energy - Smart Grids Flanders

SGF 13/10/2015
DEMAND RESPONSE
IN THE ENERGY MARKET
OF TODAY AND
TOMORROW
MARKET
FUNDAMENTALS
DEMAND
RESPONSE
CHALLENGES
EDF LUMINUS
SOLUTIONS
GAME
CHANGERS?
Market fundamentals
ENERGY MARKET LIBERALIZATION IN BELGIUM SINCE 2001
Utility operators
BEFORE
Production
Import
Transport
Supply
Grid operator
Supplier
Distribution
Supply
TODAY
Production
Distribution
Import
Transport
4
ENERGY CHAIN IN BELGIUM
PRODUCER /
POWER EXCHANGE
Produce energy
Buy / sell energy
DISTRIBUTION GRID
OPERATOR
Operate the transmission grid
Producer /
supplier
SUPPLIER
Sell energy and bill for
the energy used
Transmit energy to
residential customers and
SMEs
Meter reading company
TRANSPORT GRID OPERATOR
High voltage
Transport grid
operator
Low voltage
Distribution grid
operator
REGULATORS
Supervise the working and
organisation of the energy
market
5
SUPPLYING ENERGY: IT’S A MATTER OF BALANCE
6
ACTIVITIES OF AN ASSET OPTIMISER
From 3 years to 1
month ahead of
implementation
date [D]
•
•
•
Forecast of the
medium-term
supply/demand
balance
Scheduling of
power plant
maintenance
Sale/purchase
operations on
the forward
markets
1 Month ahead of
implemenation
date [D]
•
•
Refine the
supply/demand
balance to more
accurate
weather
forecasts and
availability of
power plants
Sale/purchase
operations on
the forward
markets
Day Ahead [D-1]
Intraday [D]
Balancing [RT]
•
•
•
•
•
Create operating
schedule for the
power plants
Balancing supply
and demand on the •
Day-Ahead market
(DAM)
Send nominations •
to TSO
Respond to latest
unanticipated
changes in the
portfolio
Send renominations to
TSO
Sale/purchase
operations on the
intraday market
Strategic Reserve
•
•
•
Continuous
monitoring
Adapting
Generation,
Demand, ID deals
Reserves operated
by TSO’s for
residual balancing
 marginal cost
setting the
imbalance price
BRP’s incentivised
by the imbalance
price to be in
balance or help to
balance the system
7
DAY AHEAD PRICE FORMATION: SUPPLY/DEMAND BALANCE
(THE “MERIT ORDER”)
Commercial
demand
Nuclear
Imports
Industrial
demand
Coal
CCGT
Exports
Peak units
Residential
demand
Hydro reservoir
Price
Renewables
8
Power
THE POWER PRICE DRIVERS ARE MULTIPLE
9
EXAMPLE 1: THE WIND HAS AN IMPACT ON BELPEX DAY AHEAD
PRICES
Evening
peak
10
EXAMPLE 2: THE SUN HAS AN IMPACT ON BELPEX DAY AHEAD
PRICES
11
SPOT AND FUTURE DAILY PRICES EVOLUTION ARE IMPACTED BY
FUNDAMENTALS
First stop of Doel 3 and
Tihange 2 following the
discovery of defect in the
reactor vessel
Doel 4
outage
Strong CO2 and coal
price decrease
Second stop of
Doel 3 and
Tihange 2
12
EUROPEAN MARKET COUPLING
 Belgian import capacity = 3500 MW




(30% of Belgian peak demand)
Since November 2010 market coupling
between France, Germany, Benelux and
Austria = Central West Europe (CWE)
In 2013 and 2014 the Price Coupling of
Regions (PCR) was further extended to
the north and the south
In Belgium the electricity price is almost
always the result of a market coupling
with one or more neighboring countries
In May 2015 the Price Coupling is
enhanced with a “Flow Based” algorithm
that will increase the efficient use of
interconnection capacity
13
Interconnection
Marginal price (€/MWh)
Coal/lignite
Gas
CCGT
(old)
52%
Gas
CCGT
(new)
59%
G
a
s
O
C
Peak Units
Interconnection
Demand price (€/MWh)
Load (in hour h)
Marginal generation cost (€/MWh)
PRICE COUPLING ENLARGES
COMPETITION
Composed MERIT ORDER
(= most efficient regional
dispatch)  lowest price
Wind
Nucl
ear
Generation Capacity (MW)
Coal/lignite
Nuclear
Coal/lignite
Gas
CCGT
(new)
59%
Ga
s
CC
GT
(old
)
52
%
Gas
CCGT
(old)
52%
Gas
CCGT
(old)
52%
G
a
s
O
C
14
Peak Units
Load (in hour h)
Peak Units
Gas
CCG
T
(new
)
59%
Gas
CCGT (new)
59%
Wind
Ga
s
CC
GT
(old
)
52
%
Demand price (€/MWh)
Marginal price (€/MWh)
Wind
Gas
CCG
T
(new
)
59%
Generation Capacity (MW)
Peak Units
Demand price (€/MWh)
Coal/lignite
Nucl
ear
Peak Units
Demand price (€/MWh)
Marginal price (€/MWh)
Wind
Load (in hour h)
Marginal generation cost (€/MWh)
Generation Capacity (MW)
Demand price (€/MWh)
Gas
OC
Wind
Interconnection
Marginal generation cost (€/MWh)
Nuclear
Gas
CCGT
(old)
52%
Gas
OC
Load (in hour h)
Marginal price (€/MWh)
Peak Units
Generation Capacity (MW)
Demand price (€/MWh)
Gas
CCGT (new)
59%
Marginal generation cost (€/MWh)
Wind
14
MARKET PRICES FURTHER CONVERGE
IN CENTRAL WEST EUROPE (CWE)
15
RENEWABLE ENERGY SOURCES TARGETS
EU 2020 & 2035 targets
for RES, Energy
Efficiency and CO2
Current installed capacity
2020 Target
2015-2020 Increase
MW
4.000
Flanders current installed
capacity and 2020 targets
+780
3.000
2.000
MW
4.000
3.500
3.000
2.500
2.000
1.500
1.000
500
0
Wallonian current installed
capacity and 2020 targets
+430
+530
Onshore
Biomass
1.000
0
PV
Sources: EDF Luminus based on Vlaams
Energieagentschap Rapport 2014/1 and Elia
+560
+180
PV
+70
Onshore
Biomass
Sources: EDF Luminus based on draft Law
from Minister Furlan 04/15 and Elia
16
ENERGY EFFICIENCY TARGETS: BELGIUM LAGS BEHIND?
Residential energy consumption level is 70%
above Eu Average
Penetration of new energy efficient technologies
is below W-EU levels
Annual Sales of energy efficient solutions
for residential building (2012):
- Pellet boilers & stoves:
2X less than France, 8 X less than Italy & Slovenia
- Solar water heater:
2X less than Germany, 3 X less than Denmark &
Austria
- Heat Pump:
>5 less than France but also Slovenia & Bulgaria,
>10 less than Estonia
Source: McKinsey & Company 2013: Pathway to world-class Energy Efficiency in Belgium;
& www.indicators.odyssee-mure.eu, European Union Intelligent energy program
17
ENERGY EFFICIENCY TARGETS: BELGIUM LAGS BEHIND?
Energy Productivity Index
(Billions € of GDP per exojoule of energy consumed)
242
206
Source: Lisbon Council Publications
236
234
231
220
196
186
165
162
159
18
Challenges
19
CHALLENGING MARKET CONDITIONS
1
Power prices are low
2 Clean spark spreads (CSS) are
mostly negative
3 Electricity generated at zero
marginal cost is increasing
Historic Belpex clean spark spread
year ahead (50 %)
Power prices in Belgium
(yearly baseload average)
Solar and wind generated electricity
in Belgium
EUR/MWh
TWh
71
8
7
6
42 42
EUR/MWh
Source: CREG
0
-2
Historic Belpex clean spark spread
yearly futures (50 %)
-6
YTD Belpex
-8
4
3
2
Wind (+36%/y)
1
-4
Historic Belpex
AVG Y+1 Cal 2016, Cal 2017, Cal 2018
ICE Endex BE Power Futures
Solar (+42%/y)
5
2018
2013
2012
2011
2010
2009
2014
41
39
46 44
2017
47 48
2016
49
2015
46
2008
80
75
70
65
60
55
50
45
40
35
30
0
2010
2011
2012
2013
2014
Source: EDF Luminus based on EUROStat
-10
-12
-14
02/01/2015
13/02/2015
Cal 2016
27/03/2015
Cal 2017
13/05/2015
Cal 2018
20
NOT ONLY IN BELGIUM: CAPACITY MIX IN EUROPE
€/MWh
Peak load
CWE in 2014
Source: CEEMS/SEER
0
50
BIOMASS
GEOTHERMAL
WIND_OFFSHORE
100
CCGT
GST
WIND_ONSHORE
150
GW
CHP
GT
NUCLEAR
200
CST
HYDRAULIC
PHOTO
250
300
DIESEL
INCINERATION
21
CURRENT ENERGY PARADIGM CALLS FOR CLOSURE OF
ELECTRICAL PRODUCTION PLANTS
22
THERMAL ASSETS HAVE LOST THEIR PROFITABILITY IN A
CONTEXT OF LARGE OVERCAPACITY IN EUROPE
 A boom in RES generation
(@near 0€/MWh marginal cost)
and a decreasing demand as a
result of the economic crisis and
energy efficiency measures has
lead to an overcapacity situation
in Europe
70 GW of closures in
Europe in past 5y
 Confronted with low electricity
prices and a structural negative
clean spark spread (CCS) gas
fired power plant operators
were/are forced to reduce their
loss-making
24 GW of closures
expected
Another 30GW to
keep existing assets
profitable
23
Demand curve (€/MWh)
During severe winter conditions
And limited import
Demand curve (€/MWh)
During normal winter conditions
3000€/MWh
■ EOM works in theory –
power plants should
receive sufficient
revenues from:


Scarcity
Rent
Scarcity rents
Inframarginal rents
■ But not in practice!

Inframarginal rent during near scarcity moments
Gas
OC
Inframarginal rent during normal conditions
Wind
Nuclear
Coal
Peak Units
Price
ENERGY ONLY MARKET (EOM) DOESN'T REVEAL VALUE OF
CAPACITY AND WILL NOT INCENTIVIZE TO MAINTAIN OR INVEST
Missing
generation?

Gas
CCGT

Volume
Supply side: no
investment stability on
sporadic price peaks
Demand side:
consumers with fixed
price contracts are not
sensitive for price
peaks
Market price caps at
3000€/MWh
RES
A complementary market is needed to ensure sufficient reliable capacity24
IS BELGIUM SHORT IN GENERATION CAPACITY?
Centralized Capacity in BE
18 GW
16 GW
14 GW
OCGT
12 GW
CCGT
Under capacity
Cogen
Hydro
10 GW
Pump-Turbine
Biomass
8 GW
Fuel
Waste
6 GW
Nuclear
4 GW
Peak Demand
2 GW
0 GW
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
25
DURING NORMAL CONDITIONS, THE (WINTER-)PEAK DEMAND OF
BELGIUM CAN BE COVERED BY THE CENTRAL GENERATION PARK
The Merit Order of the Belgian Production units depends on the marginal cost of the units.
CCGT
Green
2.6
Nuclear
Coal
5.9
0.4
CHP
1.0
3.6
0.6
STRATEGIC RESERVE
IMPORT Capacity
PUMP Storage
€/MWh
OCGT & Turbojets
Winter peak demand
13.8GW
GW
1.3
3.5
0.9
26
CRITICAL SITUATION IN WINTER 2014?
In the conditions of winter 2014 (Doel 3, Doel 4, Tihange 2 not available) and during severe winter
conditions (no renewables), the winter peak load can only be covered with the activation of the
strategic reserve or thanks to load shedding!
CCGT
Green
0.9
Nuclear
Coal
2.9
0.4
CHP
1.0
3.6
0.6
STRATEGIC RESERVE
IMPORT Capacity
OCGT & Turbojets
€/MWh
GW
3.5
0.9
Winter peak demand
13.8GW
27
STRATEGIC RESERVE IS AN IDEAL TRANSITIONAL MEASURE
■
■
■
■
■
Strategic reserve is an insurance product
against physical consequences of
scarcity, not against high prices
Plants in the strategic reserve are out of
the market  the full fixed cost must be
paid, not just the missing money
Improper use of demand response
jeopardizing the flexibility market
It does not incite to invest (a sporadic
imbalance price of 4500€/MWh is not
bankable)
Artificial measure with asymmetric risk
(of 4500€/MWh) for power plant operators
in Belgium (who have to sell in DAH at
3000€/MWh)
BUT are the forecasted volumes still
realistic?
28
BUT, IS BELGIUM SHORT IN GENERATION CAPACITY?
Total capacity in BE
Total centralized capacity
Total decentralized capacity
Total import capacity
Peak Demand
30 GW
25 GW
20 GW
15 GW
10 GW
5 GW
0 GW
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Decentralised (renewable) generation capacity is taking over
29
IMPACT OF RENEWABLES: DECREASING PRICES BUT
INCREASING VOLATILITY
Lower?
Volatility!
Higher?
30
IMPACT OF RENEWABLES: INCREASING VOLATILITY
Price spikes when balance between offer
and demand becomes stressed
31
Demand Response
32
NEED FOR FLEXIBLE BALANCING CAPACITY INCREASES
33
DELTA BETWEEN DAY AHEAD PRICES AND IMBALANCE PRICES
34
THERE IS A POTENTIAL FOR DEMAND SIDE MANAGEMENT
35
2 BUSINESS MODELS TO VALORIZE THE FLEX
Grid Operator
Capacity
Energy
R1/R2
Forward Market
ICH
Day-ahead Market
R3(DP)
Intraday Market
Strategic Reserve
Imbalance Market
Energy Market
EDF Luminus
believes in an
hybrid model
36
AGAIN A MATTER OF BALANCE…
…RESPONSIBILITY
Controlled by BRP via nominations
Export
Import
Market
Forecasting
Production
Dispatchable
PRODUCTION
BEFORE
NOW
Centralized
Dispatchable
Predictable
More de-centralized
Less dispatchable
Less predictable
Balancing
Responsible
Party (BRP)
=
Flow of
flexibility
Flow of flexibility
Flow of flexibility
Forecasting
Consumption
CONSUMPTION
Inelastic demand
More elastic demand
37
IMPACT OF ACTIVATION OF FLEXIBILITY
38
MARKET MODEL: TRANSFER THE DIVERTED ENERGY
■ Necessary to transfer
diverted energy from
Source-BRP to RequestorBRP
■ Transfer of diverted
energy implies
determination of volume
and price
39
EDF Luminus Solutions
40
We pay companies that take the lead in reducing their
consumption
INNOVATION
FOR THE BENEFIT
OF OUR
CUSTOMERS
•
•
•
•
Offer a window to the wholesale market
Balance between supply and demand of electricity
Supports renewable energy
Help to reduce CO2 emissions
Research and development
in the area of mobility
• iMove
• Luminus GreenDrivePack
We are committed to sustainable cities and
Smart Metering
• Agreement with the province of Liège
• Agreement with the municipality of Genk
• Linear: 1st large-scale smart metering / smart grid project
(intelligent networks) in Flanders
EDF Luminus, that's us !
41
DAUVISTER SA
Leader in Wallonia and Brussels in technological installations linked
to Rational Use of Energy
42
42
ATS IS A GROUP OF COMPANIES ACTIVE IN ELECTRIC
INSTALLATIONS, DISTRIBUTION AND MECHANICS
Brand detectie
Engineering en productie
van industriële transport
systemen
Elektrische installaties
voor de tertiaire sector
Business Line
Centrale diensten
Elektrische installaties
Industriële
installaties
Distributie
ATS Technics:
Industriële
koelinstallaties
Installatie van
Laagspanning
netwerken
Mechanica
Procestechnologie &
Piping
Elektrische
verwarmingsoplossingen
ATS NV
Holding + activiteiten
binnen de 3 domeinen
en centrale diensten
zoals aankoop, HR,…
HVAC en
bedrijfsautomatisatie
Distributie van interne
transport systemen en
material handling
Ontwikkeling en installatie van
machines voor de
voedselverwerkende industrie
Elektrische installaties
voor de tertiaire sector
ATS Brussels: Productie van
laagspanningsborden +
distributie elektrische
materialen
Distributie van
elektrische
componenten
Distributie van elektrische
componenten
Revenue 2014
59%
24%
17%
Elektrische installaties
Distributie
Mechanica
43
EDF LUMINUS COMPLETE ENERGY SOLUTION
Energy Services
Energy Infrastructure
Commodity products
• Energy Audit
• High Voltage
• Low Voltage
Gas
Sustainable Energy
•
• Fire Detection
• Air compression
• Solar panels
• Windmills
•
Fix products
•
Variable products




•
•
•
24/7 (HV assistance) - Technical training – Financing
Variable products
 Endex 101
 Belpex (day ahead)
ZEE100
TTF101
ZTP (day ahead)
TTF Day ahead
Options :
•
•
Options :
Add-on Energy Services
Fix products
 Fix
 Market Watcher
 Price protection
 Fix
 Market Watcher
 Price protection
• Relighting
• Power quality (Capacitor
Banks,Sub-measuring,
UPS…)
Electricity
Click and declick
Buy and Sell of
Baseload blocks
•
Click and declick
Buy and Sell of
Baseload blocks
Demand and Supply
side management
Customer Care Services
•
Dedicated Key Account Manager
•
Customer Zone 24/7
•
Dedicated Customer Service
•
E-Invoice (Certipost, email pdf)
•
Newsflashes (regulatory changes, hot
news…)
•
Quarterly newsletters
44
Game changers?
45
CAN DEMAND RESPONSE BE A GAME CHANGER?
•
•
•
•
Extrapolation field test results
to 4.6 million households (in
Belgium)
Every household behaves as a
Linear household
Only dishwasher, washing
machine, tumble dryer
Estimation of:
•
•
Number of hours power can
be called extra
Number of hours power can
be delayed
46
CAN ELECTRIC VEHICLES BE A GAME CHANGER?
BMW 318d GT
■ 5,4l/100 km
■ Diesel: 1€/l
 5,4€/100km
€28.760 excl BTW
Nissan Leaf Tekna
■ 24kWh batterij
■ Range 80-100km
■ 0,2€/kWh
 6€/100km
€27.973 excl BTW
47
CAN SMART METERING BE A GAME CHANGER?
48
CAN STORAGE BE A GAME CHANGER?
Evolution of Li-ion battery costs ($/kWh)
Li-ion battery
costs between
100-500 $/kWh
by 2020
Source: CREG
49
IS THERE ROOM FOR COMPETITION?
OR DO WE RISK GRID DEFECTION?
•
•
•
•
Commodity (energy) is
lower in Belgium than in
neighbouring countries
Commodity price is
decreasing since 2007
Commodity part is only
38% of the total invoice
But the final bill for the
customer is increasing
50
Thank You!
51