Transcript Power Sector Reform and the Nigerian Electricity Market

Power Sector Reform and the
Nigerian Electricity Market
By
The Market Operator
Outline
• Preamble
• The Nigerian Electricity Market : definition and
Characterization
• Development of the Nigerian Electricity
Market
• Roles of the Market Operator
• Measurement of Market Performance
The Preamble
• The EPSR Act 2005 provides for restructuring of the NESI, creation
of NERC, development of Electricity Market for Nigeria, and for
private sector participation in the electricity business
• Market designed to move from one stage to the next, with
increasing competition and diversification of trading arrangement,
as investments and private participation grow
• To ensure efficient and transparent electricity market, two special
entities were created: the MO for commercial stability and the SO
for technical stability of the Market
• The MO and SO initiated the 1st stage of the electricity market – the
Pre-Transitional market in Jan. 2005, with the Distribution zones
and Power Stations of PHCN as the participants, buying and selling
electricity at Transfer Prices
The Nigerian Electricity Market
• Consists of two parts – the Retail and the Wholesale Market
– The Retail Market:
•
Arrangement for the sale of electricity to the final consumers at the distribution voltage
levels
• Governed by the Distribution Code and Retail Contracts (Consumer Tariffs & conditions
of supply)
• Players are the Discos and the end-consumers
– The Wholesale Market:
• Arrangement for bulk sale and purchase of electricity at the transmission voltages
• Governed by the characterization of the Market, stage of its development and the
Trading Arrangement
• Market Operation is the wholesale purchase and sale of electricity
between the generators and distributors, including the Eligible Customers,
at the transmission and sub-transmission voltages.
• Market Operation includes the sale of Ancillary Services for the
maintenance of grid stability and power quality
Characterisation of the Nigerian
Electricity Market – three elements
• The Market structure
– Refers to the physical system of the market
(generation, transmission, distribution) and the
concentration of ownership
– Poor market structure poses the greatest threat to the
health of power markets – incentive for reform
– Market structure has a decisive impact on market
power and investments
• The more the participants, the more competition and
investment inflow
The Wholesale Market Structure for the
Nigerian Electricity Industry
Sellers
The TSP
Govt. Owned
Generators
ISO
Special/ Bulk Trader
System
Operator
The New IPPs
Interconnections
7/16/2015 (Imports)
Buyers
Distributors
Market
Operator
Large Consumers (EC)
Retailers
Interconnections
(exports)
6
Characterisation of the Nigerian
Electricity Market (cont’d)
• Market Architecture
– Comprises the list of component sub-markets
together with their types.
– Market’s architecture is a map of it’s component submarkets, eg
• Day ahead energy and capacity market
• Spot (or Balancing )market
• Ancillary services market
– The market types for the Nigeria Electricity Market are
• Bilateral
• Vesting
– Architecture is specified before the Rules are written.
Characterisation of the Nigerian
Electricity Market (cont’d)
–The Market Rules
• Define the limits of the rights, the roles and obligations
of all the Market Participants and the service providers
, and the related interactions, in the Wholesale
Electricity Market. The Rules are necessary so as
– To ensure discipline in energy trading
– To ensure transparency in Market Administration
– To guarantee no arbitrary decisions in the MO’s roles as the
Central Coordinator of the electricity Market
– To protect the MO from being held responsible for bad
commercial results of the Power Market
7/16/2015
8
Trading Arrangement
• Trading Arrangement is about the operational
integration of Generation with Transmission and
Distribution, as well as the commercial arrangements
for Market Participants to pay each other
• It sets out the relationships and the day-to-day
responsibilities of the Participants and those of the
service providers in the Electricity Market
• Trading Arrangement gets more and more
sophisticated as the Market grows from stage to stage
• Market Operation is the operationalization of the
Trading Arrangement
Transitional Market Trading Arrangement - CM
Tender
Existing IPPs
PPA
Special/Bulk
Trader (SPE)
Vesting /
Bilateral
Contracts
GenCos – Successor Generation Companies
New
IPPs
Genco 1
Bilateral
Contract
with Special
Trader
Genco 2
Genco 5
As the Gencos get privatised,
they join the new IPPs
New IPPs/
Embedded
Generators
Genco 6
Vesting
Contracts
Bilateral
Contracts
with Discos
MARKET
CLEARING
ACCOUNT
MARKET OPERATOR
Discos – Successor Distribution Companies
Disco 1
7/16/2015
Disco 2
Disco 3
National Uniform Tariffs – with cross subsidies?
Disco 11
10
Development of the Nigerian
Electricity Market
• The Nigerian Electricity Market has been
designed to develop in four stages, depending
on
– how much competition is introduced,
– how much monopoly is retained and
– how much private sector participation is achieved
in the market
Stages of development for the NEM
Stage 1
Stage 2
Stage 3
Stage 4
Monopoly
Full
Restricted
Restricted
Highly
restricted
Private Sector
participation
Absent
Substantial
Very
substantial
Dominant
Absent
Minimal
Significant
Elaborate
competition
Stage 1 = Pre-transitional
Stage 2 = Transitional
Stage 3 = Medium Term
Stage 4 = Long Term
Market development is driven by private Sector Participation (in terms of investments and
operation) and Competition
The NEM is still in stage 1, but the CPs for stage 2 are almost achieved
Roles of the Market Operator
• In line with the EPSR Act and the Market Rules, the
roles of the Market Operator include
– Implementing and Administering the Market Rules, and
Drafting and Implementing the Market Procedures
• Administration of the Commercial Metering System; ensuring that
each trading point has adequate metering systems
• Administration of the Market Settlement System
• Administration of the Payment System and commercial
arrangement of the energy market, including Ancillary Services
• Periodic reporting on the implementation of the Market Rules
• Training of Participants on the Market Rules and Procedures and
Trading Arrangements
• Supervising Participants’ compliance with and enforcing the
Market Rules and the Grid Code
Administration of the Commercial
Metering System
• The Metering System includes
– Trading point meters
– The wiring and other accessories
– Hardware and software for meter programming
– Communication system for remote data
acquisition and validation
Identification and metering of the trading points
LEGEND
Energy Meters
» 11/330KV
Transformers
Generator System
330 KV
Generator
330KV
330KV Lines
132KV
330/132KV
330KV Lines
330KV
Eligible customers
132/33/11KV
33KV
11KV
132KV Eligible Customers
33KV
33KV
Eligible customers
7/16/2015
11KV
Distribution Companies 33/11KV
11KV
Eligible customers
15
Status of Trading Point Metering
• About 659 trading points identified in the Market
–
–
–
–
45 G/T interface points for the generator trading
563 T/D interface points for the distributor trading
46 inter-disco boundary points for distributor trading
5 points for international connections for export
trading
• All are metered except 34 inter-disco boundary
points – action is on to meter up these points
• A number of the meters will be replaced to
ensure compliance with the requirements of the
Transitional Market – process has commenced
Meter Data Management (MDM)
• Manual readings
• Distributors:
– Read by representatives of Disco and SO
– Formalised in signed reading, sent to MO
– Problems: delays, inconsistencies, mistakes, cross feeders and shared
meters arrangements
• Generators :
– Read and sent by SO to the MO
• Formalised in signed reading
– Problems: Sales of generation is at injection point to the grid
• Manual input and data validation using IT
• Project to put all the meters on AMR and interface with the
settlement system, is on-going
17
Administration of the Settlement
System
• Settlement: - the calculation of charges or
payments in respect of market participants for
energy delivered or received
• Settlement is driven by two factors – metered
quantities from the meters, and wholesale or
contract prices from the MYTO or contracts
• Settlement is communicated to the participants
through the instrument of Settlement
Statements, which specify rights or obligations of
participants
– May act as debit notes (invoices) or credit notes
7/16/2015
18
The Settlement Statements
• Genco Settlement Statement consists of credit
notes; each genco must be paid for energy and
capacity sent out, to enable it meet all it’s costs,
including fuel costs and Regulatory Charges
• TCN (TSP) Settlement Statement consists of credit
notes; it must be paid by discos for energy
wheeled. TCN must pay for regulatory services,
must provide for Ancillary services payments
7/16/2015
19
The Settlement Statements (cont’d)
• Disco Settlement Statements consist of invoices to pay
for
– Energy (KWh) received from the gencos, including the IPPs,
at the T/D interface points
– Generated Capacity (KW) received from the gencos,
including the IPPs, at the interface points
– Wheeling and system operations
– Market administration
– Market Regulatory Services
• Basic market principle:
– In Settlement Statement, each payment to a Participant (credit) must have a
corresponding payment by other Participants (debit) to ensure a monthly zero
balance – Market Equilibrium
7/16/2015
20
Monthly Market Settlement; Sharing
generation
• Monthly for each Disco
– Each Buyer is proportionally buying from each
Genco & IPP ( load allocations – Vesting contract
quantities)
• Future: Balancing Market in Medium Term Market
seller
Buyer
seller
21
Market Collection & Payments
• Source of revenue for the Wholesale Electricity
Market - Collection by the Discos from the endconsumers
• Obligations to be met from Market Revenues
– Payments for energy and capacity generations,
including gas
– Payments for wheeling and system operations
– Payment of regulatory charges
– Payments for market administration charges
– etc
Market Payment System
• Monthly payment by Discos to enable Gencos
and others fund their cost, including cost of fuel
– Month “m” transactions are settled and paid in month
“m+1”
• Payment System:
– Transfers between Bank accounts
• Non payments, delayed payments or under
payments:
– PRG
– Use of security deposit
23
Measurement of Market Performance
• The ISO Model
Input (I)
KWh
System (S)
Management of
Metering, Billing
and collection
Output (O)
=N=
• It is in the System (S) that all the ATC&C Losses occur
• The efficiency of operation in the system (S) determines the
%age of the input that can be converted into output
• PIM is the grand performance indicator = O/I
• It is dependent on the size of revenue collection in relation
to the volume of energy received into the System
Performance on the Grand Indicator
(Jan. – Sept. 2011)
DISC
O
Jan
Feb.
March
April
May
June
July
Aug.
Sept.
ED
PIM
ED
PIM
ED
PIM
ED
PIM
ED
PIM
ED
PIM
ED
PIM
ED
PIM
ED
PIM
Abj
187
6.99
192
6.86
175
8.2
208
5.75
211
6.59
220
6.02
180
7.24
193
7.59
210
7.56
Ben
244
4.74
269
4.36
231
5.44
236
4.57
240
4.99
214
5.77
231
5.16
247
5.59
234
6.08
Eko
128
10.5
170
8.75
152
11.1
203
8.6
228
8.23
164
9.61
129
10.8
134
12.4
217
9.89
Enu
202
5.38
215
5.32
202
6.11
194
5.64
215
5.37
177
6.55
189
6.21
194
6.64
188
7.04
Iba
181
7.88
229
6.37
200
8.55
242
6.94
263
6.09
214
7.18
178
8.98
211
9.23
236
8.34
Ikj
211
9.36
267
8.00
237
9.82
308
7.28
307
7.8
264
8.87
217
9.68
243
10.7
291
10.3
Jos
74
5.73
99
4.55
85
5.99
107
4.02
104
4.05
84
5.47
65
7.98
79
5.71
104
5.25
Kad
121
5.14
134
4.77
132
5.87
153
2.95
153
4.91
128
4.85
117
5.26
123
5.46
144
5.05
Kan
79
6.87
94
5.97
82
7.48
101
5.38
114
6.10
91
6.30
65
9.15
81
8.09
116
6.54
P-H
112
5.04
123
4.95
115
5.71
118
4.60
121
4.92
136
4.26
121
4.93
126
5.55
107
5.89
Yola
36
5.01
37
4.58
34
6.51
43
4.39
48
4.88
34
5.94
25
6.77
28
7.1
53
4.36
ED = Energy Delivered in GWh,
PIM in N/KWh
Market Report for Sept. 2011
• Total energy sent out by all the Generators, including the IPPs was
2,369.06GWh
• Total energy received by all the distributors was 2,073.40GWh
(91.5% by the Discos, while 7.14% was exported )
• Settlement Invoice to the Discos was N18.36bn, invoices for export
trade was 1.23bn
• Total revenue expected to clear the Market, including Disco Opex
and Capex was N24.5bn
• Actual revenue collected was N15.69bn (N14.33bn from the Discos,
while N1.36bn came from export)
• Revenue gap in the month was N8.81bn.
• The sum of N8.81bn was therefore required for the Market to
achieve equilibrium in Sept. 2011 – the result of substantial ATC&C
losses
The End
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