MUNI FSS Introduction to Electricity Industry III doc. PhDr. Tomáš Vlček, Ph.D. tomas.vlcek(5)mail.muni.cz 1 Department of International Relations and European Studies Contents - Price of Electricity - Merit Order Effect - Regulation of Electricity - Baseload and Peakload - Example of Regulation Danger High voltage 2 Department of International Relations and European Studies MUNI FSS Electricity Markets - Energy-only Market + Balancing Market - only compensates power that has actually been produced vs. - Capacity Market - compensates the mere readiness, or capacity, for power production 3 Department of International Relations and European Studies MUNI FSS Price of Electricity (Producers's side) Factors influencing the price of electricity production Supply Side Demand Side • Production capacity • Macroeconomic factors • Capital expenditures (CAPEX) through • Weather depreciation • Operational expenditures (OPEX) • Fuel • Emission Allowances • Weather • Hydrology •Wind • Temperature • Global price of energy (oil) Source: Next Finance (2007): Trh s elektrickou energií v Evropě (http://www.pxe.cz/pxe_downloads/lnfo/pxe_analyza.pdf)jD.5 I FSS 4 Department of International Relations and European Studies Merit Order Effect (MOE) - way of ranking of available sources of electricity based on their marginal costs - marginal costs of production reflect the order - marginal costs is the change in the total cost that arises when the quantity produced is incremented by one unit, that is, it is the cost of producing one more unit of a good. In general terms, marginal cost at each level of production includes any additional costs required to produce the next unit. For example, if producing additional vehicles requires building a new factory, the marginal cost of the extra vehicles includes the cost of the new factory. r 1 u i 5 Department of International Relations and European Studies _ ^ t Merit Order Effect (MOE) 6 Department of International Relations and European Studies Merit Order Effect (MOE) Öko-Institut e.V. How supply and demand determine electricity prices The merit order principle last power plant utilized to fulfill demand »x« power plants not needed to fulfil demand »x« demand »x« at a specific time O renewable energies ■ @ nuclear power ■ Q lignite ■ Q hard coal © natural gas ■ $D heating oil SOURCE OEKO-INSTITUT. 2013 7 Department of International Relations and European Studies Illustrating electricity price fluctuations due to the Merit Order Effect Operating costs (Euro/MWh) Power Demand Electricity prices are reduced... Renewables Nuclear ...with higher input from renewables Natural Gas Oil Capacity (GW) Natural Gas Oil Capacity (GW) © BY SA 4.0 MUNI FSS Merit Order Effect (MOE) Are RES good or bad? Customer's point of view - Electricity price dropped considerably - Higher competitiveness for industry vs. support of RES paid by both Producer's point of view - Lower revenues - Deformed investment environment - New market opportunities vs. loss of market 8 Department of International Relations and European Studies MUNI FSS Merit Order Effect (MOE) hard coal demand Electricity price is determined by the most expensive plant. 1,000 MWe in coal or nuclear makes no difference for the market. Nuclear does not equal cheap electricity for the consumer, only sufficient generating capacity equals cheap electricity! MUNI 9 Department of International Relations and European Studies _ n n Price of Electricity (Consumer's side) - In a liberalized market the final price of electricity consists of the price of electricity (commodity) and a number of regulated components that reflect the naturally monopolistic character, such as transmission and distribution. - The support for RES development is among the price components. - The regulated components are set by Energy Regulatory Office. 10 Department of International Relations and European Studies MUNI FSS Price of Electricity (Consumer's side) Price components for electricity supply to households in the CR in 2010, 2014, and 2019 Electricity incl. margin 51.17% 36.4 % 45.58 % Market operator 0.15% 0.24 % 0.8 % System services of CEPS 4.77 % 2.43 % 2.15% Renewables, cogeneration and decentralized sources 5.34 % 12.14% 13.35% Electricity distribution and transport 38.57 % 48.79 % 38.12% Source: Energetický regulační úřad 11 + Ecological tax and VAT (21%) Department of International Relations and European Studies MUNI FSS Price of Electricity (Consumer's side) The development of end consumers' contribution to Renewables, cogeneration and decentralized sources in the CR Year 2005 2006 2007 2008 2009 2010 2011 Contribution in CZK per 1 MWh 39.45 28.26 34.13 40.75 52.18 166.34 370 Year 2012 2013 2014 2015 2016 2017 2018 Contribution in CZK per 1 MWh 419.22 583 495 495 495 495 495 Source: Energy Reuglatory Office of the Czech Republic 12 Department of International Relations and European Studies MUNI FSS Regulation of Electricity The power system is dynamic, permanently active, and within seconds changing system. - In Europe it is optimized for 50 Hz frequency. - In this network frequency, the generated active power (which is equal to the sum of active power producing generators throughout the system) is exactly equal to consumption (sum of inputs of all appliances and network losses). - The balanced supply of electricity and its consumption is the optimum state of the network. - Negative symptoms: worsening power quality (frequency reduction), overvoltage, undervoltage, brownout, blackout, island operation - The reasons for the emergence of those conditions are different from planned and unplanned shutdowns of generating units, through unexpected damage to transformers, substations and networks, the consequences of the current weather conditions (eg. heavy snowfall, the sharp drop in the outdoor temperature, etc.), or changes in electricity production from renewable resources (ie., wind and solar power). - These conditions are prevented by regulatory backups MUNI 13 Department of International Relations and European Studies _ n n Baseload and Peakload VYTVÁŘEN! REGIONÁLNÍCH TYPOVÝCH DIAGRAMU 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 3 5 7 9 11 13 Týden 14 Department of International Relations and European Studies I FSS Baseload and Peakload More than 90% of risk situations are planned and prepared for using regional diagrams from previous years. In the last 30 years there was only one situation, where the divergence from the regional diagrams was critical: Sunday, February 22, 1998 Czech Republic played ice hockey finale match against Russia (and won) during Nagano 1998 Winter Olympics 73001 7200 7100 7000 6900 6800 6700 6600 6500 6400 6300 6200 6100 6CC0 5930 5800 5700 I 15 Department of International Relations and European Studies 00:00 00:40 01:20 02:00 02:40 03:20 04:00 04:40 05:20 06:00 06:40 07:20 08:00 08:40 09:20 10:00 10:40 Source: www.idnes.cz |y| |\| FSS 999999999999999999999999999999999999999 Baseload and Peakload BBC TV Series "Britain from Above" https://www.youtube.com/watch?v=slDAvewWfrA 16 Department of International Relations and European Studies MUNI FSS Regulation of Electricity A Simplified Division of Regulation Reserves as part of CEPS System Services in the Czech Republic System Service Mark Timeframe Description Frequency Containment Process (Regulation Reserve Seconds) RZV 30 seconds Serves for the automated primary frequency control (PR) Minute Reserve available within 5 minutes (positive) mFRR5 5 minutes Minute reserve available within 5 minutes (manual Frequency Restoration Reserve, mFRR5) Regulation Reserve available within 10 minutes (positive) aFRR+ 10 minutes Serves for secondary regulation, it consists of sources available within 10 minutes (automatic Frequency Restoration Reserve positive, aFRR+) Regulation Reserve available within 10 minutes (negative) aFRR- 10 minutes Serves for secondary regulation, it consists of sources available within 10 minutes (automatic Frequency Restoration Reserve aFRR-) Minute Reserve available within 15 minutes (positive) mFRR15+ 15 minutes Minute reserve available within 15 minutes (manual Frequency Restoration Reserve, mFRR5) Minute Reserve available within 15 minutes (negative) mFRR15- 15 minutes Minute reserve available within 15 minutes (manual Frequency Restoration Reserve, mFRR5) Regulation Reserve available within 30 minutes (negative) RZ30 30 minutes It serves for tertiary regulation, it consists of regulation reserve for power reduction within 30 minutes Regulation Reserve available in over 30 minutes RZN>30 30+ minutes It consists of dispatch reserve, regulation energy and regulation energy from abroad, all available in over 30 minutes EregZ>30+, EregZ>30-) Note: a positive reserve means an increase in capacity, while a negative reserve means an increase in consumption. Source: CEPS, a. s., 2018, p. 117. 17 Department of International Relations and European Studies FSS Regulation of Electricity https://youtu.be/9Fi-eu4IQMo?t=5m5s 18 Department of International Relations and European Studies MUNI FSS Regulation of Electricity Maximum Regulation Reserves in the Czech F lepublic in 2019 (Mwe) aFRR mFRR aFRR+ aFRR- mFRR5 mFR R15+ mFRR15- Night Day Night Day Night Day Night Day Night Day Working days 335 365 335 365 505 505 280 330 220 270 Non-working days 330 345 330 345 505 505 275 315 215 255 Source: ČEPS, a. s., 2018, p. 118. ENTSO-E - If a power unit fails, another will take over its operation depending on its distance from the power outage. This substitution works on the principle of solidarity across the network. 20 Department of International Relations and European Studies Regulation of Electricity - Example 3,100/4300 MW NPP 1500 6,600/11000 MW StPP 750/2300 MWGPP+GSC 600/1000 MWHPP 200/1200 MW PHPP 700/2000 MW PhPP 70/300 MW WPP Consumption 28.2.2018 12000 11000 10000 9000 t-1-1-r 4:006:007:008:009:00 Known consumption Base 9400 MW Peak 11000 MW 9:00 Consumption 12000 MW 9:30+1500 MW WPP from neighbour, rising frequency, overvoltage imminent 21 Department of International Relations and European Studies MUNI FSS Regulation of Electricity - Example 3,100/4300 MW NPP 1500 6,600/11000 MW StPP 100/2300 MWGPP+GSC 250/1000 MWHPP 000/1200 MW PHPP 500/2000 MW PhPP 70/300 MW WPP 22 Department of International Relations and European Studies Solution: PhPP drop by 200 MW Primary regulation -650 GSC+GPP -350 HPP -200 PHPP Export-100 MW Secondary regulation will take over in 30 minutes. With the peak spot electricity price of 40 euro the regulation costs EUR 48,000 per hour. (100 MW export, 200 MW PHP used, 1200 MW regulated) MUNI FSS Regulation of Electricity - Example Consumption 28.2.2018 3,100/4300 MW NPP 1500 6,600/11000 MW StPP 100/2300 MWGPP+GSC 250/1000 MWHPP 000/1200 MW PHPP 500/2000 MW PhPP 70/300 MW WPP 23 Department of International Relations and European Studies 14000 13000 12000 11000 Known consumption Base 9400 MW Peak 11800 MW 13:00 Consumption 12000 MW 14:00 Expected cons. 11000 MW 13:30 drop in WPP from neighbour, to 0 MW in 30 minutes, drop in frequency, undervoltage imminent MUNI FSS Regulation of Electricity - Example 3,100/4300 MWNPP 6,600/11000 MW StPP 850/2300 MWGPP+GSC 680/1000 MWHPP 000/1200 MW PHPP 1100/2000 MW PhPP 70/300 MW WPP 24 Department of International Relations and European Studies Solution: i Required regulation 2500 MW by 14:00 PhPP rise by 600 MW Primary regulation +750 GSC+GPP +430 HPP End of export +100 MW End of import-1500 MW With the peak spot electricity price of 40 euro the regulation costs EUR 84,000. (600 MW PHP used, 2100 MW regulated) The regulation between 9:30 and 14:00 costs EUR 252,000. MUNI FSS Thank you for your attention. YOUWaNTN coal? we own the J mines. J you want oil and gas? f WEOWnVydUWANT I THE WELLS./ NUCLEAR V. .-/Venehgy? WE own \ souar ) r>olar A ( power isn t j V FEASIBLE t) 25 Department of International Relations and European Studies MUNI FSS