Transcript National Grid

Welcome to First Hydro Company
4 June 2009
First Hydro Company overview
 Approximately 200 employees across four sites
 Dinorwig
– the largest pumped storage plant in Western Europe
– commissioned in 1983
– total plant capacity 1,728MW, 6 reversible
pump/turbines
– reservoir capacity ~10GWh
 Ffestiniog
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the UK’s first major pumped storage station
commissioned in 1963
total plant capacity 360MW, 4 separate turbines & pumps
reservoir capacity ~1.3GWh
remotely operated from Dinorwig
 Electric Mountain visitor centre
 Bala House trading office
 Owned by International Power (75%)/
Mitsui & Co, Ltd (25%) since December 2004
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First Hydro
The pumped storage principle
 Buy electricity overnight - pump water to top reservoir
 Release water to generate at times of peak price
Marchlyn
Pump
Generate
Peris
Import 1MWh
Export 0.75MWh
 Overall cycle efficiency ~75%
 Additional costs include transmission losses and Balancing
System charges
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First Hydro
Asset features
 Speed of response
– Dinorwig full output in ~16 seconds
– Ffestiniog full output ~60 seconds
 ~40,000 mode changes per year
 Extremely high reliability and availability
 Uniquely flexible assets
 Originally designed and built to support grid system management
 Asset capabilities provide for a diverse range of trading and
marketing opportunities under NETA/BETTA
 Business is geared around maximising short term opportunity
– highly flexible outage management
– proprietary systems to support trading and despatch
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First Hydro
Dinorwig
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First Hydro
Ffestiniog
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First Hydro
Plant dynamics
Dinorwig mode change times
<30s
<12s
Spin Gen
6m
3m
Generate
6m
<90s
Shut Down
6m
8m
6m
7m
Spin Pump
Fast Start
Pump
<30s
<30s
Typical start-up times (minutes)
90
85
80
3,000
2,500
70
60
60
2,000
50
1,500
40
30
1,000
20
500
10
0
Typical load rates (MW/minute)
3,000
1.5
Dinorwig
Slide 7
300
2.5
Ffestiniog
CCGT (hot)
Coal (hot)
0
Dinorwig
Ffestiniog
10
10
CCGT (hot)
Coal (hot)
First Hydro
Plant investment strategy
 Preserve competitive advantage
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maintain current levels of performance
focus on quality of core maintenance
replace or refurbish aging/obsolescent equipment
retain expertise within business
 Enhance competitive advantage
– improve reliability/availability
– increase quality or range of products
 Case study: Dinorwig Additional Stored Energy
– increased storage by 700MWh (~8%)
– commenced January 2007 and completed October 2007
– major civil engineering project within Snowdonia National Park
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First Hydro
Dinorwig additional stored energy
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First Hydro
Commercial Focus
The role of pumped storage in the GB market
1. Energy arbitrage - peak/off-peak
– valuable peaking capacity
– enables efficient running of steam plant overnight
2. Reserve provision
– range of timescales (focus on fast)
– but, limited storage
3. Frequency control
– fast response to plant trips, TV pickups etc.
 Roles underpinned by plant reliability and dynamic capabilities
 Buying fuel and selling product via the same market
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First Hydro
Market challenges for pumped storage
 Products sold through the three BETTA markets:
– Trading, Balancing Mechanism, Ancillary Services
 Energy-only market, no Renewable Obligation Certificates, no
capacity payments
 Reliance on volatile, short term markets
– poor forward liquidity in shaped products
 Complex business
2,088MW
Energy limited
– maximising option value of assets
– managing water constraint
Balancing
Mechanism
Ancillary Services
Trading
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First Hydro
Balancing mechanism
 System operator then matches
generation to actual demand by
adjusting generation via offers
or bids, minute-by-minute.
 First Hydro offers premium
dynamics
– managing TV pickups
– cover for generator trips
– meeting demand fluctuations
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60
5
55
4
50
3
45
2
40
1
35
0
30
-1
Bids
Bid and Offer volume (GW)
 ‘Gate closure’ 1 hour ahead of
each half-hour period
Balancing Mechanism – Example Day
GB Demand and Scheduled Energy (GW)
 Generators sell energy, and then
schedule generation to meet
half-hourly contract position
Offers
25
-2
Demand
Scheduled energy
20
-3
1
6
11
16
21
26
31
36
41
46
Half - hourly Settlement Period
First Hydro
Ancillary services
 Physical services to facilitate system security and power quality
– procured by National Grid
– enable system balancing in real time
– mostly undertaken via competitive tender or real time call-off
Reserve:
Frequency Response:
Other:
 Short Term Operating
reserve (20 minutes)
 Dynamic Response
 Black Start
 Static Response
 Reactive Power
 Fast Reserve
(2 minutes)
 Intertrips
 Longer notice
contingency reserve
(BM Startup)
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First Hydro
Trading in the wholesale market
Trading considerations
 Value of capacity/energy in traded markets (net of pumping)
 Capacity ‘sterilised’ for ancillary services
 Probability of being used in
balancing mechanism
 Water balancing requirements
Key skills
 Physical ability to deliver any
half-hourly shape
 Experienced traders in APX/short term markets
 Proprietary live market information and decision support tools
 Systems able to notify contracts right up to gate closure
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First Hydro
Wholesale price trends
Day ahead traded prices (£/MWh)
£160
Baseload
£140
Overnight
Peak
£120
£100
£80
£60
£40
£20£0
2004
2005
2006
2007
2008
2009
 Highlights volatility in prices and spreads
 Impact of Phase 2 of EU ETS can be seen from Jan 08
 Tight system conditions in Winter 05/06 and through 2008
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First Hydro
Market outlook
 GB plant mix to change radically in next 10 years
– driven by tightening environmental regulation and the EU’s 2020 targets
 System to face more challenging system security and balancing issues
– wind intermittency, opted out coal plant, nuclear inflexibility
 First Hydro is well positioned and planning for the future
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investing in its assets to ensure engineering integrity and extend plant life
addressing recruitment needs, expanding apprentice schemes
developing its understanding of the impact of change in its target markets
seeking to enhance its assets to meet the demands of the market
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First Hydro