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Key Findings from the Electricity Market Operation y pBenchmarking Survey 2010
Presented by Tan Liang Ching
02 Nov 2011
1
Background to Surveyg y
• Objective is to establish referenceObjective is to establish reference material among market operators to:• benchmark market processes, and; p , ;
• guide market development
EMC first started the Survey in 2004• EMC first started the Survey in 2004, current 2010 Survey is 7th in the series
2
Respondents to 2010 Survey
1. KPX (440.9TWh) – Korea
p y
2. OMEL (275.0TWh) – Spain3. AEMO (188.3TWh) – Victoria, NSW, Queensland etc4. CAMMESA (110.7TWh) – Argentina 5. XM (56.9TWh) – Colombia6 EMC (42 3TWh) Si6. EMC (42.3TWh) – Singapore7. NZX (40.6TWh) – New Zealand8 IMOWA (17 4TWh) – Western Australian8. IMOWA (17.4TWh) – Western Australian9. ELEXON – UK10. WESM – Philippines
3
ppFigures in parentheses refer to total load in 2010
Survey Processes
• Feb – Send out survey format for feedback
y
y• Mar – Send out revised survey format• May – Collation of survey data returnsy y• June – Compile and analyze survey returns• July – Send out compiled surveysJuly Send out compiled surveys
4
Overview of Areas Surveyed
Market Market
y
Market Background
Market Data
General Info
System Modeling
Competition
Demand-Side Mgmt
S ttl ty g
Generation and EG
Settlement
Surveillance
Rule ChangeAncillary Services
Capacity Markets
Rule Change
IT Systems
Operator Performance
5
Key Market Featuresy
• Most markets settle physical trades,Most markets settle physical trades, gencos free to put in price offers in the wholesale electricity spot market
• KPX (Cost-Based Pool) – Generators submit details of production costs, p ,System Marginal Price set based on the most expensive generation available
• Elexon – Balancing and Settlement Code company
7
p y
Main MO Functions
• Common Functions – Pricing,Common Functions Pricing, Settlements, Scheduling, Dispatch
• Market operations are either integratedMarket operations are either integrated with system operation (e.g. AEMO, KPX, XM) or conducted by an independent body (e.g. EMC, IMOWA)
• Some MOs also involved in Transmission Planning (AEMO, KPX), and Market Governance (Elexon, EMC, IMOWA, KPX WESM)
8
KPX, WESM)
Products Traded
• Common Products – Energy, ReserveCommon Products Energy, Reserve (different response times), Regulation
• Products traded in Real-time onlyProducts traded in Real time only (AEMO, CAMMESA, Elexon, EMC, NZX, WESM), Day-ahead only (IMOWA, OMEL, XM) or both (KPX)
• Other products – Derivatives, pTransmission Rights, Bilateral Contracts, Capacity, Vesting Contracts, Other A ill S i ( Bl k t t)
9
Ancillary Services (e.g. Blackstart)
Locational Pricingg
• No (Elexon, IMOWA, XM)No (Elexon, IMOWA, XM)• Yes –Few nodes or zonal (AEMO/5,
KPX/2 OMEL/2)KPX/2, OMEL/2)• Yes - Many Nodes (CAMMESA/300,
EMC/720 NZX/285 WESM/276)EMC/720, NZX/285, WESM/276)Figure after slashes refers to number of pricing zones/nodes
10
Price Ceiling/Floorg
• Price CeilingPrice Ceiling• No (Elexon, KPX, NZX, WESM, XM)
• Moderate (below USD$600) (OMEL IMOWA• Moderate (below USD$600) (OMEL, IMOWA, CAMMESA)
• Very High (above USD$600) (AEMO, EMC)y g ( $ ) ( , )
• Price FloorNo (CAMMESA Elexon KPX NZX WESM)• No (CAMMESA, Elexon, KPX, NZX, WESM)
• Moderate (above –USD$400) (OMEL, XM)
V L (b l USD$400) (AEMO EMC)
11
• Very Low (below –USD$400) (AEMO, EMC)
Gate Closure / Trading Periodg
• Most Gate Closure for Real TimeMost Gate Closure for Real Time Dispatch ranges from 1 to 3 hours, except AEMO which is 1 minute
• Trading period ranges from 30-60 minutes, though AEMO/NZX have dispatch interval of 5 minutes
12
Main Fuel Typesyp
• Coal - AEMOCoal AEMO• Gas - EMC
H d NZX XM• Hydro – NZX, XM• Gas/Coal – IMOWA, WESM• Gas/Hydro - CAMMESA• Coal/Nuclear - KPX• Gas/Nuclear/Wind/Hydro – OMEL
13
Embedded Generation
• Differential Treatment for EGs• Sell directly to host retailer to reduce
retailer’s settlement (AEMO)• Receive network incentives from distribution
company such as avoided transmission payments (AEMO)p y ( )
• Only net load, rather than gross load is charged non-reserve charges such as MO/SO fees (EMC)MO/SO fees (EMC)
• Must consume at least 50% of its own generation (EMC, KPX)
14
g ( , )
Ancillary Servicesy
• Common typesyp• Reserve (response time, up/down/both)• Regulation (up/down/both)g ( p )
• Specific types • Blackstart/System Restart (AEMO EMC IMOWA)• Blackstart/System Restart (AEMO, EMC, IMOWA)• Reactive Power (AEMO)• Capacity (CAMMESA)Capacity (CAMMESA)• Load Rejection (IMOWA)• Voltage Support (NZX KPX)
15
Voltage Support (NZX, KPX)
Capacity Marketsp y
• Reliability Criteriay• Can cater to demand under drought/dry
conditions (CAMMESA, XM)• Expected energy shortfall of 0.002%
(IMOWA) or Expected Loss of Load Probability of 0.5 day (KPX)y y ( )
• Capacity Targets• Best forecast of energy demand inBest forecast of energy demand in
commitment year, accounting for load growth• Set procurement reserve rate (12-20%) from
k f t d d
16
peak forecast demand
Capacity Marketsp y
• Pricing MechanismPricing Mechanism• Administered (CAMMESA, KPX, OMEL)
• Auction (XM)• Auction (XM)
• Administered ->Auction (IMOWA)
P t M h i• Procurement Mechanism• Annual procurement
• Contract length of 1 year, up to 25 years (XM)
17
Capacity Marketsp y
• Annual Value of Capacity Market up toAnnual Value of Capacity Market up to $USD 3.68Billion (KPX)
• Allocation Mechanism• Allocation Mechanism• Usually borne by Demand/Retailers/Market
Customers through reserve capacity g p yrequirements (IMOWA, KPX, CAMMESA)
• Additional Capacity cost – subsidized by National Treasury (CAMMESA)
18
Market Surveillance
• Common objectivesCommon objectives• Improve Transparency
• Market structure conducive for efficient and• Market structure conducive for efficient and fair operation
• Compliance with market rulesp
• Safety and labour control
• Quality of ServiceQuality of Service
19
Competition (Generation)p ( )
• Market Concentrated• KPX (Korea Hydro and Nuclear Power Company - 33%)• EMC (3 Gencos – 79%) • NZX (3 Gencos – 80%)
• Market Not Concentrated• AEMO• CAMMESA• OMEL• WESM
XM
21
• XM
Competition (Retail)p ( )
• Market Concentrated• KPX (KEPCO practically 100%)
• EMC (4 Retailers – 83%) ( %)
• NZX (5 Retailers – 95%)
• OMEL (4 Retailers – 94%)( )
• Market Not Concentrated• AEMOAEMO
• CAMMESA
• XM
22
XM
Demand Responsep
• Dispatchable LoadDispatchable Load• AEMO (1320MW)
Interruptible Load (MW/% of Total Reserve)• Interruptible Load (MW/% of Total Reserve)• AEMO (1320MW)
• EMC (21MW/ 3.0%)
• IMOWA (54MW/ 1.0%)
• KPX (4668MW/ 6.5%)
• OMEL (2500MW)
23
Demand Responsep
• Other DR SchemesOther DR Schemes• Retailer/Customer Arrangement – Mostly self-
dispatched so customer can avoid high spot prices (AEMO)
• Remote Air Conditioner / Cold Storage System -C h l i t ll th d i iConsumers who newly install the device are given subsidies (KPX)
24
Load Contestabilityy
• Industrial/Commercial/Domestic• AEMO (96%)• Elexon (100%)• OMEL (100%)• NZX • XM
• Industrial/Commercial only• CAMMESA (46%)• EMC (67%)
IMOWA (69%)
25
• IMOWA (69%)
Load Contestabilityy
• Sample Load Profiles (NZX)Sample Load Profiles (NZX)• Night/day (domestic): 75%day; 25% night
• Internally switched weekend day weekend night• Internally switched weekend day, weekend night, weekday, weeknight (domestic and commercial)
• Street lighting (public)g g (p )
• Dairy milking shed (commercial)
• Telecom payphones (commercial)Telecom payphones (commercial)
• Traffic signals (public)
• Mobile phone towers (commercial)
26
• Mobile phone towers (commercial)
Interconnections
• With Gross Import/Export• CAMMESA – (2420GWh/359GWh)• OMEL – (3617GWh/11941GWh)
S ( G / G )• WESM – (127GWh/63GWh)• XM – (9.8GWh/797.7GWh)
• Without Import/Export• Without Import/Export• AEMO• EMCEMC• IMOWA• NZX
27
• KPX
Price Revision
• Price Revision Allowed• AEMO• CAMMESA• Elexon• EMC• WESM
• Revision usuallyy• made within a few business days, and;• affect only few periods except WESM
28
y p p
RT Dispatch Schedule Freqp q
• 5 mins – AEMO, KPX, NZX5 mins AEMO, KPX, NZX• 30 mins – EMC
60 i CAMMESA OMEL WESM• 60 mins – CAMMESA, OMEL, WESM• 90 mins – XM• 24 hrs – IMOWA
29
Settlement
• Dailyy• Elexon ($USD 2.4 billion, 240 companies)• EMC ($USD 12.89 billion, 23 companies)( , p )• KPX ($USD 57.5 billion, 420 companies)• OMEL• XM ($USD 4.89 billion, 110 companies)
• WeeklyWeekly• AEMO ($USD 13.82 billion, 98 companies)• IMOWA ($USD 200 million, 27 companies)
30
IMOWA ($USD 200 million, 27 companies)
Settlement
• MonthlyMonthly• CAMMESA ($USD 8.0 billion, 788 companies)
• NZX• NZX
• WESM ($USD 1.17 billion)
31
Settlement
• Payment Deadline from SettlementPayment Deadline from Settlement• <5CDs – AEMO, IMOWA, OMEL
• 6-20CDs – EMC NZX XM• 6-20CDs – EMC, NZX, XM
• >20CDs – CAMMESA, Elexon, KPX, WESM
Collateral Req irement• Collateral Requirement• Yes (net exposure ranging from 30-70 days)
• No - CAMMESA
32
Settlement
• DefaultsDefaults• IMOWA – 3 defaults, total value of
$USDm1.9 million
• Treatment of Customers of Defaulting Retailer• Transfer to retailer of last resort (AEMO,
Elexon, EMC, IMOWA, OMEL, WESM)
• No special treatment (CAMMESA, KPX, NZX, XM)
33
Rule Change Processg
• Generally similar across different marketsy• Process in EMC’s case
• Any party can propose rule changeAny party can propose rule change• Rules Change Panel (RCP) comprising
industry stakeholders with prioritise issue by i it i t ith h l f EMCassessing its impact, with help of EMC
• If prioritised, EMC will analyse and make recommendationrecommendation
• RCP support change EMC Board adopt change EMA approve change
34
MO Service Costs
Operator Cost Staff p($USDm) Numbers
CAMMESA 8.6 147EMC 22.7 56IMOWA 11.8 27WESM 67WESM - 67XM 22.9 151
Figures only as general reference, as differentMOs may have different scope and responsibilities
35
Areas where NEMS does well
• Nodal pricing with large number of locations p g gpriced
• Most ancillary service products procured titi l d ti i d ithcompetitively and co-optimised with energy,
quantity dynamically determined• Low number of state-owned generation• Low number of state-owned generation
companies, none fully state-owned• Comprehensive set of forecast schedules, p ,
with broad info coverage• No market defaults
36
Areas to Explorep
• Few risk management toolsg• Lack of products to manage risks (e.g.
forwards, FTRs) • Low fuel diversity
• Significant reliance on oil and gas, compared to other jurisdictionsother jurisdictions
• Limited interruptible load (IL) participation• Lowest installed capacity of IL at 21MW• Lowest installed capacity of IL at 21MW• Limits on percentage of reserves which IL can
provide
37
Areas to Explorep
• Limited demand-side management gprograms• Most jurisdictions have some demand-side
initiative/ dispatchable load programme• No full retail contestability
H lf f d j i di ti h t d d• Half of surveyed jurisdictions have extended contestability to domestic consumers
38