An Introduction to Network Codes & The Links Between Codes April 2014
About ENTSO-E 41 TSOs from 34 countries 532 million citizens served 828 GW generation 305 Thousand Km of transmission lines Ten-Year Network Development Plans Adequacy forecasts R&D plans Tools for Market Integration Network Codes
The IEM: meeting Europe s low carbon target Variable generation Thousands of small units Huge flows all over Europe Challenges System Stability, Resource Variability, Uncertainty, New connections, Changed power flows
The IEM: creating benefits for European customers Real choice 420 billion electricity sector s annual turnover New business opportunities Efficiency Competitive prices Better service Security of supply Sustainability 80 % of power generation still controlled by the long-established utilities 13 billion / year saved by EU customers through IEM Cross border trade Source: 3 rd Energy package and EC communications
Three pillars for delivering the IEM Infrastructure: Delivering a fit for purpose network Changed power flows Efficiency Better service System stability Sustainability Competitive prices Security of supply Uncertainty Resource variability System operation: Delivering coordinated schemes Market: Delivering well designed pan-european markets Konstantin Staschus 6 February 2013 Page 5
Therefore: network codes matter; they form the foundation on which the IEM is being built Internal electricity market 3 Connection Network Codes set requirements for - Generators - Demand-side - HVDC connections 3 Market Network Codes set market rules for - Day ahead/intraday & Capacity calculation - Long-term timeframes - System balancing 4 Operational Network Codes set common rules for - Assessing adequacy - Planning outages - System security - Emergency situations day-ahead market coupling paving the way for offshore wind regional security coordination initiatives Konstantin Staschus 6 February 2013 Page 6
What is a network code? A set of rules applying to one aspect of the energy sector Which are developed by ACER, ENTSO-E & market participants And become legally binding after the Comitology process Hence they will have the same status as any other Regulation
ENTSO-E s legal role Under the designation of Regulation 714/2009 Article 4: ENTSO Article 6: Creating network codes Article 8; Para 7: The scope of network codes Article 8: ENTSO-E s activities Charged with working to complete the internal energy market. In line with ACER framework guidelines. Which become binding. And involve extensive consultation. Cross border & market integration issues. Without prejudice to Member States right to establish codes. Network codes Ten-Year Network Development Plans. Generation adequacy reports. Winter and summer outlooks. Work programs and annual reports.
How are network codes developed? Request to draft a FWGL EC On a topic identified in art.8 (6) of Regulation EC 714/2009 Development of Framework Guidelines (FWGL) ACER EC Development of the FWGL (6 month period) In consultation with ENTSO-E, stakeholders and Expert Group Request for ENTSO-E to draft a network code According to FWGL submitted by ACER Development of network code Period in which ENTSO-E can develop a network code (12 month period) ENTSO-E In consultation with stakeholders according to FWGL Assessment, agreement & entry into force ACER EC Assessment of network code Comitology process (where appropriate) Recommendation of network code to the European Commission In consultation with all stakeholders resulting in a legally binding network code through a collaborative process
Benefits Enabling renewables Creating clear connection rules. Providing harmonisation to benefit manufacturers. Creating markets to reduce risks. Security of supply Ensuring security of supply A coordinated approach to system operations. Greater optimisation to enhance efficiency. More flexible markets (e.g. balancing). Enhancing competition A single market design across Europe (in all timescales). Promoting cross border trade & enhancing liquidity. Reducing risk for all market players Sustainabili ty Competitiv eness
Overview of current & future network codes Grid Connection Related Codes Requirements for Generators Demand Connection Code HVDC Connection Code (RfG) (DCC) (HVDC) System Operation Related Codes Operational Security Network Operational Planning & Scheduling Load Frequency Control & Reserves Operational Procedures in an Emergency (OS) (OPS) (LFCR) (EP) Market Related Codes Capacity Allocation & Congestion Management (CACM) Forward Capacity Allocation (FCA) Balancing Network Code (EB)
Order of work Decided by the EC Influenced by and informs Through a Priority List agreed upon through consultation ENTSO-E s Three- Year Work Plan RfG Requirement for Generators CACM Capacity Allocation and Congestion Management Therefore current network codes are developed in this order DCC OS OPS LFCR FCA EB Demand Connection Code Operational Security Operational Planning and Scheduling Load Frequency Control and Reserves Forward Capacity Allocation Electricity Balancing HVDC High Voltage Direct Current Connection requirements
The jigsaw that is network codes RfG HVDC DCC EB Network Codes CACM LFCR OS FCA OPS EP
Grid connection related network codes RfG was developed first Followed by DCC Next is HVDC These codes link into (and are influenced by) several important policy areas And are also related to existing standards Some of the more substantial links to other codes are: Electricity Balancing and Operational Security All connection codes link to EB HVDC RfG All connection codes link to OS DCC Both linked to energy efficiency directive All connection codes linked to existing standards Linked to smart grid initiatives through DSR
System operation related network codes Operational Security was first Closely followed by Operational Planning & Scheduling Next is Load Frequency Control & Reserves They will be followed later by Emergency Procedures LFCR closely linked to EB LFCR OS links to all connection codes OS The operational codes have strong links between themselves and to other codes: OS links to all connection codes LFCR is closely tied to EB All the operational codes are linked OS and OPS are linked to the CC part of CACM (because of the Common Grid Model). OPS/OS link to CC due to CGM OPS LFCR/OS/ OPS all linked EP
Market related network codes CACM Capacity Allocation and Congestion Management was the first market code to be developed It contains three main subsections that were merged at an early stage: Intraday (ID) Day Ahead (DA) Capacity Calculation (CC) ID DA CC This was done to ensure consistency between these heavily interrelated areas The CACM code is based on the EU wide Target Model for market design.
Market related network codes DA/ID link to EC Governance guideline ID EB All connection codes link to EB Capacity Allocation and Congestion Management was the first market code to be developed Followed by Forward Capacity Allocation And Electricity Balancing All market codes link to transparency regulation FCA Linked to MIFID FCA DA CC EB closely linked to LFCR CC link to OS/OPS due to CGM All market related codes tie into transparency regulation Day Ahead & Intraday are closely linked to the EC Governance Guideline FCA links to financial regulation These codes have direct links to others: EB to all connection codes Also to LFCR operational code Capacity Calculation links to both OS and OPS
Network code overview How do all the network codes fit together? RfG Both linked to energy efficiency directive All connection codes link to EB HVDC DCC Linked to smart grid initiatives through DSR DA/ID link to Governance guideline ID EB Network Codes All connection codes link to OS All connection codes linked to existing standards All market codes link to transparency regulation DA LFCR closely linked to EB LFCR OS FCA CC OPS LFCR/OS closely linked EP FCA Linked to MIFID CC link to OS/OPS due to CGM
Of course this is not exhaustive. There are further extensive links between codes RfG Both linked to energy efficiency directive All connection codes link to EB HVDC DCC Linked to smart grid initiatives through DSR DA/ID link to Governance guideline ID EB Network Codes All connection codes link to OS All connection codes linked to existing standards All market codes link to transparency regulation DA LFCR closely linked to EB LFCR OS FCA CC OPS LFCR/OS/ OPS all linked EP FCA Linked to MIFID CC link to OS/OPS due to CGM
Network Code on: Requirements for Generators Code Overview Purpose: Provide a set of coherent requirements for generators (of all sizes) in order to meet the future power system challenges. Status: An ACER recommendation to adopt the code was made on 27 March 2013. The EC is currently preparing the network code for entry into Comitology. Contents: Requirements Operational Notification Procedure for Connection Compliance Derogations Links to other codes/ areas DCC Balances demand and generation requirements and uses similar processes.. HVDC Reference to part of the RfG requirements for offshore HVDC connected generation. Coherence in processes. OS Technical requirements to strengthen coordination and system security. EB Must ensure RfG characteristics are reflected in products. 6 Months 12 Months 3 Months > 12 Months Framework Guidelines Drafting Internal Public Approval Consultation Updating Internal Approval ACER Opinion Comitology Process. Scoping Development Approval
Network Code on: Capacity Allocation and Congestion Management Code Overview Purpose: Translate the vision for a pan European Target Model into a binding set of rules. Status: An ACER recommendation to adopt the code and proposals for change was made on 14 March 2013. The EC is currently preparing the network code for the Comitology process. Contents: Capacity Calculation Bidding Zones Day Ahead Markets Intraday Markets Remedial Actions Firmness rules Cost recovery Links to other codes/areas OS/OPS Build on the CGM in CACM. FCA Bidding zones and capacity calculation are common. Structure is similar. EB Strong link with intraday markets and common capacity calculation, bidding zones & structure. OPS Schedules are relevant in day ahead markets. Transparency regulation Vital to efficient market functioning. 6 Months 12 Months 3 Months > 12 Months Framework Guidelines Drafting Internal Public Approval Consultation Updating Internal Approval ACER Opinion Comitology Process. Scoping Development Approval
Network Code on: Operational Security Code Overview Purpose: To set common rules for ensuring the operational security of the pan- European power system. Status: ENTSO-E has amended the network code in light of the ACER reasoned opinion and resubmitted it to ACER in late September. ACER will now assess the code. Contents: Operational Security Requirements Testing and Investigation Data Exchange Training Compliance Staff Training Links to other codes/areas OPS Is an extension of the OS code prior to real time. LFCR Frequency control operations uses the coordinated schedules from OPS. RfG/DCC Contain technical requirements to strengthen coordination and system security. CACM Capacity calculation uses a common grid model as does OS. 6 Months 12 Months 3 Months > 12 Months Framework Guidelines Drafting Internal Public Approval Consultation Updating Internal Approval ACER Opinion Comitology Process. Scoping Development Approval
Network Code on: Operational Planning & Scheduling Code Overview Purpose: Sets requirements, ranging from the year ahead timeframe to real time, for assessing the adequacy and operational security of the interconnected power system and for planning outages required by TSO s and grid users when they have cross-border impacts on power flows. Status: ENTSO-E has amended the network code in light of the ACER reasoned opinion and resubmitted it to ACER in late September. ACER will now assess the code Contents: Data For Operational Security Analysis in Operational Planning Operational Security Analysis in Operational Planning Outage Planning, Adequacy, Ancillary Services, Scheduling ENTSO-E Operational Planning Data Environment Links to other codes/areas OS Extension of OS requirements prior to real time.. CACM An overlap with schedules in day ahead markets and the Common Grid Model. Market Codes Planning and scheduling cooperation will unlock transmission capacity in the forward, DA, ID and indirectly balancing. LFCR Frequency control operations: uses the coordinated schedules from the OPS. 6 Months 12 Months 3 Months > 12 Months Framework Guidelines Drafting Internal Public Approval Consultation Updating Internal Approval ACER Opinion Comitology Process. Scoping Development Approval
Network Code on: Demand Connection Code Overview Purpose: To set requirements for new demand users and DSO connections and to outline demand side response requirements related to system frequency. Status: An ACER opinion and recommendation to adopt the code was made on 27 March 2013. The EC is currently preparing the code for entry into the Comitology process. Contents: Requirements Operational Notification Procedure Compliance Derogations Links to other codes/areas RfG/ HVDC Balance between demand and generation requirements and coherence in processes. LFCR Impact of DSR SFC on system reserve calculations. OS Technical requirements to strengthen coordination and enhance system security. EB Demand Response will be an ever more needed building block in balancing products. Ecodesign/labelling Directive Vehicle to develop DSR requirements. Cenelec M490 Work on-going to develop DSR standards. 6 Months 12 Months 3 Months > 12 Months Framework Guidelines Drafting Internal Public Approval Consultation Updating Internal Approval ACER Opinion Comitology Process. Scoping Development Approval
Network Code on: Forward Capacity Allocation Code Overview Purpose: To set rules for calculating and buying capacity in timescales before day ahead and for hedging price risk between bidding zones. Status: ENTSO-E will submit the network code to ACER in late September 2013 Contents: Governance Capacity Calculation for FCA Bidding Zones The Forward Capacity Market Single Platforms for Allocation and Secondary Trading Allocation Rules Firmness and Congestion Income Distribution Links to other codes/areas CACM Similar processes and consistency with capacity calculation. MIFID Sets capital and organisational requirements for investment firms and markets operators when dealing with financial instruments/impact on TSOs and joint platforms. Transparency Regulation Impacts on the information that is published. 6 Months 12 Months 3 Months > 12 Months Framework Guidelines Drafting Internal Public Approval Consultation Updating Internal Approval ACER Opinion Comitology Process. Scoping Development Approval
Network Code on: Load Frequency Control and Reserves Code Overview Purpose: To set out coordinated and clearly specified load frequency control processes and rules regarding the levels and location of reserves (back-up) which TSOs need to hold. Status: The ACER opinion is due on 25 September 2013. Contents: Frequency Quality Load Frequency Control Structure Frequency Containment Reserves Frequency Restoration Reserves Replacement Reserves Exchange and Sharing of Reserves Co-operation with DSOs, Compliance Links to other codes/areas EB Specifies how the reserves determined under LFC will be procured. OS Frequency quality; deviation management; improves operational security. OPS Frequency control operations: uses the coordinated schedules from the OPS. DCC Impact of DSR SFC on system reserve calculations. CACM Operational limits: have an impact on transmission capacity available for XB exchanges. HVDC Impact of loss of power (e.g. from an offshore wind farm) on system reserves. 6 Months 12 Months 3 Months > 12 Months Framework Guidelines Drafting Internal Public Approval Consultation Updating Internal Approval ACER Opinion Comitology Process. Scoping Development Approval
Network Code on: Balancing Code Overview Purpose: To define rules for the development, implementation and operation of a pan-european balancing market. Status: Over 2100 from 42 organisations were received via the public consultation which ended in mid August. ENTSO-E is now updating the code for delivery in December. Contents: The Electricity Balancing System Procurement of Balancing Reserves Use; Allocation and Reservation of Cross Zonal Capacity for Balancing Reserves Settlement Balancing Algorithm Development Reporting, Transitional Arrangements Links to other codes/areas LFCR Strong link with LFCR setting rules for the volume of reserves to be procured & BAL creating rules to procure them. CACM Overlap with capacity calculation and links to intraday markets (which close before balancing opens). RfG/DCC Important that connection rules are reflected in products available on balancing markets. 6 Months 12 Months 3 Months > 12 Months Framework Guidelines Drafting Internal Public Approval Consultation Updating Internal Approval ACER Opinion Comitology Process. Scoping Development Approval
Network Code on: HVDC Connection Code Overview Purpose: Sets requirements for HVDC connections and offshore DC connected generation. Status: A Public Consultation on the Preliminary Scope finished on 7 June 2013. ENTSO-E is continuing to work with stakeholders to produce a draft; which will be consulted on in November. Contents: Requirements for long distance DC connections, links between different synchronous area s or DC connected Power Park Modules such as offshore wind farms, Links to other codes/areas RfG Reference to part of the RfG requirements for offshore HVDC connected generation. Coherence in processes. OS Technical requirements supporting frequency and voltage stability, system stability robustness and system security. LFCR Impact of loss of power (e.g. from an offshore wind farm) on system reserves. EB Ensure balancing capabilities for reserve transactions across cross-border HVDC links where relevant. DCC Coherence in processes (operational notification, derogations, ) 6 Months 12 Months 3 Months > 12 Months Framework Guidelines Drafting Internal Public Approval Consultation Updating Internal Approval ACER Opinion Comitology Process. Scoping Development Approval
More info: http://networkcodes.entsoe.eu/ Please address any questions to: Jean-Baptiste.Paquel@entsoe.eu