Embed Size (px)
DESCRIPTION
A report on EU electricity market rules, which must reflect the energy generation mix of the future and help usher in a flexible power system with a large-scale uptake of wind power and other renewable energy sources. The report recommends: 1- Creating a level playing field for renewable energy sources by tackling structural market deficits. 2-Creating functioning markets covering larger geographical regions within Europe so as to reduce the need to balance variable renewables like wind and solar 3- Developing intraday and balancing markets at national and cross-border levels 4- Creating new markets for 'grid support services', supporting the functioning of the grid to ensure a secure supply of electricity, instead of introducing market distorting capacity payments.
Citation preview
Creating the internal Energy Market in Europe
Key findings • Structural market distortions
remain the main obstacle for the IEM and wind energy integration– Large incumbents, high market
concentration, regulated prices
• Support mechanisms for wind and RES should be seen in the context of unfinished liberalisation
• Exposure of wind generators to market risks require a level playing field
Key findings (…continued)• Integration of large amounts of
wind in a cost efficient manner requires changing current market arrangements
Key findings (…continued)• The EU Target Model (TM) does
not effectively enable optimal wind energy integration – No emphasis on wind integration
to the extent of NREAPs– No provisions for more
competition– Lack of emphasis on intraday
and balancing markets liquidity, harmonisation and interactions. These are wind energy integration cornerstones!
Key findings (…continued)• Flexibility is the main feature of
tomorrow’s power system– Low marginal costs– Fast ramping power plants– Investment recovery over fewer
running hours
• Wind energy is able to contribute significantly to system operation and flexibility– Grid support services– System adequacy
Policy recommendations1. Creating a level playing field2. Implementing the EU-wide
Target Model with large share of wind power
3. Assessing system adequacy properly in a renewable EU integrated power system
4. Ensuring cost-effectiveness of the future power system: a market-based approach for ancillary services
Policy recommendations1. Creating a level playing field• Tackle market distortions rather
than only focus on RES provisions – Implement and transpose
properly liberalisation packages– Provide incentives for extensive
use of commercial power exchanges
• Design market rules that recognise the intrinsic characteristics of wind energy– Large control zones for
smoothing output variability– Shorter trading time horizons for
improved forecast accuracy and reduced balancing needs
Policy recommendations2. Implementing the EU-wide
Target Model with large share of wind power
• Implement the EU-wide Target Model as a minimum– Provide integrated intraday and
balancing markets– Make the best use of available
transmission capacity
• TSOs must be encouraged to analyse all aspects of firm capacity from wind power and other RES in an integrated system at EU level– Challenge for capacity payments
Policy recommendations3. Assessing system adequacy
properly in a renewable EU integrated power system
• TSOs must be encouraged to analyse all aspects of firm capacity from wind power and other RES in an integrated system at EU level
• Challenge for capacity payments
Policy recommendations4. Ensuring cost-effectiveness of
the future power system: a market-based approach for ancillary services
• Grid codes in Europe should first consider market options for ancillary services instead of compulsory requirements
• Establish grid support services markets to create additional non-discriminatory revenue streams for all generators
Electricity volume traded day-ahead in power exchanges (PX) vs. forward bilateral contracts (OTC). [MW as percentage of national gross electricity production], 2009 data
GreeceNorthern Ireland*
Denmark*Spain*
PortugalSweden*
ItalyFinland*
LithuaniaGermany
The NetherlandsRomaniaBelgium
FranceAustria
Slovak RepublicCzech Republic
Great BritainPoland
0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00% 90.00% 100.00%
OTC PX
Sources: European Parliament , Cornwall, N (2006)
How wind power influences the power spot price at different times of the day through the so-called “Merit order effect”
Source: Risø DTU
Intraday Day ahead 2 days ahead0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
RM
SE [
% o
f in
stalled p
ow
er]
Increasing wind forecast error (Root Mean Square Error) as time horizon increases. Results from regional wind power production from Germany
Source: IEA Wind Task 25
Intraday Markets in the EU (2011)
Source: EWEA
Volume of electricity traded in intraday markets, 2011 and 2010* data
Sources: EPEXSPOT, CREG, NordPool, OMIE
Balancing services
Sources: ETSO and EWEA
Relevant EU directives and regulations in electricity
Source: Adapted from REKK & KEMA (10), EC, DG Energy
Number of countries with regulated electricity prices (2009) EU-27
Sources: European Commission 2011
Household Industrial
Degree of market concentration in the EU power sector
Source: European Commission 2011
The EU Target Model (TM) for electricity trading
Source: Florence Forum, Project Coordination Group (PGC), 2009
ATC – Available Transmission Capacity NTC – Net Transfer Capacity GCT – Gate Closure Time
Roadmap for day-ahead market coupling as per TM
Market coupling effects on volatility of energy prices
BE DE FR NL
10
20
30
40
0.00
1.00
2.00
3.00
4.00
5.00
6.00
5.21
0.74
4.05
1.99
Explicit Implicit Explicit-Implicit difference
Sta
ndard
devia
tion (
€)
Source: CWE
Decrease of forecast error prediction for aggregated wind power production due to spatial smoothing effects. Error reduction = ratio of RMSE regional and RMSE of a single site. Results based on 40 German wind farms
- 500.000 1000.000 1500.000 2000.000 0.0
0.2
0.4
0.6
0.8
1.0
Err
or
reduct
ion
Source: Energy and Meteo Systems in IEA Wind Task 25
Market coupling mechanisms used in the EU. *Ongoing initiative
Market coupling mechanisms used in the EU. *Ongoing initiative
Market coupling mechanisms used in the EU. *Ongoing initiative
Level of accuracy of wind power predictions for larger areas and shorter time scales
Source: Rorhig, K. in IEA Wind Task 25
Opposite imbalance exchange of two countries
Source: Andersen & Detlefsen, 2011
Market integration and wind power deployment benefits
Increase in capacity credit in Europe due to wind exchange between countries in 2020
No wind energy exchange Smoothing effect0%
2%
4%
6%
8%
10%
12%
14%
16%
ENTOS-E continental Europe Top ten wind countries All European countries
Rela
tive C
apaci
ty C
redit
, perc
enta
ge o
f in
stalled
capaci
ty
Source: TradeWind project
Increase in capacity credit in Europe due to wind exchange between countries in 2020
Source: TradeWind project
No wind energy exchange Smoothing effect0
5
10
15
20
25
30
ENTOS-E continental Europe Top ten wind countries All European countries
Capaci
ty C
redt
[GW
]
About the European Wind Energy Association
EWEA is the voice of the wind industry, actively promoting wind power in Europe and worldwide. It has over 700 members from almost 60 countries making EWEA the world's largest and most powerful wind energy network.
Rue d'Arlon 80B-1040 BrusselsBelgiumwww.ewea.org
To download the pdf version click here
To download the Ipad (Ibooks) version click here
If you want to see more statistics, reports, news and information about wind energy event please visit EWEA’s website www.ewea.org or contact us at [email protected]
