DS3 Ambitious approach to future network requirements. Mo Cloonan Commission for Energy Regulation, Ireland

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1 DS3 Ambitious approach to future network requirements Mo Cloonan Commission for Energy Regulation, Ireland 1

2 Overview Irish/N.Irish power system and policy objectives Operational challenges for Ireland- DS3 Programme New ancillary services arrangements - DS3 System Services- Interim and Enduring Slide 2

3 Wind Targets European Power Systems Ireland & N. Ireland seeing the impacts first Slide 3

4 Irish / N.Irish System Non-priority dispatch Priority dispatch System Demand 3-7GW Slide 4

5 Operational Challenges RoCoF Low System Inertia Lack of Synchronising Torque Frequency Nadirs System Ramping Capability Voltage Dip Induced Frequency Dips Reactive Power Shortfall Slide 5

6 Delivering a Secure Sustainable System (DS3) Delivering a Secure Sustainable System (DS3) 2011 DS3 Programme established 2014 High level design of DS3 System Services Meeting the RES Policy Objectives efficiently while maintaining system security Detailed Technical Analysis All Island Grid Study Facilitation of Renewables Ensuring a Secure Sustainable System Holistically considering technical, commercial and regulatory needs of the system Engaging with all industry over many years stakeholders Designed cognisant of I-SEM energy/capacity market design Slide 6

7 DS3 delivering increased renewables on the system Industry Performance System Services RoCoF 75% SNSP Operational Tools TSOs Operational Policies 7

8 All Island DS3 Project Regulatory Oversight of DS3 CER Ireland DS3 Project Board Utility Regulator NI SEM Committee Eirgrid SONI 8

9 System Non-Synchronous Penetration 60% Maximum Allowable Real Time Wind Level Wind Curtailment Levels SNSP = Wind + Imports Demand + Exports Slide 9

10 System Stability issues Source : SONI/ Eirgrid High SNSP = low inertia levels Critical system stability issue - needs increase in flexible system services to maintain system security Slide 10

11 Dispathch Down (%) Wind Dispatch-Down ( ) 6% 5% 4% 3% 2% Wind Dispatch-Down 4.1% 3.2% 2.2% 2.1% 5.1% 1% 0% Slide 11

12 Operating with High Wind Levels In November 2016 a 3 month trial commenced of SNSP limit at 60% SNSP = Wind + Imports Demand + Exports Slide 12

13 DS3 Overview DSM Performance Monitoring Frequency Voltage ROCOF System Services Renewable Data Grid Code WSAT Control Centre Tools Model Dev. & Studies

14 DS3 System Services Objectives Incentivise Performance Promote Investment in Service Provision when needed Facilitate New Technologies Protect Consumers Interests Slide 14

15 DS3 System Services Changing Energy Markets Source : Technical and Economic Analysis of the European Electricity system at 60% RES Energy market prices may significantly decrease in value = Ancillary/System Services will require adequate remuneration to ensure System Stability Slide 15

16 Incentivising Portfolio Performance 55 m 7 Services Ancillary Services Capacity Payments Ancillary Services / System Services 235 m cap in 2020/21 14 Services Capacity Payments Energy Payments Energy Payments Slide 16

17 DS3 System Services transition from Harmonised Ancillary Services Enabling increased service provision to TSOs for maintaining system security New revenue streams for generators, storage, DSM 7 existing, 7 new products Technology neutral approach Minimum provider 100kW, minimum contracting unit 1MW Go live Interim arrangements Oct 2016, technology trials

18 New DS3 System Services Enabling increased service provision to TSOs for maintaining system security

19 DS3 System Services Frequency Products Inertial Response Existing Reserve Products: Reserve Primary (POR), Secondary (SOR), Tertiary 1 & 2 (TOR1&2) Operating Reserve, Replacement Reserve (RR synch & de-synch) Ramping SIR POR TOR1 RR FFR SOR TOR2 Ramping 0 5s 5 90s 90s 20min 20min 12hr time Synchronous Inertial Response (SIR) Fast Frequency Response (FFR) *New* Fast Post-Fault Active Power Recovery *New* *New* Ramping Margin 1/3/8 hour *New* Slide 19

20 DS3 System Services Voltage Products Transient Voltage Response Voltage Regulation Network Dynamic Reactive Power Steady-state Reactive Power Network Adequacy Grid 25 ms s s min min hr Dynamic Reactive Response *New* Steady-State Reactive Power Slide 20

21 SEMC Approach to System Services Interim Arrangements Q go live Enduring Arrangements Competitive Process Transitioning from regulation to competition where possible Fully Integrated Market Optimisation of energy, system services and capacity prices through competitive forces

22 Interim Arrangements- live since Oct 1st 2016 Generator Unit SIR FFR POR SOR TOR1 TOR2 RRS RRD RM1 RM3 RM8 FPFAPR SSRP DRR Tariffs created for all 14 System services OJEU Qualification based tendering process 772 lots assessed, 728 passed ( technically qualified) 107 units contracted Product and performance scalars active Successful delivery of condensed work programme- new contracts, tariffs, scalars 22

23 Current DS3 System Services tariffs Service Name Unit of Payment Final Tariff Rate Synchronous Inertial Response (SIR) MWs 2 h Fast Frequency Response (FFR) MWh 2.06 Primary Operating Reserve (POR) MWh 2.93 Secondary Operating Reserve (SOR) MWh 1.78 Tertiary Operating Reserve (TOR1) MWh 1.41 Tertiary Operating Reserve (TOR2) MWh 1.12 Replacement Reserve - Synchronised (RRS) MWh 0.23 Replacement Reserve Desynchronised (RRD) MWh 0.50 Ramping Margin 1 (RM1) MWh 0.10 Ramping Margin 3 (RM3) MWh 0.16 Ramping Margin 8 (RM8) MWh 0.14 Fast Post Fault Active Power Recovery (FPFAPR) MWh 0.14 Steady State Reactive Power (SSRP) MVArh 0.21 Dynamic Reactive Response (DRR) MWh

24 Qualification Trials- technology and measurement technique focused Qualification Trials process Provenability Trials Measureability trials Wind- POR and RM3 Demand Side POR and RM3 Other technology FFR FPFAPR & DRR Trial tendering OJEU Nov-Jan Trials Start- March 2017 Trials complete Aug

25 System Service Enduring Arrangements A. Tariffs (Q1 2017) Enhancement of interim arrangements Budget of 235m by 2020 Scalars- fully implemented Procurement Strategy finalised Volume forecasts B. Competitive Arrangements EU Electricity Balancing Guideline requirements International best practice review Winter (Clean Energy) EU package implications Scoping of competitive options C. Incentives Scoping of regulatory approaches DS3 (wider programme) and System Service Balancing market requirements Dispatch Balancing Costs

26 Complexities Competitive process optimal design Length of contracts - EU Balancing code requirements CEER recommendations on network companies owning storage Alignment of service contracts Capacity mechanism and DS3 contracting Central dispatch system, technical realisability and settlement Levy on imported energy

27 Questions? Mo Cloonan CER 27