Transcript No Slide Title

Perspectives from Abroad
Sustainable Energy Ireland, Dublin 13 June
Wind Farms in a Gross Pool Market:
Australian National Electricity Market
Hugh Outhred
School of Electrical Engineering and Telecommunications
The University of New South Wales
Sydney, Australia
Tel: +61 2 9385 4035; Fax: +61 2 9385 5993;
Email: [email protected]
www.sergo.ee.unsw.edu.au
Outline
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Scope & design of the Australian NEM
Managing supply-demand balance
Ancillary service, spot & derivative markets
Renewable energy certificate trading
Network connection issues
Conclusions
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Electricity industry structure in SE Australia
Generation
Sector:large
generators
Gen 1
Financial instrument
& REC (emission) trading
Intentions
offers &
payments
Multi-region
National
Electricity
Market
(NEM)
Intentions
bids &
payments
pricing
Electricity
Retailer 2
Retail
Markets
pricing
NSW
Victoria
South Aust.
Queensland Electricity
& possibly
Tasmania
Distribution
sector
Distributor 1
Network
access
Distributor 2
Electricity
Distributor Y
Contestable
customers
Franchise
customers
Retailer Z
Transmission
Tx network
Tx network
Sector
Gen X
Embedded
generators
Retailer 1
Gen 2
Gen 3
Retail
sector
End-use
sector
End-use
Equipment
&
Distributed
resources
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Key NEM features
• NEM covers all participating states:
– A multi-region pool with intra-regional loss factors
– Ancillary services, spot market & projections
– Auctions of inter-regional settlement residues
– Operated by NEMMCO (owned by states)
• Compulsory participants in NEM:
– All generators & dispatchable links > 30 MW
– Network service providers & retailers
• Contestable consumers may buy from NEM
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Region boundaries & interconnectors
• Regions boundaries selected so that:
– Transmission constraints are rare within a region
– Frequently-occurring constraints are placed on
region boundaries
• Region boundaries to be reset as required:
– Whenever a constraint occurs > 50 hours/year
• Unregulated inter-connectors are allowed:
– If dispatchable so that it can bid like a generator:
• ‘Directlink’ the first (operating since July 2000):
– 180 MW DC link between NSW & Queensland regions
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Scope of the NEM
• Queensland
• New South Wales & ACT
• Victoria
• South Australia
• Tasmania (on connection
to the mainland)
NEM regions are indicated, and their
boundaries need not be on state borders
(e.g. two regions in NSW)
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NEM regional spot market model
(Based on NEMMCO, 1997)
Queensland
750 MW
Murraylink 220 MW (unregulated DC)
& possibly SANI (regulated AC)
750 MW
NSW
3,000 MW
850 MW
1,100 MW
Snowy
250 MW
South Aust
Directlink
180 MW
(unregulated DC)
thermal
or stability
flow limits
1,500 MW
Victoria
500 MW
300 MW
Tasmania
480 MW
Basslink
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Supply-demand balance in the
electricity industry
Generator input power
Thermal
Power stations
Hydro
generators
Wind farms
+
Load electrical power
_
Industrial
Commercial
Residential
• Frequency is a measure of supply-demand balance
– always varying due to fluctuations in power flows
• Wind farms will make frequency more variable:
– Does this matter & if so, who should pay for additional
control action?
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Managing supply-demand
balance in Australian NEM
increasing uncertainty
Spot market forecast &
derivative markets
Spot market
for period t
Commercial issues
time
Spot market
for period t+1
spot
period t
spot
period t+1
Frequency control
ancillary service
markets for period t
FCAS markets
for period t+1
Physical issues
Supply/demand
projections & FCAS
derivative markets
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NEMMCO processes for managing
supply-demand balance
Power system reliability & security standards
NEMMCO Forecasts
of supply & demand
• 10 year (annual)
• 2 year (weekly)
• 1 week (hourly)
• day-ahead spot price
& dispatch (30 min)
Spot
& FCAS
Markets
NEMMCO operation:
•Participant bid/offers
•Network data
•Demand forecast
•Reserve threshold
•Security constraints
•Reliability safety net
Derivative
Markets
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Bidding & dispatch
(source: NEMMCO)
Commitment
notices
Capacity
Energy/RoC
Day -2
Initial Offers/Bids 1230hrs
then re-bids until dispatch time
Day -1
Day 0
Day 1
Dispatch Day
ST PASA
1400hrs
1st Pre-dispatch
1600hrs
Updated 3hrly
5-minute & 30-minute prices as set;
previous days data at 0800hrs
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Dispatch, Pre-dispatch, PASA & SOO
SOO (10 yr)
Medium Term PASA
Short Term PASA
Pre-dispatch, re-bid & final dispatch schedule
0 day 1 day 2 week 1
month 1
year 1
year 2
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PASA & reserve trader
Invitation to provide
more capacity
Purchase of
more capacity
•Energy
constraints
•Demand
forecasts
•Network
capacity
Registration of
available capacities
(long term expected USE < 0.002%)
NEMMCO
Settlements
Payment for
purchased capacity
Expected
inadequacy
PASA
Available
capacity
Purchased capacity
offered to market
(usually at VOLL)
Day-ahead
Offers & bids
Pre-dispatch
then
dispatch
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Spot market offers & bids
• Generators, retailers & consumers:
– Price-quantity curve (sell/buy) for each half hour:
• ≤ 10 daily prices, quantities changeable until dispatch
– Demand forecasts ‘bid in’ at $10000/MWH (VoLL)
• Dispatchable links between regions:
– Flow offer curve based on price difference
• Bids & offers ranked to give dispatch stack:
– Considering loss factors & inter-tie constraints
– 5 minute prices set by economic dispatch:
• Half-hourly averages are calculated in ‘real time’
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NEM Pre-dispatch, Dispatch &
AGC
Day-ahead bids
from
participants
Continuous
re-bid quantities
from participants
NEMMCO data
(e.g. operating
constraints)
SCADA
Pre-dispatch
(half-hourly)
Bid Database
Economic Dispatch
(5 minutes)
AGC
(2 second cycle)
Forecast
spot prices
Current
spot prices
Instructions
to
participants
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Modelling regulated interconnectors
& intra-region location
• Regulated interconnector between 2 regions
– Modelled by a linearised marginal loss function:
• A ‘dynamic’ network loss factor that depends on flow
• Flow limits (security or thermal criteria)
• Locational effects within regions
– Modelled by ‘static’ network loss factors (LFs)
• Annual average of estimated half-hour marginal losses
for each generator node & group of consumer nodes
– Intra-regional constraints not modelled but a
‘constrained-on’ generator cannot set price
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Financial instrument trading in
support of NEM
• Trading in swap & cap contracts:
– Bilateral trading
– Over-the-counter instruments
– Exchange-traded CFDs (swaps)
• Inter-regional hedges:
– Specialised form of financial instrument:
• to manage regional price difference risks
• funded by interconnector settlement residues
– NEMMCO inter-regional settlement residue
auctions:
• Commenced in 1999
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Monthly average NEM Regional Ref Prices
(RRPs) since market inception (NECA, 03Q1 Stats, 2003)
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Cumulative spot prices
(7-day moving sum) (NECA, 2003)
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Ave, Max & Min RRP in SA region
(truncated at 300 $/MWH) (NECA, 03Q1 Stats, 2003)
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Histogram of RRPs, Jan-Mar 03
(NECA, 03Q1 Stats, 2003)
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Cumulative duration curve, SA RRP,
Jan-Mar 03 (NECA, 03Q1 Stats, 2003)
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Spot price as a function of demand
SA,02 Q4 (NECA, 03Q1 Stats, 2003)
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Key derivative markets
• Forward contracts (futures)
– Expected spot price for a defined load shape
& period (eg flat annual demand)
– Either OTC or exchange traded
• Call options
• Renewable energy certificates
– Available to qualifying generators
– Increasing to 9,500 GWH pa at 2010 then
constant to 2020
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Flat forward contract prices,
1999-2006 (NECA, 02Q4 Statistics, 2003)
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Premium ($/MWH) for all spot prices above
strike price for year to 4/02 (Reliability Panel, 2002)
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Qu een slan d
New S o u th W ales
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Vi ct o ri a
S o u t h A u st ral i a
P remi um ($/MW / h)
40
30
20
10
0
0
50
10 0
15 0
S tri k e P rice ($ / M W h )
20 0
25 0
30 0
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Renewable Energy Certificate Prices forecast to 2020 (A$/MWH) (ORER, 2003)
60
55
50
45
40
35
30
25
20
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
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NEC Grid connection process
(NEC, Chapter 5, p 9)
Code participant
Network service provider
Preliminary enquiry
Assess network suitability
Try another NSP
Connection does not
guarantee market access
under all conditions
Prepare application
Apply & pay fee
Provide additional
information
Finalise connection
agreement
Prepare:
•Preliminary program
•Performance specification
•Technical data lists
•Application fee estimate
•Commercial requirements
Advise applicant
Investigate application:
•Technical & economic studies
•Liase with other NSPs
•Seek additional information
Make offer to connect
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National Electricity Code (NEC)
connection requirements for generators
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Reactive power & voltage control capability
Quality of electricity injected into network
Protection requirements
Remote control arrangements
Excitation system requirements
Loading rates
Ride-through to avoid cascading outages:
– Loss of largest generator; 175ms network fault
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NEC categories of generators
• Either market, non-market or exempt
– Market implies sell to NEM
• Can then also sell ancillary services
– Non-market or exempt implies sell to retailer
• Either scheduled or non scheduled:
– Scheduled implies centrally dispatched:
• Must then participate in the NEM processes of
bidding, pre-dispatch & PASA
• Default category for generation projects > 30 MW
• Not appropriate for “intermittent” generation, eg wind
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Future directions for NEM
COAG Energy Market Review (2002) Recommendations
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Create a National Energy Regulator
Improve control of generator market power
Improve operation of derivative markets
Give NEMMCO a NEM-wide planning function
Increase number of NEM regions & aim for full
nodal pricing
• Phase in interval metering & retail competition
for all end-users
• Enhance competition and network scope for gas
• Replace existing climate cahnge policies by
emission trading
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Key web sites
• COAG Energy market review:
– www.energymarketreview.org
• National Electricity Market Management Company:
– www.nemmco.com.au
• National Electricity Code Administrator:
– www.neca.com.au
• Electricity Supply Association of Australia:
– www.esaa.com.au
• University of New South Wales - Sustainable energy
research group:
– www.sergo.ee.unsw.edu.au
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