Creating a secure and undistorted European energy...
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Creating a secure and undistorted European energy market Steigenberger Grandhotel 4th February 2014 Brussels
Transcript of Creating a secure and undistorted European energy...
Creating a secure and undistorted European energy market
Steigenberger Grandhotel
4th February 2014 Brussels
Session 2 – The role of demand side management (DSR)
The legal framework for DSR in Europe – Anne-Sophie Chamoy, Head of Legal & Regulatory, Energy Pool
© Energy Pool
Anne-Sophie ChamoyHead of Legal & Regulatory
The legal framework for DSR in Europe
© Energy Pool
Energy PoolWho we are ?
4
2008 2010 2013
Companyset up
Strategic partnership with
First operations in B & UK
2014
65 employees24/7
First operations in 3 new countries
YOUNG OLD COMPANY
RECOGNIZED FIELDS OF EXPERTISE
STRONG IDENTITY
Engineering - Steel industry, electrometallurgy, pulp and
paper, cement industry, agri-food industry, hospitals…
Market design & Regulatory
Operational excellence
© Energy Pool 5
Définition du marché pertinent
Demand Response at EU level
A well unknown concept
DIRECTIVE 2009/72/EC
ENERGY EFFICIENCY DIRECTIVE
Art. 2.2 ‘energy efficiency/demand-side management’ means a global or
integrated approach aimed at influencing the amount and timing of electricity consumption in order to reduce primary energy consumption and peak loads by giving precedence to investments in energy efficiency measures, or other mea-sures, such as interruptible supply contracts, over investments to increase generation capacity, if the former are the most effective and economical option, taking into account the positive environmental impact of reduced energy con-sumption and the security of supply and distribution cost aspects related to it
Art. 2.(45) ‘aggregator’ means a demand service provider that combines
multiple short-duration consumer loads for sale or auction in organised energy markets
Art. 15.4 Prohibition of tariffs that might hamper the participation of Demand Response on the markets
Art.15.8 Participation of Demand Response alongside supply in wholesale and
retail markets / Integration of Demand Response in balancing, reserves & system services markets
COMMUNICATIONIncorporing demand side flexibility, in
particular demand response, in electricity markets
2 Demand Response is to be understood as voluntary changes by end-
consumers of their usual electricity use patterns - in response to market signals (such as time-variable electricity prices or incentive payments) or following the acceptance of consumers' bids (on their own or through aggregation) to sell in organised energy electricity markets their will to change their demand for
electricity at a given point in time. Accordingly, demand response should be neither involuntary nor unremunerated.
REGULATION 714/2009 Art. 8.6 No explicit reference to Demand Response but Network Code on
Balancing + Load Frequency Control & Reserves
Art. 2.29
Art. 2. (45)
2.
Art. 8.6
© Energy Pool 6
Demand Response in France
A new born concept
ENERGY CODE
Art. L123-1 to L123-4
Art. L271-1
Financial support granted to those DR providers who contribute to the national energy policy objectives
• Possibility to monetise DR on the wholesale market and on the balancing and reserves markets, subject to modalities to be defined in a decree
• No possibility for a BRP/supplier to veto the action of a DR provider on a given site
• Obligation for DR providers to compensate the supplier of the curtailed consumer
Art. L335-1
Set up of a capacity market (with possible certification of DR capacities)
Draft decree on DR
• Details on the financial support for DR providers
• Details on the compensation to be paid to the BRP/suppliers
• Definition of DR and of DR provider
1
2
3
© Energy Pool 7
Demand Response in France
The view of the French Competition Authority
Opinion 13-A-25 on DR
• Details on financial support for DR providers
• Details on compensation to be paid to BRP/suppliers
• Definition of DR and of DR provider
1
2
3
20th december 2013
Draft decree on DR
Comments on draft decree• Critics on the “subsidy” to be granted to
DR providers• Comments on payment modalities for
compensation
DR market analysis• Definition of DR market
• Analysis of EDF behavior on such market
B
A
© Energy Pool 8
Definition of DR Market
UPSTREAM RESOURCES DOWNSTREAM MARKETS
Balancing marketBalancing market
Reserve marketReserve market
Capacity marketCapacity market
Wholesale marketWholesale market
BRP portfolioBRP portfolio
ResidentialResidential
IndustrialIndustrialSellingOperatingCollecting
DR MARKET
IdentifyingConnectingValuing
MWDesigningBeing registered onPricing & Bidding
A
SUPPLY MARKET
© Energy Pool 9
Analysis of EDF behavior on DR marketB
Dominant position of EDF on :
Supply market (both for residential (92%) and industrial (80%))
DR market (considering its EJP/Tempo offers)
Risks of abuse
Use of database
Tying activities / Cross subsidies
1
2
© Energy Pool 10
SUPPLY MARKET DR MARKET
SUP
PLI
ER
CO
NSU
MER
DR
PR
OV
IDERProducts/services
price
Information
Information
Products/services
price
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Abuse of dominant position if • Information collected during its former monopoly (without competition on the merits) • Non easily reproductible by competitors
EDF should put part of its database at the disposal of DR providers RECOMMENDATION
Analysis of EDF behavior on DR marketB
© Energy Pool 11
Abuse of dominant position if (1) Products A and B are two different products(2) Consumers cannot buy A without B(3) Company has a dominant position on a market(4) Behavior limits competition
SUPPLY MARKET DR MARKET
EJP/TEMPO OFFERS
Product AElectricity supply (MWh)
Product B DR Services (MW
Analysis of EDF behavior on DR marketB
© Energy Pool 12
Tying activities ?CRE : EJP/Tempo tariffs do not cover EDF costsCombined offers do not allow an easy « cost control » by CRE or Competition Authority
SUPPLY MARKET DR MARKET
EJP/TEMPO OFFERS
Product AElectricity supply (MWh)
Product B DR Services (MW
EDF should split off its DR activities in a separate entityRECOMMENDATION
Analysis of EDF behavior on DR marketB
© Energy Pool
Mécanisme d’ajustement, réserves, marchés de gros de l’énergie
Eff
acem
en
ts
€
SCHEMA INTUITIF Valorisation directe des effacements sur les marchés par les consommateurs, mais rendue difficile (notamment pour les petits consommateurs) du fait des modalités relativement complexes d’accès aux marchés
Eff
acem
en
ts
Opérateurs d’effacement
Op
éra
tio
n e
t va
lori
sa
tio
n
€Mécanisme
d’ajustement, réserves, marchés de gros de
l’énergie
Consommateurs
ConsommateursOpérateurs
d’effacement
Co
ntr
at
«e
ffa
cem
en
t»
Consommateurs
Eff
acem
en
ts
Optimisation de portefeuilleArbitrages (production/effacements)
Econom
ies
sur
la f
act
ure
«
fourn
iture
»
SCHEMA « AGREGATEUR »Valorisation des effacements sur les marchés via l’intervention d’un agrégateur (seul véhicule possible pour la valorisation de l’effacement diffus)
SCHEMA « FOURNISSEUR » Valorisation des effacements par le fournisseur du site à travers un rabais sur sa facture « fourniture »Pas de participation aux marchés
Op
éra
tio
n e
t va
lori
sa
tio
n
Fournisseurs
Co
ntr
at
fou
rnitu
re
Acteurs concernés
Biens/Services substituables
Marchés formalisés
Marché pertinent de la flexibilité ?
Session 2 – The role of demand side management (DSR)
Integration of demand side – the TSO perspective – Thomas Veyrenc, Director Markets Department, RTE
Integration of Demand SideThe TSO perspective
Thomas VeyrencDirector Markets Department
Different stages in market design
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Stage 1: specific arrangements in
old-style regulatory
regime
Predefined tariffs (even when dynamic)
Specific products providing little flexibility (D-1 signals, no RT
action)
Stage 2: DSM-compatible
market design
DSM participation authorized in
markets
Stage 3: DSM-friendly market
design
Adapted governance
framework to enable the
participation of independent DSM
Operator
Specific products tailored to enable
DSM participation in all markets
(but with equal conditions to other
products)
Stage 4: Public support for DSM in market design
Support schemes
Energy Capacity
Bala
nci
ng
Mark
ets
Within
port
folio Portfolio
optimization for suppliers
(sourcing vs sales)
Balancing markets open
to DSM
Reserves / AS procurement open to DSM
Capacity certificates for
DSM
DSM reduces individual
contribution to SoS
Direct valuation in
energy markets
Demand Side integration in the energy market
Cornerstone : Independent DSM Operator
Challenges
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Why ?
Suppliers? Core business selling energy
Consumers? High complexity & transaction costs
Requirements
Open access to demand side potential
Open (explicit) access to markets
Trust in the product
Definition / Control
Smooth interactions in the market
Neutralization of imbalances
Supplier compensation
Open Competition
Adapted governance framework
Free access to DSM potential
Technical issues
Metering / Aggregation possibilities…
Potentially conflictingCan there be a fair compensation without conditional access to DSM potential ?
Proof of concept
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Trust in the product
Pre-qualification & quality controls
Smooth interactions in the marketOpen Competition
Technical issues
Step by step improvements
Regulated third party access & compensation
WithdrawalsInjections
BRP 1 BRP 2
WithdrawalsInjections
DSM Operator
WithdrawalsInjections
TSO intermediationensures commercial
confidentiality
€
TSO
€
€Market price
AverageMarket price
AverageMarket price
Capacity Market to foster Demand Side
Key role for Demand in the Capacity Market
With a shorter construction time than other capacities, it is expected to set the final price
Enabling Demand Side participation requires integration in the whole value chain
Capacity Markets can provide a complementary framework to develop Demand Side
TSOs have a key role to play for DSM integration in all markets & trust in the product
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Implicit participation through obligation
reduction
Suppliers can hedge with DSM
1
1
Explicit participation through certification
Certification process similar to
generation
2
2
Peak load threat to SoS : Implementation of a DSM friendly Capacity Market in France
Capacity wide, technology neutral, no capacity target, decentralized market, forward looking, no public money
Session 2 – The role of demand side management (DSR)
– Dr. Martin Iffert, CEO, Trimet Aluminium
11. Februar 2014
Dr. Martin Iffert
TRIMET ALUMINIUMMAKES
LIFE
EASIER
Supply Production RecyclingCasting / Downstream process
Aluminium is our Passion
Founded
1985
Production Sites
7
Employees
2,500
Apprentices
120
Revenue
1,500 €m
Investments Annual
80 €m
Production per year
600 kt
Equity Ratio
37 %
TRIMET SE– Current FiguresConsolidated
Essen Hamburg Gelsenkirchen
Harzgerode Sömmerda
Production Sites TRIMET
SJ-de- Maurienne (F)
+ Castelsarrasin (F)
Essen Smelter since 1994
Investments
300 €m
Employees
700
350
Dismantled potline 3 rebuilt in 1996-1998Smelting capacity increased from 90 kt to 170 ktCasthouse capacity increased from 130 kt to 260 kt
We producespecial alloys exclusively for our customers and according to their requirements
Billets Slabs Foundry Alloys
Main Products and Market Segments
Rod
Casting Parts Liquid Metal
Raw Material – Power – TRIMET Germany
5 TWh = 5.000.000.000 kWh
+1 ct/kWh
CostIncrease50 Mio. €
10.000
100.000
1.500.000
Domino-Effect
SavingSocial Fairness
Saving theWorld Climate
Society Targets
Renewable EnergiesInstalled Capacity in Germany
MaxBedarf
Min
142.000 MW
112.000 MW
57.000 MW
Modelling 2050Weather data 2013 and installed capacity 2050
Industry as Link
Research Focus„Virtual Battery“
Model Cell Heat Exchanger
TRIMET – more than aluminium
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