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User Group on balancing

12 September 2013Energinet.dk

2

Agenda

• The balancing network code (Energinet.dk) 30 min

• Status of the balancing network code

• Balancing network code – system design rules

• Future system examples

• Data provisions

• Discussion on questions (all) 50 min

• Discussion on questions sent out before the User Group

• Opinions round-the-table

• Conclusions (Energinet.dk) 10 min

• Short break before shipper meeting

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Status of the Balancing network code

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Status of BAL NC

• The balancing network code is right now in the hands of the Member States

• Expected to be finalised at meeting in October

• Hereafter follows 3 months of comitology

• The balancing code will ”rest” for 3 months

• Thereby formally approved by the European Parliament

• Expected to be implemented into Regulation 715/2009 on 1 April 2014

• Only minor changes expected from ENTSOGs version

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Implementation timeline in BAL NC

3 possible implementation timelines:

• Fast track

• 1 year after rules have been adopted into Regulation

• Energinet.dk will primerely follow this path, implementing most requirements towards 1 October 2014

• ”Semi” fast track

• 2 years after rules have been adopted into Regulation

• Requires NRA approval

• Some requirements (eg nDMS data) will be implemented towards 1 October 2015

• Implementation with interim steps

• Stepwise implementation over 5 years

• Requires NRA approval

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Market involvement

Implementation time schedule for balancing in DK

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Final model

described

STF (possible)

Market

Implementation step 1

DERA dialogueInitial method

Final method

delivered

DERA

Second DMS model

DSO coporation – 2.DSO coporation 1.

First DMS model

DSO DSO cop. -3. nDMS

AnalysisENDK

User Group 1 &

shipper meeting

1.1. 2014 1.10.2015

Implement. step 2

1.5.2013 1.10.20141.10.2013

The different topics will be

discussed in one step

User group 2 &

shipper meeting

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BAL NC system design rules

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Overall principles for BAL NC

Framework Guidelines on balancing are based on 3 core principles:

1. Balancing must primerely be carried out by the shippers

2. The shippers must have the right market tools to fulfill its role as balancing responsible party

3. Shippers must have the right data, to fulfill its role as balancing responsible party

Rationale:

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A competitive market will be able to balance the system in a more cost

efficient matter, than a TSO is capable of!

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Operational balancing

• There must be developed a number

of short term standardised products,

for the market and the TSO to undertake

operational balancing actions

• Products could be developed at eg. an

exchange

• Title products (day-ahead and within-day) are first priority

• Title products exist at Gaspoint Nordic today, but must be designed differently (eg longer trading hours, more dynamic within-day products ect.)

• As a fifth option, TSOs can also develop a balancing platform, where public tenders with the market are performed

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When is a shipper imbalanced?

The TSO shall calculate a Daily Imbalance Quantity for each network user in accordance with the following basic formula

Daily Imbalance Quantity = Inputs – Off-takes

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Calculation of daily imbalance charge

• The marginal Sell Price =

• the lower of either the lowest price of any trades of Title Products in which the TSO is involved, or

• the Weighted Average Price of gas minus a small adjustment (max 10 %)

• The marginal Buy Price =

• the higher of the highest price of any trades in Title Products, or

• the Weighted Average Price of gas plus a small adjustment (max 10 %)

• The small adjustment = payment that shall incentivise network users to balance their inputs and off-takes

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Marginal sell or Buy Price

Daily Imbala

nce Charge

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Daily imbalance charge - example

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Price development over the gas day (on day-ahead and/or within-day)

Weighted Average Price

Weighted Average Price plus small adjustment

Weighted Avereage Price minus small adjustment

Highest TSO trade on STSPs

Lowest TSO trading price on STSPs

In this example TSO charges the end of day imbalance of shippers being

long with: lowest TSO trading price on STSPs TSO charges the end of day imbalance of shippers being

short with: WAP + small adjustment

06:00 Gas day starts 06:00 Gas day ends

Possibility of providing a Linepack Flexibility Service

The TSO can choose to provide a Linepack Flexibility Service, but only

• if there are the needed flexibility and TSO not need to enter into any contracts with any other infrastructure provider (eg. storages)

• if within-day obligations are not applied

• if it is offered on a transparent and non-discriminatory manner to the market

• Today linepack is offered as BSA, but in the future system:

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Linepack Flexibility Service can be compared with a system

wide balance margin

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Future system examples

Basic model

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Gas day

Upper physical limit

Upper TSO reaction zone

Lower physical limit

Lower TSO reaction zone

No TSO interference

Energinet.dk envisage a model with different ”zones” Green zone = market balance with no TSO interference Yellow zone = TSO reaction, through e.g. commercial products Red zone = physical limits of the system TSO reaction based on total system balance

1 5 9 13 17 21 25 29 33 37 41 45 49 53 57 61 65 69 73 77 81 85 89 93

-20

-15

-10

-5

0

5

10

15

20

Commercial balancing - with cash-out (Belgian model)

TK_1TK_2Kom_balFys_balTSO

Hours

Lin

epack im

bala

nce

Shippers (and TSO) are cashed out end-of-day The physical balance continues (grey line) TSO takes (trading) action within-day, when commercial balance crosses green limit Shipper 2 trades himself into an imbalance on day 2, which ”forces” him to

renominate TSO can also trade the physical position

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1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73 76 79 82 85 88 91 94

-25

-20

-15

-10

-5

0

5

10

15

20

Commercial balancing - Linepack flexibility service (envisaged Dutch model)

TK_1TK_2TSOKom_balFys_bal

Timer

Lin

epack im

bala

nce

Shippers balancing position continues across gas days TSO takes (trading) action within-day, when commercial balance crosses green limit In this example: TSO buys gas off shipper 1 on day 2 and sells it back to the market on

day 3; could also be handled by ”moving” imbalance instantly from ”helper” to ”causer” (envisaged Dutch solution)

Shippers pay tariff for linepack, depending on position end of day

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Data provisions

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Forecast D-..

Measurements & Prediction D

Allocation D+..

Intra Day Metered

Daily Metered

Non Daily Metered

.Not Provided

Not Provided

Prediction Provided• End of day value• Prediction based on

profiles and their variables (temp, …)

Base Case

En

d o

f d

ay

inp

ut

me

asu

rem

en

t

Provided• Twice a day per network

user.• The measured quantity.

Prediction Provided• End of day value• More precise prediction

of profile variables (temp, …)

Not provided

No readings available

Measured

Estimated

• Based on profiles and their variables (temp, …)

Measured

Information Provision

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Forecast D-..

Measurements & Prediction D

Allocation D+..

.Not Provided

Not Provided

Not Provided

Variant 1

Du

ring

th

e d

ay

inp

ut

me

asu

rem

en

ts

Intra Day Metered

Daily Metered

Non Daily Metered

Status update of consumed quantity.

Prediction Provided• Estimated consumed

quantity (diurnal profiles). • Prediction based on

profiles and their variables (temp, …)

Prediction Provided• Based on diurnal profiles

or nominations.• Estimated consumed qty.

Provided• At least twice a day per

network user.• The measured quantity.

En

d o

f d

ay

inp

ut

me

asu

rem

en

t

Estimated

• Based on profiles and their variables (temp, …)

Measured

Measured

Information Provision

21

Forecast D-..

Measurements & Prediction D

Allocation D+..

.Not Provided

Not Provided

Prediction Provided

• Prediction based on profiles and their variables (temp, …)

Variant 2

Intra Day Metered

Daily Metered

Non Daily Metered

Provided• Twice a day per network

user.• The measured quantity

Not provided

No readings available

Not provided

(Fixed)

Measured

Fixed

• Based on the forecast

Measured

En

d o

f d

ay

inp

ut

me

asu

rem

en

t

Information Provision

User Group on balancingQuestions for preparation

12 September 201309:00-10:30

Energinet.dk, Pederstrupvej 76

Initial questions

• The Dutch balancing regime is often referred to as the most well-functioning balance system in the EU, and is based on a form of ”trust” between shippers and TSO

• Do you agree with these statements, and why?

• Could a smaller scale copy of the Dutch, or the Belgian system work in Denmark (both models will be presented at the User Group)

• Are there balancing experienses from other countries (good/bad) that Energinet.dk should be aware of?

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Trading products

According to the balancing network code (article 12 to 15), there are 4 types of standardised short-term products which can be offered on the market, for the TSO to balance

• Besides day-ahead and within day products, which are mandatory, could you see yourself trading locational and/or temporal products during the gas day?

• What are the necessary trading windows, in order for you to react within-day?

• Please explain why?

The balancing network code also allows for balancing platform where the TSO can hold tenders, if balancing actions cannot be fulfilled by the short term products (article 16)

• Do you see that short term products will fulfill the market’s (and TSO) need to balance, or should a balancing platform also be established? Please explain why?

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End of day settlement

Different balancing models are possible towards the end of day settlement (models will be presented at the user group), eg:

• Daily cash out to zero every day, at the daily imbalance charge (market price + small adjustment or TSO trading price)

• No cash out end of day, but usage of linepack flexibility service (with a fee) where balancing positions are continued

• Given af system, where both the daily imbalance charge and the linepack flexibility service price is linked to market prices, which model do you as shipper prefer?

• Please argument why?

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12 21:452013:45

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Within-day data

to shippers with DMS and BNG portfolios.

First 6 hours of current gas day

Within-day data to shippers with

DMS and BNG portfolios.

First 14 hours of current gas day

Daily energy balance to all shippers

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Within-day data – DMS and BNG portfolios - 2013

Within-day data:

• SDV file

• XML

• Energinet.dk Online

Gas day (D+1)Gas day (D)

Data provisions - questions

• When 2 updates are applied, are these timings suitable for you?

• If more updates are possible in the future, when are the most critical times?

• When no balancing margin is available, what is the critical number of updates for you to manage your balance?

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Data provisions – data model questions

Based on BAL NC text and todays presentation

• Which of the 3 data models would you as shipper prefer?

• Please explain why?

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Conclusions