Industry workshop

June 2014

Agenda Time Topics

10.00am-12.00pm • Introduction • System Operations update • Meet Erich and Andrew • The joint work programme • Reserves and frequency management

programme • Security of supply

12.00-1.00pm Lunch

1.00-2.15pm • Reserve management tool replacement • Security policy review • Extended reserve (AUFLS) • Wrap up

• What’s been achieved in the last 6 years – Major transmission projects on the grid – Delivery of Section 42 initiatives with the EA

• Next steps for Transpower as the System Operator

Keeping the lights on

3

Working together

• We want to keep you informed • Your insights and feedback are important • New opportunities and challenges for all

4

Joint work programme

• Delivering the system operator service • Focus on relationship with the Electricity

Authority • Joint work programme highlights

5

Future direction

• New General Manager • New Senior Leadership Team

– Andrew Gard, Engineering Manager – Erich Livengood, Market Manager – Kevin Duckworth, Director Energy Market

Services – Dan Twigg, System Operations Manager – John Campbell, Risk and Performance

Manager 6

Questions

Market update

Erich Livengood

Erich Livengood – Market Manager

9

Background • Degreed Engineer (Mechanical), MBA • Oil and Gas experience (upstream, capital projects) • Management and energy consulting and consulting • Energy, environmental and capital markets • Various governance roles • NZ Electricity Industry – 7 years (Mco, KEA 3 Ltd, NZX Energy) “We have the gift of a great industry – full of complexity, challenge and change.” “We have not quite sorted industry governance…there is a bit more efficiency to be gained from a collaborative approach to change—one with less input from the general election process” “I try to play nicely with most industry participants….its not too hard if you take the time to listen and understand where people are coming from”

Some thoughts prior to arriving at the SO last month

10

Other questions

SOE in Monopoly position

Highly skilled and knowledgeable staff

Responds well in crisis

Relatively good at managing large projects

Cost effective? How to measure and know we are working on the right things?

Industry leadership? What do they do?

How to motivate when not in crisis? Commercial nous?

What about costs? What is coming down the road?

My external view

Example:

National IR markets

Paper presented

2004

System Operator – Markets

11

New organisation formed to • Focus on market aspects of operation and development • Internalise competition reliability and efficiency • Smoother travel of idea to implementation

– align better with Authority objectives and work plan – improve industry experience – ensure cost effective delivery

• Enhance commercial and economic awareness in the System Operator

Market Services • Here and now focus • Market support operations • Ancillary services • Heavy project involvement

Development team • 3-15 year view • Specialised technical toolset • Academic leaning • Somewhat independent

System Operator – Markets – current and future work

12

In addition to the joint work plan items, the team is working on: • Study of how Competition, Reliability and Efficiency apply to the SO • Support Strategic planning for market and market systems • Pre-thinking about market/market system architecture circa 2020 • Enhance commercial and economic awareness in the System Operator • Impact of distributed renewables on the market and grid • Observer/support for the Wholesale Advisory Group

Engineering update

Andrew Gard

Contents

• Background – Engineering/Project Manager

• Transpower • System Operations Engineering • Operations Planning • Investigations

14

Background

• Electrical Engineer • Distribution Engineering

15

Background

• Overseas – turnkey GIS installations (EHV) • Engineering design, management and project

management

16

Transpower • 2003 to present • Grid Vision • NIGUP, SIGUP, HVDC investigations • HVDC Pole 3 Project

17

Transpower • HVDC project not so busy…. • UNI DRS Project – Marsden and Penrose • Haywards Synchronous Condenser

refurbishment

18

System Operations Engineering • The System Operations Engineering group is comprised

of two core teams: - Operations Planning - Investigations

• Broad responsibilities - Power system analysis and engineering - Support SO’s ability to meet PPOs - Assess and monitor compliance of asset owners - Supporting real-time through to future development

19

Operations Planning - outage assessments - commissioning plan assessment (transmission) - grid upgrade assessments - system models – update (ACI/commissioning) - constraint development - event reviews - UNI/USI winter regional studies - NZ Energy Balance/NWG - POCP database upgrade - project support – AUFLS, PRISM, RAS

20

Investigations - compliance monitoring, event review - generators - commissioning, routine testing, workshop and companion guide (AOPO) - dispensations/equivalences - System Security Forecast (2 years) - Security Policy Review (5 years) - system models/tools updates - projects – RMTSAT, DSA TSAT on-line - FKC/MFK testing - EA TASC work – range of UFM initiatives

21

Questions?

22

Joint work programme

Shane Tennett, System Operations and Tim Street,

Electricity Authority

What is it?

• A joint work plan between EA and SO • It shows the work required to:

– Maintain and improve current services – Investigate new ideas – Deliver new services

• Provides planned time and cost (together with the capex plan)

DD

Projects 2014/17

Electricity Authority

Market System Functional Changes

Upgrade / Efficiency Projects

Infrastructure / ISBA Upgrades

2014 - 2015 2015 – 2016

MSE SDV

Data Centre Firewall

MS Server

MSE O&O

HVDC Genco EDF

ESB Upgrade PRISM / TSAT/ Qknet / iGrid

2016 - 2017

CLU Upgrade

MDB Remediation

Genco Tutor Upgrade

Enhanced Information Display

TTSE Upgrade

Load Forecast

HVDC Controls Implementation

National IR (1) Modelling of Losses(2)

Auto Regression Test

Support Environment Upgrades

MS Enhancements

Lifecycle Automation

RMTSAT

DR & DR

Centralised Logging System

RAS

MS Enhancements

AD Segregation

Test Regions Segregation

File Share Scripts Replacement

RMT Wind Forecasting II

MDB Dispatch in PI Support Tool Updates

SO Website Updates

Support Tool Updates Support Tool Updates

Environment Automation

Remaining Server Migrations

Centralised Monitoring

User Access Controls for MS

EDF Refactor

Genco Retirement

Citrix Migration to MS VI

Oracle Server Upgrade

Oracle Migration from AIX

POCP

National FK (1)

FK Cons On/Off (4) UFM Instantaneous Reserve Arrangements (3)

UFM Wind Gen Reserve (5) UFM – Inertia (4) Review Gate Closure (2) Spot Market Review (2)

Planning / Priority required

Wind Gen input to FP (4)

Key highlights

• Multiple Frequency Keepers (2014) • HVDC Controls Implementation (2015) • SCADA (PRISM) Upgrade (2015) • Interim Reserve Sharing Arrangements

(2015) • National IR Market (2017 - indicative) • National FK Market (2018 - indicative)

Why do we have one? • The EA is responsible for the New Zealand

wholesale electricity market, and the SO is an important enabler and service provider

• Generally, changes to the wholesale market require changes to market systems and SO processes

• Joint planning allows SO resources to reliably maintain existing services, whilst supporting carefully managed changes (and sequencing efficiency)

When do we do it?

• Must be updated annually - 1st November • Refined through the year with improved

information • Major review completing now • The plan has a nominal 10 year view but

while the view of the first 3 years is clear it gets progressively more fuzzy for the later years

How does it happen?

• The EA/SO meet regularly to review the work plan using best available information

• There are various inputs: – Lifecycle planning – New initiatives (arguably biggest impact to

market) – Improvements to existing services

The effect on market participants

• Most work (e.g. lifecycle) will “just happen in the background” – the effect will be a maintained service level to market participants

• However market initiatives will often require changes to participants’ processes and systems

• These will be signalled well in advance through the consultation process

• How do new initiatives get onto the Joint Work Plan? Aligned with Statement of Intent, and Strategic Directions paper

Questions

Reserves and frequency management programme

John Campbell

Reserves and Frequency Management Programme South Island

Multiple Frequency Keeping

Reserve Management

Tool Replacement

Market implementation

for new HVDC

(if required)

SO Security Tool for new

HVDC controls

Under Frequency

Management

National Frequency Keeping Market

National Instantaneous

Reserves Market

Reserve Management

Tool (TSAT)

HVDC displays and

SCADA alarms

National Frequency

source selection

FKC refine & tune

HVDC Risk

Modelling

TTSE updates

EA Code development

Quantity of FK procured

by island under FKC

Full National IR

Market

FK and IR interaction selection

National FK selection and

co-optimisation

Settlement process (NZX)

Ancillary services

arrangements

Extended Reserves

Reserve Arrangements

Inertia

IL over provision

Over frequency reserves

Provision of wind reserves

Interim National IR

Sharing

SO/TP Initiative

EA Initiative

Legend

RMT TSAT functional

enhancement

Questions

Security of supply

Bennet Tucker

Brief history

36

2008 Dry Winter

2010 Brownlee Reforms

Security of Supply

37

… Less of this

• General focus…

MW

Security of Supply

38

… And more of this

• General focus…

Security of Supply

39

• General focus…

MW

… But some of this

What we do

40

• A function that supplies information to participants • Some regulatory function • Produce three main pieces of work that are visible to

the industry:

Security of Supply Annual Assessment

Hydro Risk Curves & Simulated Storage Trajectories (HRCs & SSTs)

Security of Supply Annual Assessment

41

• It assesses the balance between supply and demand over a 10 year horizon

• Derives a series of security margins for each year (winter focus) and for a variety of future generation possibilities

• Compares these margins against standards provided by the EA

• It is a very simplified model • Best to view as metrics or

performance indicators and not exact gauges

Annual Assessment - Results

42

https://www.systemoperator.co.nz/security-supply/security-supply-annual-assessment

Annual Assessment – Future work…

43

• We kick off 2015 Annual Assessment in August/September

• Assessment is open to changes and suggestions

• Now is the time to get involved

• Questions or comments on the Annual Assessment…?

Hydro Risk Curves

• Deterministic • Not meant to be

a realistic estimate of market behavior

• Determines when we take regulatory steps to avoid shortage

44

• An objective benchmark showing the risk of shortage the NZ electricity system faces

Simulated Storage Trajectories • Forecast of lake levels using 82 years of inflow data and a market

and transmission system model

45

• Market based valuation of value of water

• Attempts to be a realistic view of what might happen under various inflow sequences

• Subjective as we are predicting how market participants may act

HRCs & SSTs – Future work…

46

• We are always looking to improve our modelling: – Improve risk analysis – Challenge assumptions – Increase usefulness to

industry – Develop awareness and

engagement • Invite suggestions and

challenges to our assumptions

• Questions or comments on the HRCs or SSTs…?

Other areas of development and future work

• Using Security of Supply analysis to assist with wider Transpower decision making – Not just limited to Transpower though…

• Hydrology information review • Policy work

– Preparing System Operator Rolling Outage Plan (SOROP) internal procedure

– Subsequent review of both SOROP and the process around Participant Rolling Outage Plans

47

Questions

Lunch

Reserve management transient security assessment

tool

Heidi Heath

Introduction

• Project Overview • Impact on the current market • Impact on the future market • Factory Acceptance Testing • Conclusion

51

Project overview

• Demonstrate that the Reserve Management Tool (RMT) can be changed from a Matlab platform to a PowerTech Platform

• Ensure RMT is not a road block for the National Reserve Markets

• Project Budget $600,000 • Project finish date: 30/06/14

52

Project overview

• PowerTech already supply power flow tools to Transpower.

• The company is part of BC Hydro and their power flow tools are used by many grid operators worldwide

53

Project overview Project stage Planned Completion Actual completion Detailed Specification 31/01/14 31/01/14 Write new code 30/04/14 26/04/14 Factory Acceptance 31/05/14 28/05/14 Market System Test 30/06/14 On target

54

Impact on the current markets None!

55

Impact on future markets

• Model the new HVDC controls • Ensure that RMT can model a National

Reserve Market • Will enable other Market System changes

56

Factory acceptance testing

57

FAT – by the numbers

• 336 tests carried out • 41 defects raised • 37 defects fixed to date • Remaining defects appear manageable

58

Conclusion

• So far so good!

• Any questions?

59

Security Policy Review: Credible Event Management

Andrew Gard

Contents

• Background • Methodology and Scope • Potential outcomes • Next steps • Questions

61

Background

62

Electricity Industry Participation Code

Policy Statement

Security Policy

Background • We review the ‘Credible Event Management’ every 5

years • This current review will consider historic events on the

system, system topology, newly commissioned equipment, modes of operation, and any new regulation

• Link to the EA’s objectives of CRE (Competition, Reliability, Efficiency)

63

Methodology and scope • Credible event identification, including existing events

identified in 2009

• Risk analysis of the identified events via the risk management framework

• Evaluate against our Principal Performance Obligations

• Review the classification of events

• Analyse the costs, determine optimal management

64

Potential outcomes

• Change of the event classification • Procurement of ancillary services • More efficient operation of the grid • The impact of new and upcoming changes such

as HVDC FKC, multiple frequency keeping, AUFLS/extended reserve

65

Next steps

• Identification and analysis of credible events (June/July) • Determine optimal mitigation measures (Aug/Sept) • Conclusions and recommendations (Oct) • Industry feedback on draft review (Nov) • Review finalised and issued to industry (Dec)

66

Questions

Extended reserve

Justin Blass

BRIEF OUTCOMES 1. High level background 2. Proposed changes to AUFLS 3. SO next steps

BACKGROUND • What is AUFLS? • What’s the purpose?

• Why is it being reviewed?

Jul – Dec 2011

EA Consultation on extended reserve - 2nd Consultation

WORK TO DATE

Jan – Jun 2012 Jul – Dec 2012 Jan – Jun 2013 Jul –Dec 2013 Jan - Jun 2014

EA/SO joint consultation

scheme design and

procurement options

EA Consultation on extended

reserve – draft Code

Amendment

SO Paper: AUFLS Framework

EA Consultation procurement of

extended reserve

SO Tech Report: Use of RoCoF

relays

SO Tech Report: AUFLS Economic

and Provision Report

SO Tech Report: Proposed NI

Scheme Changes

SO Workshops: AUFLS

Framework

48.0

47.5

47.8

Block 2 = 16%

47.9

47.7

47.6

47.4

47.3

Block 1 = 16% Block 1 = 10%

Block 2 = 10%

Block 3 = 6%

Block 4 = 6%

48.5 Block 4 = 6%

Freq (Hz)

OLD SCHEME NEW SCHEME

NI SCHEME CHANGE

48.0

46.5

47.5

47.0

46.0

Block 1 = 16% Block 1 = 16%

Block 2 = 16%

Freq (Hz)

OLD SCHEME NEW SCHEME

45.5 Block 2 = 16%

SI SCHEME CHANGE

EXISTING CODE

Part 8, Schedule 8.3 ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- -----------------------------------

WHAT THE SYSTEM NEEDS • 2 blocks of 16% demand • Technical requirements

• Relay settings, testing, information (etc.)

• Post-event restoration process

WHO AND HOW ITS PROVIDED • At every GXP • Minimum requirement • Provided by distributors

• Direct connects exempt

THE CODE

ELECTRICITY AUTHORITY

ELECTRICITY AUTHORITY

Technical Requirements

Schedule

Selection Methodology

Procurement Schedule

Implementation Plan

WHAT

HOW

WHEN

WHO &

HOW MUCH

WHAT Statement of Extended Reserve Obligation

GOVERN PROCESS

THE CODE

System Operator

Extended Reserve Manager

Industry Participant

PROPOSED CODE CHANGES

Technical Requirements

Schedule

Selection Methodology

‘Procurement Notice’

Implementation Plan

SO Procurement Database

Procurement Schedule

Statement of Obligation

Extended Reserves Manager System Operator System Operator

Industry Participant

Selection process (tool)

Information requirements

Information and Data Provision

Setting and testing

requirements

Default terms and conditions

SLIDE 76

Coordinate implementation

plans

THE AUTHORITY’S PROPOSAL

April 2012

April 2011

April 2013

April 2014

Schedule 1

Schedule 2

Schedule 3

Year 1 Year 2 Year 3

Analysis Analysis

TECHNICAL WORKING GROUP • Trial the proposed changes to assess the

practicality and impact • 7 companies participating • Analysing historic impact • Findings report due in September

• Waiting to hear decision on the Code from the Authority

• System Operator prepares for the new world • Facilitating technical working group • Updating our business processes • Drafting a Technical Requirement Schedule (TRS)

SO WHAT NOW?

What we’ve covered today

• How we want to work with you • Our current and future joint work

programme • Reserves and security of supply • Extended reserves (AUFLS)

79

Follow up

• Presentations from today will be available on our website

• A summary from these sessions will be included in the July e-newsletter

• We’ll be seeking your feedback on today • System Operator newsletter every two

months • Key contacts on our website

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Questions