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N. Keith Tovey, M.A. PhD, C.Eng MICE Н.К.Тови М.А., д-р технических наук

NBS-M017 2013. CLIMATE CHANGE GOVERNANCE AND COMPLIANCE. Regulation in Electricity Supply. The changing face of the Electricity Market in the UK. Изменяющееся лицо рынка электроэнергии в Британии. N. Keith Tovey, M.A. PhD, C.Eng MICE Н.К.Тови М.А., д-р технических наук.

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N. Keith Tovey, M.A. PhD, C.Eng MICE Н.К.Тови М.А., д-р технических наук

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  1. NBS-M017 2013 CLIMATE CHANGE GOVERNANCE AND COMPLIANCE Regulation in Electricity Supply The changing face of the Electricity Market in the UK Изменяющееся лицо рынка электроэнергии вБритании N. Keith Tovey, M.A. PhD, C.Eng MICEН.К.Тови М.А., д-р технических наук Energy Science Director Low Carbon Innovation Centre University of East Anglia, Norwich Руководитель по энергетическим исследованиям Центр экологических инноваций Университет Восточной Англии, Норвич

  2. Course WEB Page http://www2.env.uea.ac.uk/energy/energy.htm or http://www.uea.ac.uk/~e680/energy/energy.htm

  3. The changing face of the Electricity Market in the UK Изменяющееся лицо рынка электроэнергии в Британии • A brief review of the UK Electricity Industry prior to 1990 under State Ownership. • differences in approach between England / Wales and Scotland. • Fuels used for generation • Fuel Diversity – The Shannon-Wiener Index • The Electricity Markets in the 1990s after Privatisation • The New Electricity Trading Arrangements NETA (2001) • The British Electricity Trading and Transmission Arrangements (BETTA). • The Supply of Electricity since 1990 • Conclusions

  4. Scotland (Шотландия): Two vertically integrated companies supplying discrete areas (Две вертикально интегрированных компании, снабжающие отдельные территории) Scotland Шотландия England and Wales Англия и Уэльс Northern Ireland Северная Ирландия 2000 MW • Electricité de FranceEDF EdF The Generation and Distribution of Electricity has always been different in Scotland compared to England and Wales (Шотландия всегда отличалась от Англии и Уэльса в плане производства и распределения э/э ) England and Wales (Англия и Уэльс): One Generating Company (CEGB) and 12 Regional Electricity Suppliers (Одна генерирующая компания (CEGB) и 12 региональных поставщиков).

  5. Structure of Electricity Supply in early 1990sСтруктура системы энергоснабжения в начале 1990 г.г. Scottish Hydro Scottish Power England & Wales Northern NORWEB Yorkshire Англия и Уэльс East Midlands MANWEB Midlands Eastern SWALEC London SEEBOARD Southern SWEB Scotland Шотландия • Scotland Шотландия • Vertical Integration Вертикальная интеграция • two companiesдве компании England and Wales Англия и Уэльс 12 Regional Supply Companies 12 региональных компаний also Distributed Network Operatorsа также распределяющие сетевые операторы

  6. Electricity Generation in the UKПроизводство электроэнергии в Великобритании Coal + Oil Nuclear Gas (CCGT) Renewables Until 2006, growth averaged 1.8% over previous 20 years In recent years gas has overtaken coal as dominant fuel and nuclear has declined

  7. Implications of daily/weekly/monthly variations in fuel use for Electricity Generation • The carbon factor for electricity generation in UK is ~ 540g/kWh • Varies from • Hour to hour • Day to day • Week to week • Month to month • See • Current accounting only uses Grid annual average. In future accounting may relate to emissions associated with time of use • Thus a heavy industry with high electricity demand in day time could significantly reduce its carbon emissions by operating overnight rather than during day. www.bmreports.com

  8. Daily fuel mix in electricity Generation11th January 2010

  9. Weekly fuel mix in electricity Generation11 - 17th January 2010 Mon Tues Wed Thurs Fri Sat Sun Notice higher proportion of coal used during day time hence a higher carbon emission factor.

  10. Shannon – Wiener Index of Fuel Mix Diversity • The Shannon-Weiner Index (H) is defined as: H = -  pI ln pI where pi is the proportion of the ith fuel. The index value increases with number of items and also the relative proportions of items With three fuels, the maximum value reaches 1.09 when all the fuels are in equal proportions. In Norway where Hydro provides 99.5%, the index for the three fuels used is just 0.035.

  11. Shannon – Wiener Index of Fuel Mix Diversity • Shannon – Wiener Index is a measure of diversity originally developed as a measure of biodiversity. • Higher index values occur with higher diversity. • But there is no absolute upper limit. • There is a maximum diversity index for a given number of fuels (e.g. species, fuels) when all items are in same proportion, but index will be higher for a greater number items. • Index is low if one item dominates Variation in maximum value of Index with number of items. The situation occurs when all items have equal proportion. e.g. with 6 fuel types the maximum value of index would be 1.8.

  12. Shannon – Wiener Index of Fuel Mix Diversity Exercise Selected link for EXCEL Spreadsheet Template

  13. Transmission Network in the UK 400 kV 275 kV 132 kV ScotlandШотландия Transmission throughout England, Wales and Scotland became unified on April 1st 2005 England and Wales Англия и Уэльс Historically transmission networks have been different in England and Wales compared to Scotland Исторически, сети передачи э/энергии в Англии и Уэльсе отличались от сетей Шотландии

  14. Most Generating Capacity is in the North - most demand is in South Interconnector to Scotland +1643 +7525 +418 -4709 -1963 Interconnector to France MW • Generating Capacity Surplus/Deficit • on February 12th 18:00 • +ve: generating capacity exceeding demand • -ve: demand exceeding generating capacity

  15. Electricity Generation - pre 1990 • Decision on how electricity was to be generated was done on a generating set basis • Generating Sets to run were selected on Merit Order. • Based on Marginal Costs • (i.e. the fuel costs - цены на нефть) Some generating sets were run OUT of MERIT ORDER where system constraints were an issue. • Generators sold electricity to Regional Electricity Boards • Electricity Boards sold to consumers in their Area only • Prices to consumers varied between regions

  16. Privatisation of Electricity Supply Industry 1990 Central Electricity Generating Board Центральное National Power PowerGen Nuclear Electric • Coal (Угольные) Fired Power Stations • Oil (Нефтяные)Fired Power stations • Gas Turbine (Газовы турбины) Stations • Hydro Stations (ГЭС) • Nuclear Stations (Атомные) • Transmission (Трансмиссия) National Grid Company 12 Regional Electricity Companies 12 Regional Electricity Companies

  17. Typical UK Electricity Demand in Winter 2003 and 2005

  18. Comparison of Demand Forecast and Outcome Data for 48 hour period covering 27th and 28th September 2008 Note: there was an alert on 28th from period 45 (i.e. 22:30) meaning no actual data is available from this time.

  19. Obtaining Information from BMREPORTS • Total Demand for electricity on a half hour basis may be accessed from: www.bmreports.com INDO: Initial Demand Out-turn ITSDO: Initial Transmission Demand Out-turn – includes transmission losses etc What is today’s demand: What are today’s wholesale prices?

  20. The changing face of the Electricity Market in the UK • A brief review of the UK Electricity Industry prior to 1990. • The Electricity Markets in the 1990s after Privatisation • the first system know as the “Pool”. • Some Countries operate a derivative of the “Pool” • Operation of the Pool – the bidding Process • The New Electricity Trading Arrangements NETA (2001) • The British Electricity Trading and Transmission Arrangements (BETTA). • The Supply of Electricity since 1990 • Conclusions

  21. Scottish Nuclear (Атомная)* Scottish Hydro Consumers Потребители Scottish Power Electricité de France PowerGen Licensed Suppliers Лицензированные поставщики Consumers Потребители The Pool Пул Independents-Независимые BNFL (Magnox) RECs Industry-Промышленность Second Tier Consumers Вторичные потребители Nuclear Electric * Eastern ** Innogy Scotland Шотландия England and Wales Англия и Уэльс

  22. The Operation of The Electricity Pool: 1990 – 2001 • Only the Generators (>100 MW) bid into the POOL to supply electricity e.g. National Power (now Innogy), PowerGen etc • The National Grid Company published projected demands for the following day and invited bids • The Generators supplied bids for each generating set in each station for each half-hour period of the following day • The NGC sorted bids to determine which generating sets would be used for each particular period, and which ones would have capacity made available

  23. 1250 MW Bid from company E £19.50 per MWh Bid from company D £19.40 per MWh 1250 MW Bid from company C £19.32 per MWh 32500 MW 1250 MW Bid from company B £19.31 per MWh 1250 MW 1250 MW Bid from company A £19.20 per MWh (0.96R / kWh) • Range of bids from companies in range £18 - £19 per MWh • 0.90 - 0.95 Roubles per kWh • Range of bids from companies in range £15 - £18 per MWh • 0.75 - 0.9 Roubles per kWh • Range of bids from companies in range <£15 per MWh • 0.75 Roubles per kWh System Marginal Price = £19.31 SMP 10000 MW 10000 MW Companies up to and including B successful 10000 MW £1 ~ 50 Roubles

  24. The Operation of The Electricity Pool • All Companies who were successful were paid the SMP for all units generated irrespective of what their bid was • The bids were for the single half-hour period and fresh bids were required for all half hour periods • It was possible for companies to bid £0 and this would guarantee that they generated and paid SMP • However, if all Companies did the same they would have to generate electricity for nothing • In addition to the SMP, there was also a capacity charge relating to the generating capacity which was requested to be available

  25. Value of Lost Load The Operation of The Electricity Pool • Capacity Charge paid to all Generators who had been requested to have capacity available. -based on formula(по формуле): LOLP * (VOLL - SMP) Loss of Load Probability VOLL: was set by the Regulator at around £2400 per MWH LOLP: normally a very low figure but could become significant if there was a shortfall in generating Capacity Charge: signal to ensure sufficient capacity was available. Pool Input Price (PIP) = SMP + LOLP * (VOLL - SMP)

  26. Электрический пул System Constraints (Система давления): • Some Power Stations constrained “ON” to ensure security of supply even when their bid was more expensive • (Некоторые электростанции constrained “ON”обеспечить снабжение, даже в случае более дорогих заявок) • Some Power Stations constrained “OFF” even when their bid was cheaper (-excess of capacity in one region) • (Некоторые электростанции constrained “OFF”обеспечить снабжение, даже в случае более дешевых заявок) • Constrained Stations paid their “Bid” Price • (уплачивали их «заявочную» цену) • POOL Output Price: (POP) = Pool Input Price + Uplift • Uplift represented the additional charges incurred to National Grid Company because of System Constraints • Suppliers purchased Electricity at Pool Output Price • (Поставщики закупают э/э на Пуле по цене производителя)

  27. Электрический пул: A Review • Need for strong Regulatory Body to ensure prices were not fixed. • Evidence suggested price manipulation took place in early years. • Regulator required major generators to dispose of some stations. • The lack of Demand Side Bidding was a weakness • Charges for Transmission Losses were averaged over whole Network. • Customers in North subsidised those in South • Generators in South subsidised those in North • These issues have been partly resolved under BETTA Separate discussions relating to Distribution Charges are also under way

  28. Scottish & Southern Scottish Power Scottish Power Scottish & Southern Changes in Regional Electricity Companies in the 1990s • Take-over • Scottish Power takes over MANWEB 1990 • Mergers Scottish Hydro & Southern become Scottish & Southern • Vertical Integration • nPower acquire Midlands • PowerGen acquire East Midlands United Utilities • United Utilities formed • in NORWEB area PowerGen nPower c. 1998

  29. The changing face of the Electricity Market in the UK • The New Electricity Trading Arrangements NETA (2001) • The British Electricity Trading and Transmission Arrangements (BETTA). • BETTA essentially extended NETA to cover Scotland. • There were few changes in England and Wales apart from Transmission issues • Operation of the Trading Market remained the same • Although minor modification take place all the time • In BETTA • Both Generating and Demand Side Bidding Takes Place • Most Electricity is traded outside Balancing Mechanism • Favours those who guarantee specific levels of generation/supply in advance • Favours those who can guarantee flexibility in output / demand at short notice.

  30. Operation of BETTA The basic principles Основные принципы • Generators and Suppliers are penalised if they deviate from their agreed level of generation / supply. • System security is maintained via the Balancing Mechanism • Renewable Generators e.g. Wind and small CHP (~10 MW) can be adversely affected. • Generation and Supply focuses on: • Balancing Mechanism(BM) Units • Generating BM Units: Demand BM Units • Trading between Generating and Demand BM Units • Only the volume traded( not price)has to be notified.

  31. NETA/ BETTA The Balancing Mechanism: A Summary Real Time 30 mins Current Day Day Before Operation of Balancing Mechanism Gate Closure FPN IPN • Initial Physical Notification (IPN) – 24 hours in advance • System Operator checks sufficient capacity is available. • Final Physical Notification (FPN) Gate Closure for Real Time Period of 30 mins • Initially 3.5 hours before REAL Time • later reduced to 1 hour. 3.5 hours 1 hour • Changes to contract position cannot be made after Gate Closure • Balancing Mechanism provides System Security

  32. NETA/ BETTA: Operation of the The Balancing Mechanism: • Generators and suppliers are penalised if they deviate from their contract position at the final physical notification (FPN). • The System Operator negotiates with balancing Mechanism (BM) units to increase/decrease the amount of electricity available to maintain system security and ensure system remains stable. • Case 1: • Too little electricity on the system • Generators can OFFER to INCREASE output • Suppliers can OFFER to REDUCE consumption Time OFFER FPN OFFER FPN • If OFFER is agreed then Generators / Suppliers are PAID for any electricity increased / reduced under the OFFER. • Separate charges apply for these services. Time

  33. The New Electricity Trading Arrangements Новая система оптовой торговли НЕТА Time OFFER FPN OFFER FPN Time The Balancing Mechanism Балансирующий механизм • To allow system to remain stable • Too little electricity on the system • Generators can OFFER to INCREASE output • Suppliers can OFFER to REDUCE consumption • If OFFER is agreed then Generators / Suppliers are PAID for any electricity increased / reduced under the OFFER.

  34. OFFER FPN Bid The New Electricity Trading Arrangements Case 2: Too much electricity on the system • Generators can BID to REDUCE output • Suppliers can BID to INCREASE consumption Time OFFER FPN Bid Time • If BID is agreed then Generators /Suppliers PAY for any reduction in generation / increase in demand under the BID.

  35. The Balancing Mechanism: Offers and Bids 50 - 100 MW: £50 per MWh (2.5 Roubles per kWh) 25 - 50 MW: £30 per MWh (1.5 Roubles per kWh) 0 - 25 MW: £20 per MWh (1 Rouble per kWh) FPN окончательная физическая нотификация Example of Differential Offers from a Generator Generators / Suppliers may submit OFFERs or BIDs which differ for different levels of deviation from the Final Physical Notification National Grid Company normally accepts OFFERS / BIDS which are cheapest unless System Constraints prevent this.

  36. The Balancing Mechanism: Undo Offers/Undo Bids OFFER / UNDO BID: Pair +2 OFFER / UNDO BID: Pair +1 FPN BID / UNDO OFFER: Pair -1 BID / UNDO OFFER: Pair -2 What happens if System Operator has got it wrong? • OFFERs / BIDs cannot be cancelled • UNDO BID removes an OFFER and is usually less than the OFFER • UNDO OFFER removes a BID and is usually more than the BID • OFFERs / UNDO BIDs [ or BIDs / UNDO OFFERs] are submitted in pairs

  37. Actual Metered Volume FPN Paid SSP FPN Actual Metered Volume Установлено в двустороннем порядке договаривающимися сторонами Settled bilaterally between contracting parties Pays SBP Установлено в двустороннем порядке между сторонами Settled bilaterally between parties The Balancing Mechanism: Imbalance Charges Charges for imbalance depend on whether BM unit is deviating in same direction as overall system or not. Example shows cases where imbalance is in same direction as system

  38. Distributed Network Ownership in 2005 Distributed Network Ownership in 2004 Distributed Network Ownership in 2010/11 Aquila Central Networks Scottish & Southern Iberdrola Scottish Power United Utilities Regional Supply Ownership CE Electric UK Electricité de France UKPower Networks Western Power Western Power PowerGen Distributed Network OwnershipВладение распределительной сети Scottish & Southern Scottish Power Iberdrola nPower E.ON (PowerGen) Electricité de France In 2007, Scottish Power became part of Iberdrola

  39. Changes when BETTA came into force – April 1st 2005 • Integrated Trading System operating England and Wales with Scotland • Before BETTA • System and Transmission Network Operator in England and Wales was National Grid Company (NGC). • System and Transmission Network Operator in South of Scotland was Scottish Power • System and Transmission Network Operator in North of Scotland was Scottish and Southern • After BETTA • National Grid Company become System Operator for whole of England, Wales and Scotland. • NGC now Transmission operator for England and Wales • In Scotland the two companies now hold the respective transmission Network Licences • Issues of differences in Transmission Protocol had to be resolved – including the use of the Inter connector • Charges for Transmission Losses had to be addressed

  40. Impact on System Sell and Buy Prices Sunday 6th December 2010 Monday 7th December 2010 Example of System Sell Price (SSP) and System Buy Price (SBP) corresponding with First Point of Triad 2010-2011.

  41. Impact on Wholesale Charges Completion of Langeled Gas Line to Norway UK becomes net importer of gas Oil reaches $140 a barrel How well has it performed since starting on 27th March 2001? 41 Wholesale prices rose rapidly in 2004/2005, fell sharply from mid 2006, rose rapidly since mid 2007 then fell but are less stable.

  42. Generator Connection Charges under BETTAПлата за подключение к генератору энергоснабжения по BETTA 1 2 4 3 A > £25 per kW 5 8 7 B 9 £20 to £25 per kW 11 6 C 12 10 £15 to £20 per kW 13 14 D £10 to £15 per kW 15 19 E £5 to £10 per kW 16 17 F £0 to £5 per kW 18 G - £5 to £0 per kW 20 21 22 25 24 H 27 - £10 to -£5 per kW 26 23 42

  43. Generation Connection Charges from April 1st 2013 Note: Updated Values on those in handout and current as of October 2013 These are general charges for each area in addition there are additional charges reflecting the capabilities of the local regions around each substation

  44. Generation Connection Charges from April 1st 2013 In addition there is a local sub-station tariff which varies from as much as £+5.805051per kW at Edinbane on Skye in the SHETL area to as little -£0.742416 per kW at Mark Hill in the SPTL area.

  45. Demand Connection Charges 2012 - 2013 • Beware!!!! • The TRIAD Approaches!!! on 1st November! What is the TRIAD? A modified measure of peak demand over winter period

  46. Demand Connection Charges 2012 - 2013 The Triad occurs in the period 1st November – 28th/29th February It is the mean of the following: The maximum demand in any one half hour in the above time period. The second highest demand in any one half hour provided it is separated from (1) by at least 10 days. The third highest demand in any one half hour period provided that it is separated from (1) and (2) by at least 10 days

  47. Demand Connection Charges from April 1st 2013 This table has updated figures for 1st October 2013

  48. Example how TRIAD charges can be mitigated Peak demand occurs at time of TRIAD - form process working Shift process by say 2 hours will reduce the TRIAD charge by over 25% or £13628 - see handout

  49. N.K. Tovey (杜伟贤) M.A, PhD, CEng, MICE, CEnv Н.К.Тови М.А., д-р технических наук NBS-M017 2013 CLIMATE CHANGE GOVERNANCE AND COMPLIANCE 8. Regulated Power Zones and Smart Grids Recipient of James Watt Gold Medal 49 49 49

  50. REGULATED POWER ZONES • Transmission and Distribution Networks are critical to electricity security. • Losses on line: = I 2 R where I is the current and R is resistance • the power transmitted P = V * I - V = voltage • Typical UK domestic voltage - 240V • European Voltage - 220V • North American Voltage 110V • These are nominal voltages and system must control voltages within a narrow band of this. Losses are reduced by increasing voltage

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