s the consumers that have to pay for the losses that occur n the Natonal Power System. Ths turns out to be natural, knowng that the Market Operator s a non-proft company. If the net physcal poston has a negatve sgn, then t s known as the prelmnary transacton quantty PRTQ. All partcpants havng a postve net physcal poston are deemed to have sold energy to the DAM, whle all partcpants havng a negatve net physcal poston are deemed to have bought energy from the DAM. The total sale transacton amount (TSTA) and total purchased transacton amount (TPTA), shall then be based on the quanttes gven above together wth the market clearng prce for the nterval and zone n queston. Mathematcally ths can be wrtten as, TSTA = NPP t MCP, NPP > 0, (7) t z, z t, z TPTA = NPP t MCP, NPP < 0, (8) t z, z t, z The followng example gven below wll help to understand the two terms and ther settlement. Example 1.1: Let s assume that a producer, called P1, has undergone a contract wth a consumer for the delvery of 1000 MWh at a prce of 25 /MWh. Let s also assume that P1 s total producton 18

19 capacty s 1100 MWh. As explaned before, all producers are oblged to submt sell offer to the DAM for ther entre producton capacty durng the transton perod. Let s assume that he dstrbutes hs offers n the followng way for a gven dspatch nterval: Offer 1: /MWh Offer 2: /MWh At the same tme another producer, P2, has submtted the followng offer: Offer 3: /MWh Due to the transton perod, the Market Operator sets the load forecast to 1100 MW. All ths gves the followng stuaton, Prce Quantty After runnng the matchng process, the accepted offer wll be; Sell offers Load Forecast Offer 1: 900 MW that wll be pad at a prce of 19 / MWh (MCP) for the tradng nterval of one hour. Offer 3: 200 MW that wll be pad at a prce of 19 / MWh (MCP) for the tradng nterval of one hour. P1 has a producton oblgaton of 900 MW, whle he s gong to get pad for 1000 MW accordngly to the contract. Ths means that P1, s earnng 2500 (100*25 ) for the addtonal 100 MWh that he does not produce. But who wll produce the addtonal 100 MW ( =100), whch s the dfference between P1 s contracted value and the value that he has been selected for by the market? Accordngly to equaton (6), the expresson for P1 s net physcal poston s, NPP = STQ ESTC ESTC TP CDF PTQ + RBE DBE + IMP EXP Snce we are here consderng the smplest case, meanng that P1 s a smple producer who s sellng ts energy to another partcpant and doesn t export nor mport energy, the terms ESTC, CDF, PTQ, RBE, IMP and EXP are all zero. Ths leaves the reduced equaton, wth STQ and DBE defned as above. NPP = STQ DBE, (9) 19

20 Usng the numbers gven n the example, we fnd NPP = = 100 whch defnes the amount that P1 has to buy from the DAM. The amount to pay the Market Operator can now be determned by equaton (8), TPTA=100*19 = 1900, contanng one element snce we are only consderng one dspatch nterval. The total amount that P1 s gong to receve s therefore, 1000* = Compensaton payments At the end of each tradng nterval, the Settlement Admnstrator wll receve the metered values for each partcpant who s regstered as a suppler. Ths nvolves that the values and naturally the amounts, are gong to be modfed. The compensaton made after each tradng nterval, s determned accordngly to, ESTC CDF DCOP = ( TMC ) MCP, (10) ESTC where TMC s the total metered consumpton, ESTC s the estmated consumpton for tradng partcpant TP n queston, CDF s the centralzed demand forecast and MCP s the market clearng prce. TP Dstrbuton of payments Transton rules The Settlement Admnstrator can, durng the fnal settlement rules, demand tradng partcpant to provde an amount of economcal securty before beng enttled to commt transacton n the DAM. Ths amount wll then lmt the total fnancal volume that a tradng partcpant can submt to the DAM. By ths, the Market Operator s always sure of recevng payments for transactons. Ths opton doesn t exst durng the transton perod and other measurements must be taken to avod that the Market Operator s affected economcally, snce he s a non-proft company. To protect the Market Operator from the rsk of non payments from any tradng partcpant, and to dstrbute the assocated rsk and losses to all tradng partcpant, the Settlement Admnstrator shall make sure that the Market Operator always pays all owned amounts, upon the recepton of payments from other partcpants ownng money. The amount receved by the Market Operator shall then be dstrbuted n portons, whch depend on the total amount receved and the amount that he should have receved, to each tradng partcpant. Mathematcally ths can be wrtten as, 20

21 P dstr amounttotp = A owned amountbym Areceved amountbym. O. OtoTP, (11) A owned amountbym. OtoTP Havng ths form of dstrbuton, the payments performed by the Market Operator can never be greater than the amount that he has receved. Tradng partcpants are not allowed to reclam any outstandng payments to the Market Operator. The only way for a tradng partcpant to take legal acton aganst another partcpant, who for some reason doesn t pay, s by choosng to be settled blaterally. Ths means that all amounts that a partcpant owes to the Market Operator, shall be proportonally owed to all partcpants that have to get pad. Mathematcally, ths can be wrtten as RAj PA, j = PA, (12) TRA In the same manner, all amount that a partcpant s owed by the Market Operator, shall be proportonally owed to all partcpants, Mathematcally ths can be wrtten as, PAj RA, j = RA, (13) TPA Now, each partcpant can easly verfy whch partcpant s responsble for the outstandng payment, and can decde to start a legal procedure. To better understand ths, the followng example s gven: Example 1.2: Let s assume that we have a market stuaton wth sx partcpants. Three of them are buyer and three of them are seller. The amount that each partcpant must pay, respectvely get pad are shown n the fgure below To prevent non- payments, let s assume that all Sellers TP1 TP2 TP3 sellers chose to be settled blaterally. Ths means that the Settlement Admnstrator wll determned the amount that each of ths sellers M.O must receved from each of the buyers. Usng equaton (12) and (13), we can determne the correspondng amounts, whch Buyers can be summarzed n the table below. TP4 TP5 TP Fgure 1.6 Market stuaton From To TP1 TP2 TP3 TP TP TP Table 1.1 Dstrbuted amounts 21

22 Let s now assume that tradng partcpant TP6 does not pay the amount that he owns. The dstrbuton wll then be as to table 1.1 and each seller can verfy that the outstandng amounts are due to TP6 s non- payment and can take legal actons wthout nvolvng the Market Operator. As shown, the Settlement Admnstrator shall make sure that the Market Operator only dstrbutes the amount that he has receved. Sellers TP1 TP2 TP M.O Buyers TP4 TP5 TP Fgure 1.7 Dstrbuton payments for Example

23 2. Balancng Market 2.1 Introducton As all offers to the Day- Ahead Market must be submtted before 5 p.m. local tme the day before the tradng day, ths means that the market s not organsed for handlng offers n realtme. To be able to mantan the load equal producton at all tme n the natonal grd and thereby beng able to handle unexpected changes that can occur durng the tradng day, another market must be created that selects offers n advance and later call up on them n real tme when needed. Ths market s known under the name of Balancng Market [8] and s very mportant n order to prevent a collapse n the natonal power system. It s the Transmsson System Operator (TSO) represented by the Romanan Power Grd company Transelectrca S.A 3 that has the total responsblty of the balancng market and s therefore the balancng market operator. Hs task s to ensure that the securty s mantaned for each tme nterval durng the day, by buyng or sellng energy at the balancng market. The balancng market, whch covers ths purpose, has three types of balancng energy; Secondary Regulaton Fast Tertary Regulaton Slow Tertary Regulaton and nvolves the followngs partcpants, The TSO All producers that operate dspatchable unts All consumers that operates dspatchable loads, mostly pump-storage plants. Durng the followng chapters, we wll see how the balancng market s used by the TSO and the balancng partcpants. We wll also see how balancng energy s used when solvng network constrants, whch sometmes are due to the use of balancng energy tself. Terms lke down and up-regulaton wll be explaned and fnally we wll deal wth the settlement formulaton. 3 Transelectrca s responsble for sale and effcent operatons of the power system and the whole electrc market. 23

24 2.2 Balancng Energy Balancng energy shall be used for ether upward or downward regulaton. The term upward regulaton means that a producer ncreases hs producton or that a consumer wth a dspatchable load, reduces ts consumpton. In the same manner, wth downward regulaton t s meant a producer who reduces ts producton or a consumer that ncreases ts consumpton. To ensure the securty of the system, all lcensed partes that operates dspatchable loads and unts, must sgn up as balancng market partcpant and shall be authorzed for the delvery of secondary, fast tertary and/or slow tertary regulaton dependng on the type of unt / load that ths partcpant owns (standng data as ramp-tme, cool down tme etc, are taken nto account). If a unt or a load has not been authorzed for the delvery of fast tertary, then t s deemed that ths partcpant s authorzed for the delvery of slow tertary regulaton Prmary and Secondary Regulaton The power balance s frst mantaned by usng prmary regulaton and secondary regulaton. It s the devaton n frequency that s gong to actvate the prmary regulaton, snce the frequency n the power system ndcates the balance between electrcty producton and consumpton. If the frequency decreases from ts nomnal value, 50.0 Hz, then consumpton s hgher than producton. In the same manner, producton s greater than consumpton when the frequency of the grd ncreases from the nomnal value. Prmary regulaton s completely automatc and can be moblsed wthn 30 seconds and mantan for a perod of 15 mnutes. Wth automatcally, t s meant that no physcal person must actvate the regulaton after a gven order. In Romana, all tradng partcpants provdng electrcal energy must also provde some knd of prmary regulaton. If they can t manage to do ths all by them self, they are allowed to pay a thrd party that can provde prmary regulaton nstead. The prmary regulaton s part of the Ancllary Servces Market, and therefore out of the scope of ths report and project. Snce the prmary regulaton causes the frequency to ether descend or to ncrease, ths soluton can not be used n a longer tme frame snce the system must mantan the nomnal frequency. To solve ths problem, the TSO shall call upon the use of secondary regulaton, whch functon s: Restore the frequency to 50.0 Hz Substtute the prmary regulaton, n order to have prmary regulaton avalable n case a new, unexpected load or producton change occurs. To be able to provde secondary regulaton, the provdng party must be regstered and authorsed by the TSO for ths purpose. The secondary regulaton must be moblsed wthn a maxmum of 15 mnutes, startng after no more than 30 seconds after a correspondng nstructon has been ssued by the TSO. Unlke prmary regulaton, whch the TSO has no control over, secondary regulaton s controlled automatcally by a devce called Automatc Generaton Control (AGC) and a partcpaton factor. The partcpaton factor s calculated by the TSO and decdes the part of the total amount of balancng energy that each generator provdng secondary regulaton, must delver. The Romanan regulator ANRE, has untl today 24

25 not chosen how often ths partcpaton factor wll change. The most probable soluton s to have a partcpaton factor that changes each day. Another possble soluton s havng partcpaton factors that follows the on-peak and off-peak perods. A system that changes ts partcpaton factor each tradng nterval s not to recommend, snce ths can gve relablty problems and jeopardy the system s securty. It s worth mentonng that some countres have decded that ther secondary regulaton, or secondary control as t also can be called, shall not be automatcally and nstead manually. Ths s the case n the Nordc power grd, were the secondary regulaton s started manually by a techncan n the control room of each producton unt after a gven order from the TSO [9] Tertary Regulaton If the TSO expect that balancng energy wll be needed durng a longer tme perod, he shall try to replace the secondary regulaton wth tertary regulaton n order to have secondary regulaton avalable n case of new, unexpected producton changes occurs. Ths tertary regulaton s dvded nto two sectons: Fast Tertary Regulaton can be fully provded wthn 15 mnutes after nstructon from TSO. Slow Tertary Regulaton can be provded after more than 15 mnutes after nstructon from TSO. As the names clearly states, the frst one s the faster one of the two. Techncally ths means that a generator that provdes fast tertary regulaton, s synchronsed wth the natonal power system, but does not nject any electrcal power nto the net untl he s told to. Normally, ths knd of regulaton s provded by thermal power plants that are kept n the rght temperature. Slow tertary regulaton s provded by generators that are not synchronsed wth the natonal power system, and therefore takes longer tme for them to start up and get synchronsed wth the natonal power system. 2.3 Submsson of offers All tradng partcpants that have been sgned up as balancng market partcpants must submt daly offers for ther entre capacty of a dspatchable unt/load that has been declared avalable. Ths daly offers shall contan the prce and the amount of balancng energy that ths partcpant s wllng to make avalable for up and down regulaton, but not contan the type of balancng energy as to whch the offer apples to, as many other markets requres. The prce gven for upward regulaton s the mnmum unt prce for whch ths partcpant s wllng to provde the energy offered. In addton, the prce gven for downward regulaton s the maxmum unt prce that a partcpant s wllng to pay when provdng downward regulaton. In other words, t can be sad that upward regulaton s sellng energy to the balancng market whle downward regulaton s buyng energy from the balancng market. Unlke offers omtted to the Day-Ahead Market, each daly offer can only contan up to ten prce-quantty pars. In the case of a dspatchable unt, all offers wth the lowest prces and a total quantty below the scheduled producton shall be consdered as offers for downward 25

26 regulaton. In the same manner, all offers wth the hghest prces and a total quantty above the scheduled value shall be deemed to be offers for upward regulaton. For a dspatch load, the frst prce-quantty par s consdered to be the mnmum consumpton of ths load and the energy that the partcpant don t want to do avalable for balancng energy. All quanttes that are between the scheduled value and ths mnmum consumpton shall be deemed as quanttes for upward regulaton and all other shall be consdered for downward regulaton. Prce Q mn Q scheduled Q max Quantty Downward regulaton Upward regulaton Fgure 2.1 Daly offers omtted by a producton unt. In addton to the daly offers, all partcpants that are enttle to provde slow tertary regulaton shall also submt standng offers, whch shall contan two components: Standng Offers for Start-up, and Standng Offers for Stand-by Each standng offer for start-up defnes the prce at whch a partcpant s wllng to start hs producton unt that s not synchronsed wth the natonal power system. For a consumer, ths means the prce at whch he s ready to start the reducton of consumpton of hs dspatchable load. Each standng offer for stand-by defnes the prce per hour that a partcpant s wllng to let hs producton unt be n a state that allows t to be synchronsed wth the natonal power system on nstructon of the TSO. For a dspatchable load the stand-by prce s, for natural reasons, consdered to be zero Avalable Balancng Capactes After the recepton of all offers and followng the approval of the physcal notfcaton, whch determnes the scheduled for a gven unt/load, the TSO shall determne the avalable balancng capactes, whch s the total balancng energy that can be made avalable by a unt / load durng each nterval and the dstrbuton of ths energy n the dfferent types of balancng energy. The TSO shall determne the avalable balancng capactes separately for: Each dspatchable unt / load 26

27 Each dspatch nterval Each type of balancng energy,.e. secondary, fast and slow tertary Up and downward regulaton Ths calculaton shall maxmse the avalablty of secondary regulaton, before fast tertary regulaton and slow tertary regulaton takng nto account techncal constrants as max and mn generaton, ramp rates, start-up tme, coolng down tme, stand-by possbltes/ constrants etc. Ths selecton can be llustrated, wth the same producton unt as above, n the followng fgure, Prce fast tertary regulaton fast tertary regulaton Q mn Q scheduled Q max Quantty slow tertary regulaton secondary regulaton slow tertary regulaton Fgure 2.2 Avalable balancng capactes As the fgure shows, a range around the scheduled producton s made avalable for secondary regulaton, and then an addtonal amount as fast tertary and the remanng capacty s made avalable for slow tertary regulaton. However, f the scheduled producton s changed due to the use of balancng energy,.e. the producton unt provdes downward or upward regulaton, the stuaton may change. Therefore, the TSO shall verfy after a gven nstructon for the delvery of balancng energy to the provdng party, that the lmts are stll vald and change them f necessary. 2.4 Selecton of offers For the selecton of offers n the Balancng Market, three dfferent tmeframes are used as llustrated by the fgure below. Each dspatch nterval s splt nto four 15 mnutes ntervals, whch are agan dvded nto three 5- mnutes balancng ntervals, ensurng n ths way that there s no conflct between the use of the same offer for one of the three types of balancng energy. 27

28 Fgure 2.3 Tmeframe for the use of balancng energy. Note: The tme s not n scale. At least 20 mnutes before the start of each balancng nterval, the TSO shall have completed ts selecton of offers for secondary regulaton for the nterval n queston. Ths s done by collectng all offers made avalable for secondary regulaton accordngly to fgure 2.2, and lstng then by prce,.e. determnng the mert order lst, separately for upward and downward regulaton. Thereafter, the TSO shall accepted offers so that the followng ponts are satsfed: The aggregated quantty of all accepted prce- quantty pars for upward and downward regulaton s equal to the requred margn. The accepted upward regulaton quantty for a dspatch unt shall be equal to the downward accepted quantty. Rght after the selecton, the TSO must nform all partcpants about the quantty that they have been selected for. After the recepton of ths nformaton, the partcpants shall set the regulatng band of the unt, gven the TSO fully access to t. In case the TSO consders t necessary, he wll send sgnals n real tme from the central secondary controller to the AGC and start the delvery of balancng energy of ths unt. Upon the recepton of a sgnal, a transacton s deemed to take place between the TSO and the provdng unt at a prce of the most expensve offer accepted by the TSO. In the same manner, the prce when provdng downward regulaton shall be the prce of the cheapest offer that the TSO has accepted for downward regulaton. It shall be précsed that only selected offers wll be pad, n dfference from some markets that also pay just for submttng offers. Unlke secondary regulaton, where the selecton of offers s done even though the need of balancng energy has not yet been determned, the selecton of fast tertary s done when the TSO expects a contnuous need of balancng energy. He shall then determne the tme ntervals were balancng energy wll be requred and select offers that are wthn ths nterval. Ths s done snce the control of fast tertary regulaton s a decentralsed manoeuvre that takes place at the central command room of each unt, gven the TSO no control over t. When dong the selecton, the TSO shall verfy that the requred margn for secondary regulaton s mantaned at all tme. In the same manners, the TSO shall use slow tertary regulaton f he expects a contnuous need for balancng energy durng one or more dspatch ntervals. After determnng the dspatch nterval(s) were balancng energy wll be requred and the amount, the TSO shall accept offers. Ths selecton s done n the same manners as the selecton for the other types of regulaton. The TSO can also accept the standng offers that have been submtted to the 28

29 balancng market. All standng offers for start- up that are accepted by the TSO and that lead to an addtonal start- up, establsh a transacton between the TSO and the provdng party at the tme nstructed by the TSO and shall be pad at the offered prce. All standng offers for stand- by that have been accepted, establsh a transacton between the TSO and the provdng party durng the tme specfed by the TSO and for the prce offered. To avod an neffcent reservaton of offers for a certan type of regulaton, all offers for secondary regulaton are also made avalable as fast and slow tertary regulaton, and all offers for fast tertary are made avalable as slow tertary regulaton. It s though very mportant that the TSO has enough secondary and/or fast tertary regulaton avalable at all tmes. Therefore the TSO must calculate for all balancng ntervals, a certan mnmum amount, called requred regulaton, of secondary respectvely fast tertary regulaton that must be kept at all tme and therefore reserved. For better understand the use of the three tmeframes, let s assume a major producton outage, expected to contnue for several hours. The use of secondary regulaton s determned for the current balancng nterval. At the same tme, the TSO already decdes on the use of fast tertary regulaton. But the use of fast tertary regulaton s only begnnng wth the frst 15- mnutes nterval startng at least 15- mnutes after the end of the current balancng nterval,.e. n ths case by the begnnng of the fourth 15 mnutes nterval of the current dspatch nterval. Smlarly, the use of slow tertary regulaton s only begnnng wth the frst dspatch nterval startng at least 1 hour after the end of the current balancng nterval,.e. n ths case by the begnnng of dspatch nterval 2. By ths procedure, the rules avod any conflct due to the smultaneous use of any offers for secondary, fast tertary and / or slow tertary regulaton. In essence, any mbalance s thus frst solved by secondary regulaton, whch can be replaced by fast tertary regulaton wthn mnutes. The use of fast tertary regulaton may n turn be replaced by slow tertary regulaton after a mnmum of mnutes. Ths structure therefore tres to fnd a sutable compromse between allowng determnng an optmal soluton and lmtng the complexty of the selecton mechansm. DI DI DI DI 0 ( current dspatch nterval ) 15 mn 15 mn 15 mn mn 1 Bal. Interval 1 Bal. Interval 2 Bal. Interval 3 5 mn Secondary Fast Tertary ( mn ntervals) Slow Tertary t actual Fgure 2.4 Example showng the mechansm of the three tmeframes. As all the balancng market partcpants are oblged to submt daly offers to the market, the TSO s always sure of havng suffcent balancng energy. To control ths, the TSO must 29

30 verfy that each partcpant has submtted vald offers for all ts unts. If the TSO determnes that a partcpant has faled to submt an offer, t shall nform the partcpant gvng the nformaton of the mssng unt. At the recepton of such nformaton, the partcpant has 30 mnutes for sendng the mssng offer. If the partcpant doesn t response to ths call, then the TSO wll create the mssng offer based on the standng techncal data and the approved physcal notfcaton for the correspondng unt. The prce of all prce-quantty pars n such an offer shall be equal to the market clearng prce of the Day-Ahead Market applyng to the delvery day and dspatch nterval n queston. 2.5 Congeston Management If a transacton concluded by the TSO would result n a congeston that can endanger the securty of the natonal power system, he shall mmedately cancel ths transacton by markng t as cancelled n the balancng market system. Thereafter, he shall replace ths cancelled transacton by acceptng an equal amount of balancng energy but at the same tme makng sure that ths new acceptance doesn t lead to new congeston. Ths new accepted offer shall then be marked as used for congeston management n the balancng market system. Balancng energy shall also be used to treat unexpected congeston that can occur durng the day. The TSO shall solve congeston by selectng an equal amount of upward and downward regulaton n the respectve parts of the system where congeston s due to take place. In addton, the TSO shall specfy: The tme at whch the congeston s expected to start and how long s ts expected duraton The requred reducton of the power flow between the two parts n the system where the congeston s gong to take place. Where n the natonal power system the congeston s stuated. The TSO shall try as far as possble to solve all congeston wth the use of slow tertary regulaton and f ths s not possble, the use of fast tertary regulaton. All the transacton that takes places after a gven order from the TSO for takng care of congeston shall be marked as used for congeston management n the balancng market system. The frst reason for ths s that from a settlement pont of vew, there s a dfference done between the costs for system balancng, meanng the transactons used to keep the balance, and the costs for congeston management, meanng the transactons used to avod congeston n the system. The second reason s that the transactons for congeston management are not taken nto account when determnng the penalty that each partcpant must pay for mbalance. Ths wll be further explaned n chapter

31 To understand how balancng energy can be used to solve network constrants, let s look at the followng example. Example 2.1: Let s assume that the TSO becomes aware of the followng stuaton that s gong to take place n a couple of hours, To solve ths problem, the TSO shall order the delvery of 50 MW downward regulaton n the border tradng zone and 50 MW upward regulaton n the natonal tradng zone. By dong ths, the transt of power wll be decreased to the allowed amount of 200 MW, and the congeston s solved. It s mportant to understand that ths example s extremely smplfed snce n realty we have many more factors that come nto play, but the prncple stays the same. 2.6 Settlement Balancng Market Introducton As n the Day-Ahead market, the TSO shall prepare trade confrmaton for all the transacton concluded durng the day n the balancng market and that have not been cancelled due to congeston. Each tradng confrmaton shall contan the accepted quanttes and prce for each type of balancng energy and for upward and downward regulaton. Ths trade confrmaton shall be send to all partcpants that the TSO has undergone a transacton wth and one copy shall be send to the settlement admnstrator. At the end of each month, the meterng operator must send all metered values [MWh] to the TSO. Upon the recepton of ths nformaton, the TSO shall create the monthly balancng market statement separately for each balancng market partcpant. Ths statement shall summarze, as the trade confrmaton, all monthly amounts of balancng energy delvered and actually delvered, by the partcpant n queston together wth ts prces. Ths monthly statement shall be send to the correspondng balancng market partcpant and to the Settlement Admnstrator. 31

32 2.6.2 Daly Settlement Calculaton Upon the recepton of the monthly statement, the settlement admnstrator shall performed the settlement calculaton, separately for each partcpant and day, accordngly to the equaton ( AQ P ) ( AQ up down, BMDSA =, P ), (14) where BMDSA s the balancng market daly settlement amount, AQ s the quantty actually delvered n nterval and P s the prce of ths transacton. As mentoned n earler chapters, the prce for secondary regulaton shall be the lowest accepted prce for downward regulaton and the hghest accepted prce for upward regulaton. For tertary regulaton, the prce s the offered prce. It shall though be mentoned that f the amount of upward regulaton actually delvered s less than the amount to be delvered, only those transactons for the delvery of upward regulaton wth the lowest prces and wth an aggregated quantty equal to the amount of upward regulaton actually delvered shall be deemed to have been delvered. In the same manners, f the amount of downward regulaton actually delvered s less than the amount to be delvered, only those transactons for the delvery of downward regulaton wth the hghest prces and wth an aggregated quantty equal to the amount of downward regulaton actually delvered shall be deemed to have been delvered. All partcpant that has not fulflled to delver the amount of energy that they have contracted wth the TSO as to the trade confrmaton, wll be penalzed for each MWh that he has not delvered. Mathematcally ths can be wrtten as, ( CQ AQ ) + ( CQ AQ K ) BMP = (,,,, ), (15) up up down down where BMP s the balancng market penalty, CQ s the contracted quantty, AQ s the actually delvered quantty and the constant K s the specfc penalty for under- delvery of balancng energy for nterval. As the name of the constant tells us, a partcpant can only be penalsed for the under- delvery of power and not for delverng more than he has contracted. It shall also be mentoned that the standng transactons,.e. the start up and stand- by transacton, are not taken nto account n the calculaton of the balancng market penaltes. Ths s due to the fact that a standng offer does only contan a prce and not a quantty and therefore can t be penalzed. The constant K, whch has the unt [Le / MWh] 4, s determned for each dspatch nterval durng the day as, K = a + b MCP + c IMBDP + d IMBSP, (16) where a, b, c and d are constants determned by ANRE. The constant a, shall be expressed n Le, and constants b, c and d shall be expressed as percentages. The term IMBDP s called mbalance defct prce and IMBSP s called mbalance surplus prce whch s the average cost of upward respectvely downward regulaton that has been used n the correspondng dspatch nterval. These two terms are calculated accordngly to the equatons, 4 Le s the natonal currency f Romana. 32

33 IMBDP = j ( AQ j +,, P ) + ( AQ,, P ) up bal j AQ j up, bal, j j k AQ up can j up, can, k j, (17) IMBSP = j ( AQ down j, bal, j Pj ) + ( AQdown, can, j Pj ) j, (18) AQ + AQ up, bal, j k up, can, k where the ndex bal stands for balancng, and the ndex can stands for cancelled. From ths two equatons, we can se that the average prce of mbalance only takes n account all transacton that have been ntally chosen for provdng balance energy, even f they later have been cancelled due to congeston. If the TSO has not ordered any balancng energy, or f the only balancng energy order s for congeston management, then both the mbalance surplus prce and mbalance defct prce shall be set equal to the market clearng prce from the Day-Ahead Market for the correspondng dspatch nterval Cost of System Balancng and Congeston Management The settlement admnstrator, whch s the one responsble for determnng all the amounts that shall be pad or receved by each partcpant n the Day- Ahead Market and the Balancng Market, shall also calculate the total cost of system balancng and congeston management. The cost of system balancng ncludes; The cost of transactons that have been concluded n the balancng market, and that are not marked as used for congeston management n the balancng market system. The quantty shall be the actually delvered quantty and not the contracted quantty. The cost of transactons that have been concluded n the balancng market and that have been cancelled due to congeston. Ths can be dvded n two terms, the payment for system balancng and the ncome from system balancng. Puttng ths nto equatons gves, AQ + k up bal, j P, j ) ( AQ up, can,, PSB = (, P, ), (19) j k ISB = ( AQdown, bal,, j P, j ) + ( AQdown, can,, k P, k ), (20) j where P,j and P,k are the prces for the j:th respectvely k:th transacton n nterval. Puttng ths two equatons together gves the cost for system balancng as, k k CSB = PSB ISB, (21) The costs for congeston are equal to: 33

34 The cost of transacton that have been concluded n the balancng market and that have been marked as used for congeston management n the balancng market system. The quantty shall be the actually delvered quantty. Mnus the avoded costs of transacton that have been concluded n the balancng market and that have been cancelled due to congeston. As the cost for system balancng, ths can also be dvded n the payment for congeston management and the ncome for congeston management, P, = ( AQ,,, P, ) ( AQ,,, P, ), (22) con j up con j j k up can k I con, = ( AQdown, con,, j P, j ) ( AQdown, can,, k P, k ), (23) The cost for congeston can then be expressed as, j C con, Pcon, I con, k =, (24) k The Settlement Admnstrator shall send the nvoce for the cost of congeston to the TSO, who wll charge ths to all the consumers n the natonal power grd ndrectly as taxes or charges. 34

35 3. Imbalance Calculaton 3.1 Introducton As seen n the prevous chapter, t s mportant that the balance s mantaned durng the day. But who s responsble for ths mbalances and who has to pay the cost of mbalances? Is t the producers, the consumers or s t the TSO? And what s the defnton of mbalance? In ths chapter, the answer to the questons above wll be gven, startng wth the defntons of the BRP and endng wth the BRP mbalance calculaton [10] and nformaton mbalance. 3.2 Balance Responsblty Party BRP Before any partcpant s allowed by the Romanan regulator ANRE to partcpate n any of the two markets mentoned earler, specal applcatons must be flled out and send. Dfferent crtera must be fulflled dependng f the applcaton comes for a producer or a consumer. One crtera n common, s that each applcant must nomnate someone who wll assume the responsblty f he doesn t fulfl hs tasks. The party can provde such responsblty s called Balance Responsblty Party (BRP). The establshment of a BRP s mportant to: Enable the executon of electrc power transacton n the natonal electrcty market n an orderly fashon. Help establsh a pror the electrc power balance of the natonal power system. Unlnk fnancal transactons from physcal delvery Ensure correct settlement of electrc power transacton n the natonal electrcty market. The concept of balance responsblty provdes for a compromse between assgnng the fnancal responsblty for mbalance between planned and actual producton, consumpton and exchange of electrc power and avodng any undue punshment of ndvdual market partes, by allowng market partes to combne ther aggregate mbalances. Ths means that a BRP can have the responsblty for several producton unts and consumers at the same tme and by combnng ther mbalance try to acheve ts responsblty at each dspatch nterval. Assume for nstance that a BRP s costumers, has a total consumpton of 1500 MW the frst half hour and that the consumpton s 2500 MW durng the second half hour. If the producton unts that ths BRP has responsblty for has a total producton of 2000 MW durng the whole hour, then ths BRP has acheved to mantan hs balance. Each BRP oblges tself for ths purpose, to plan for each dspatch nterval, n such a way that the producton and purchasng, ncludng mports, of electrc power correspond to the antcpated consumpton and sales, ncludng exports, of electrc power by all market partes, ncludng tself, that ths BRP has the balance responsblty for. The nvoce for the energy that the TSO must purchase at the balancng market s gong to be sent to the BRPs wth negatve mbalances whch together have made upward regulaton 35

36 necessary. In the same manners, f the TSO sells energy to the balancng market,.e. downward regulaton, then the revenues from ths sale s passed on to the BRPs wth postve mbalance whch together have made downward regulaton necessary. All lcensed partes can become BRPs. They have to do a wrtten applance to the TSO, provdng the followng nformaton: Full name, legal address and contact detals of the lcensed party Type and number of the lcensed party s lcense Names and contact detals of all persons beng enttle to act on behalf of the lcensed party Aggregate nstalled capacty of all producton set for whch the applcant would lke to assume the balance responsblty for Aggregate capacty of all consumers for whch the applcant would lke to assume the balance responsblty for. Snce the responsblty s fnancal and not techncal, all BRPs must also provde a fnancal guarantee, showng that they are able to assume the responsblty for the capacty that they have appled for. 3.3 Net contractual poston and net metered poston To be able to determne f a BRP has had mbalances durng a dspatch nterval, the calculaton are gong to be based on dfferent nformaton provded from several nvolved actors, manly BRP, the TSO and the Meter Operator. To enable the determnaton of the mbalances, t s very mportant to have the, Net contractual poston, and Net metered poston The net contractual poston of each BRP s based on all contractual delveres (producton, consumpton, exports and mports) of electrc power wth other BRPs, for whch he s responsble for, ncludng those transactons entered nto the DAM and the balancng market. The net metered poston of each BRP s based on all metered delveres of electrc power from or to the naton power system, or between the dfferent parts of the natonal power system. All the metered values are provded by the meter operator that s n charge of all the meterng ponts that are placed through out the natonal grd. The smplest example s a suppler who smple supples customers and purchases all ts need n the market, wthout sellng to anybody else. The net metered poston would then be equal to the demand of ts costumers and the net contractual poston equal to ts purchases n the market, and the mbalance equal to the dfference between the demand of ts costumers and ts purchases n the market. For the net contractual poston the correspondng equaton s then, Pr od Cons + EXP IMP + NCP = B.E, (25) 36

37 where Prod s the producton, Cons s the consumpton, EXP s the contractual exports and IMP s the contractual mports that ths BRP has the responsblty for. B.E s the total balancng energy that ths BRP has undertaken the responsblty to delver to the TSO. For the net metered poston, the correspondng equaton s, NMP = TMG TMC, (26) where TMG s the total metered generaton and TMC s the total metered consumptons, both values gven by the meter operator. It should be mentoned that ths equaton s vald only f the BRP s not a network operator. If the BRP s a network operator then the equaton s, NMP = TME TMI, (27) where TME s the total metered exports and TMI s the total metered mports. Ths s done, snce the losses n the system are taken nto account n the mbalances of the network operator. Havng these two equatons, the BRP mbalance can be calculated as, BRPI = NMP NCP, (28) whch wll gve that the amount to pay or to receve for each BRP s, BEA = BRPI IMBSP, for BRPI > 0, (29) BEA = BRPI IMBDP, for BRPI < 0, (30) In both equaton (29) and (30), the mbalance prces are the same as determned n the prevous chapter. Ths means that we now can gve a more correct defnton of the mbalance defct prce, as the unt prce that a BRP has to pay to the TSO for negatve mbalance and mbalance surplus prce as the unt prce that a BRP receves from the TSO for postve mbalance. To ths amount, the settlement admnstrator must also apply the correspondng taxes and send the nvoce to the correspondng BRP. 3.4 Informaton Imbalance The nformaton mbalance s a measure of a power plant s devaton from ts scheduled output. In other words, ths means the dfference between the actual and planned producton of a dspatch unt. As n the balancng market, each unt has to pay a penalty fee for ths devaton. The amount to pay s based on the nformaton mbalance quantty and the mbalance nformaton charges. The later one can be compared wth the constant K n the balancng market, snce t s determned by the same equaton, IIC = a + b MCP + c IMBDP + d IMBSP, (31) but where the constant a, b, c and d can have dfferent values to the constants n the balancng market. 37

38 The penalty amount that each producer has to pay at each dspatch nterval, s determned by the equaton, IIA = IIBnon + outage 2 T not, outage IIB, not,, outage 1 IIC, (32) T ref, Where IIB non s the non- notfed nformaton mbalance quantty n MWh, IIB not,,outage s the notfed nformaton mbalance quantty for an unexpected outage n MWh, T s the tme n mnutes between the start of the dspatch nterval and when the outage was nformed to the TSO, T ref s the tme n mnutes between the scheduled submsson tme and the start of the dspatch nterval where the outage has occur and IIC s the nformaton mbalance charge [Le/MWh] for dspatch nterval. It shall be mentoned that a unt can only send a notce for reducton of outputs, not for ncreases and that the only tme when a producer s allowed to change ts ntal schedule, and therefore wll not get penalsed, s f he suffers from an unexpected outages due to techncal falure whch he has to be able to prove. To better understand the nformaton mbalance and equaton (32), let s study the followng example. Example 3.1: Assume that a producer has the schedule and hs actual output as fgure 3.1 for the frst dspatch nterval of the day,.e. between 00:00 a.m. and 01:00 a.m. Let s now assume that an unexpected outage occurs at 00:30 and that the unt gves a notce to the TSO at 00:35 that hs scheduled output wll change. 140 Informaton Imbalance MW Actual Output Scheduled 80 Notce Tme 00:00 00:30 01:00 t Fgure 3.1 Schedule and actual output for a producton unt, whch suffers from an outage at 00:35. After the recepton of the metered values at the end of the dspatch nterval, the TSO and the settlement admnstrator are gong to base ther calculatons on the average output that ths value gves. Here, the average output (.e. the metered value of the whole nterval) s therefore, 38

39 Metered = = 125 MW, (33) 60 Ths wll then gve us the followng graph, 140 Informaton Imbalance MW :00 00:30 01:00 t Fgure 3.2 scheduled and metered output. Schedule Metered Notce Tme The determnaton of the mbalance nformaton quanttes IIB non and IIB not s now done by takng nto account the tme when the unt notfed the change to the TSO. The dfference between the metered and scheduled values up to the notce tme shall become the nonnotfed nformaton mbalance and the rest shall become the notfed nformaton mbalance. Fgure 3.3 The dark area shows the non- notfed nformaton mbalance. Mathematcally, ths can be expressed as, and IIB IIB ( ) 35 = 2.92 MWh, (34) 60 non, = ( ) 25 = 2.08 MWh, (35) 60 not,, outage = Usng equaton (32), (34), (35) and assumng that T ref s 420 mnutes (correspondng to the tme n mnutes between the scheduled submsson tme 17:00 and the start of the dspatch nterval), gves the total quantty that ths unt s penalsed for as, 39

40 IIA 2 35 = 2,92 + 2,08 1 ICC, (36) outage 420 As seen, the nformaton mbalance s to oblge each producton unt to respect ther schedule. In realty, the nformaton mbalance s to prevent the BRP from changng dspatch nstructon durng the day. Take for nstance a BRP that has two producton unts under hs responsblty, one located geographcally n a southern border tradng zone and one n the northern part of the natonal tradng zone. The one n the natonal tradng zone has been scheduled for 100 MW, and the one n the border tradng zone has been scheduled for 200 MW. Ths BRP has then a total balance responsblty of 300 MW whch he has to fulfl. Imagne now, that the BRP consders that t s more economcal from hs pont of vew, to produce 100 MW n the BTZ and 200 MW n the NTZ. Ths soluton means that he s stll gong to keep hs balance n the dspatch nterval, but the geographcal change n producton can eventually lead to congeston and therefore s not the most economcal soluton for the TSO. 40

41 4. Implementaton 4.1 Introducton As seen through out ths report, the flow of nformaton n an electrcty market s very complex and ndeed mportant, whch requres well-defned structures of databases and nformaton flow. Wth the modern communcaton systems that we have today, all communcaton between the dfferent market actors s gong to be done through Internet. Trade confrmatons, submsson of offers etc s relevant market nformaton that s requred to be stored n a central database and were relevant partes can have access to. The prmary sources of publshed market nformaton for the publc, s the respectve web-stes of the market operator, the settlement admnstrator and the TSO, were t shall be possble to download certan nformaton. Snce the practcal part of ths project, s the creaton of a prototype for the settlement calculaton, ths chapter s gong to focus on the nformaton flow that s necessary to have for the settlement. A short descrpton of the program AIMMS [11], were the prototype has been developed, s gong to be gven together wth some screen-shots showng the user-nterface of the prototype. 4.2 Informaton flow and AIMMS As n all electronc system, the nformaton has to be stored n a central database. Ths central database s, n the case of the Romanan electrcty market, composed by the nformaton send from one market partcpant to another, manly by the TSO (ATC- values, matchng process results, etc.), tradng partcpants (offers) and the settlement admnstrator. The contrbuton from the settlement admnstrator s the calculaton of payments n the Day-Ahead Market, the Balancng Market and the Imbalance calculaton. To be able to perform the settlement n an orderly fashon, the settlement admnstrator must have a fully access to ths central database. The general structure of the connecton wth the database can be presented as n the fgure below, Tradng Partcpant TSO Central Database Settlement Admnstrator Fgure 1.1 The nformaton flow between the market actors and the central database. 41

42 Here, t can be seen that all market actors have access to the central database. Some restrctons must though exst for preventng that sensble nformaton gets n the wrong hands. For nstances, a tradng partcpant shall not be able to see the prce of offers send by another partcpant, snce ths wouldn t be compettve. All rules have been mplemented n AIMMS whch s a mult- dmensonal modellng language, who has a powerful ndex notaton enablng to capture the complexty of problems as the occur n real lfe stuaton. It also provdes the ablty to express very complex calculatons n a compact manner wthout the need to worry about memory or sparse data storage. AIMMS provdes also a powerful combnaton of automatcally updated multdmensonal defntons and procedural executon. The defntons allow to globally specfyng unque relatonshps between enttes n the model wthout havng to worry about the order of executon. In addton, the procedures provde the total control over the precse order n whch partcular computaton has to be performed. Ths s especally necessary, when one calculaton depends on other calculated nput data. AIMMS provdes also a rch set of mathematcal, statstcal and fnancal functons and also gves the opportunty to express tme-based models through the use of calendar, whch n the core of ths project and that can easly be used. Thanks to the exstents of an ntegrated tool for the constructon of graphcal user nterface, called GUI, the creaton of ends- user screens are done n an easy pont and clck manner. Here, the results can be vsualsed as tables, charts and curves, all lnked to the multdmensonal dentfers n the model. An ODBC 5 - connecton s used to communcate wth the database, whch makes t possble to access any data from any applcaton, regardless of whch database management system (DBMS) s handlng the data. 4.3 Prototype The prototype, as today, s created so that a user can easly navgate between the dfferent markets thanks to a menu. After havng selected the tradng date, whch can ndeed be several dates at the same tme, he can choose the results that shall be vsualsed. The results can be dsplayed for each day, months or weeks that are wthn the selected dates. For the Day-Ahead Market, t exst a checkbox called transtons rules, that a user can select when the chosen dates are wthn the transton perod. Ths wll lead to a change n the results that can be dsplayed, snce accordngly to chapter 1, we have dfferent equaton durng ths phase. 5 Open DataBase Connectvty 42

43 Fgure 4.2 Screen shot showng the prototype n ts user- nterface. When pressng the READ button, the program wll get the nformaton that he needs from the central database. Ths process can be shown n the followng fgure, User Interface Central Database Input data download Output data upload Input data Output data Settlement Calculaton Matchng Process Fgure 4.3 Connecton between user- nterface and the central database. 43

44 Ths fgure shows what the trajectory would have been f ths prototype would be used as the settlement calculator n the Romanan market. Snce ths prototype s created to verfy the rules, the results are not gong to be wrtten n the central database as t would otherwse. Instead, the results are shown drectly n the screen, wtch means that the trajectory s the one wth the black arrow. If the button CLEAR DATA s pushed, then all nformaton s gong to dsappear, and a new run must be performed to get the data back. The user nterface for the matchng process s smlar to the settlement calculaton. Here, the user must type the date together wth the dspatch nterval for whch he wshes to see the matchng results. Furthermore, the user must also check that the tme of the computer s set on the Romanan tme zone and type n the date n standard tme,.e. not n daylght savng tme DST. Ths means that f a user wants to check the result for, let s say 8-aprl- 2004, he has to enter the start date, 7-aprl :00, and the end date 8-aprl :00 and also precse the nterval. As for the run of the matchng process, the same procedure as n fgure 4.3 takes place when the button READ DATA s pushed. Fgure 4.4 Screen shot showng the matchng process. 4.4 Conclusons and future work Ths project has analysed the proposed market rules n Romana for the Day-Ahead Market, Balancng Market and the Imbalance Calculaton. The rules have also been explaned why they are needed and the role they play n the market. A prototype has been created n AIMMS, where the settlement rules for the Day-Ahead Market, as well as the Matchng Process, have been mplemented and where the results have been checked and found satsfactory. But there 44