Powering Europe - European Wind Energy Association

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3.2 European integration assisted by interconnection Before 2006, all markets in Europe were national, with the exception of the Nordic market. These markets were characterised by one or a few dominant power producers that had emerged from the former utilities which owned a major share of the generation and transmission capacity. New market entrants that owned generation capacity abroad faced the difficulty of transporting variable amounts of power over the borders. An integrated power market should be made up of different countries. In a perfect market, the market prices between these countries should only differ when the interconnector capacity between the countries is insufficient. Interconnectors would be used based on the evolution of prices in the different markets. In the past, allocation of interconnector capacity was not market-based, whereas now mechanisms in Europe are becoming increasingly market-based, mainly through auctions. Most auctions are explicit, meaning tthat in order to offer energy on a foreign spot market, a market participant has to buy a cross-border transfer capacity at the capacity auction and energy at the concerned spot markets separately. In order for a power market to be truly competitive, sufficient transmission capacity is required between the relevant markets. Moreover, the legal and regulatory framework must enable an efficient use of interconnectors between participating countries. This is made possible by market coupling and splitting, leading to an implicit allocation of interconnector capacity, which is when bids and offers from different countries are combined in order to establish a common market price for the region. Whenever an interconnector is congested, 2 EMcc: European Market coupling company. 124 the prices on either side cannot converge further, and the price difference represents the value of the interconnector for trade. Such implicit auctioning ensures that interconnector capacity is used efficiently. In the last few years, the European integration of power markets has accelerated thanks to several initiatives. First, the Regional Initiatives of the European Regulators’ Group for Electricity and Gas (ERGEG) pursued the development of seven regional electricity markets, each made up of several national markets. The larger countries such as Germany and France participate in several regional markets. Consequently, a market player in one of those countries can choose any of the available market regions for every bid or offer. In practice, this is likely to align prices in the different regional markets. However, the most concrete steps towards regional markets were taken in the creation of the NordPool market and the Pentalateral market between Benelux, France and Germany. Moreover, in 2007, Germany joined the NordPool day-ahead market. A further market coupling between Germany and Denmark operated by EMCC 2 was put in place at the end of 2009. The Pentalateral Energy Forum launched the so-called “North Seas Countries’ Offshore Grid Initiative” in 2010. Other examples of regional integration are the Irish All-Island market and the Iberian MIBEL. Ongoing market integration across Europe could provide a further building block for a future power system characterised by flexibility and dynamic electricity markets, where an increased number of market participants, including the demand side, respond to price signals, facilitating competition and better integration of wind power and other variable renewables. Powering Europe: wind energy and the electricity grid
3.3 Legal framework for further liberalisation of the European electricity market The movement towards liberalised markets is being boosted by a thorough legislative process at European level. An important step was taken by the adoption of the Third Liberalisation Package in 2009. In this package, the European role of network operators was spelt out more clearly in the obligation to create an umbrella organisation - ENTSO-E (European Network for Transmission System Operators for Electricity) - with a clear mandate for transmission planning and coordinated operation at European level. The establishment of ENTSO-E took place in 2009 and is expected to lead to an increase in transmission capacity, alleviating congestion in the European grid and ultimately bringing about lower power prices. chApTEr 5 electrIcItymarketDeSIgN Equally, within the package of regulatory measures, it was decided to reinforce the European role of the energy regulators by creating a European Agency for Energy Regulation, ACER. This Agency is to initiate and oversee the process of creating appropriate codes for network and market functioning in the liberalised power market. At the time of writing, this process had just started with work on a first “pilot” network code on grid connection requirements (see Chapter 2). Considering the variable degree of progress in different market regions, the European Commission launched a roadmap and target model for the convergence of Regional Initiatives to a single market. A possible sequence of European market coupling to be accomplished by 2015 has been proposed by the European Forum for Electricity Regulation (Florence Forum) as illustrated in Figure 1. fiGURE 1: RoaDMaP PRoPosED by thE EURoPEan foRUM foR ElECtRiCity REGUlation towaRDs a sinGlE MaRkEt FUI BS NE CWE SWE CEE CSE SEE Estonia, Latvia, Lethuanis 25TWh ~350MW SE, NO, DK and FIN 400TWh DE and AT 600TWh TLc 650TWh BS, SE, NO, DK and FIN ~2800MW cWE 1250TWh ~1000MW MIBEL 300TWh cZ and SK 100TWh GB 400TWh ~3000MW cWE, NE, BS, SWE and UK ~2500TWh ~2500MW IT and SLO 350TWh Price coupling No decision on the coupling yet Volume coupling cWE, NE, BS, SWE, cSE- and UK ~3000TWh ~6000MW cWE, NE, BS, SWE, FUI, cEE-, cSE- and rO ~3100TWh ~1000MW cWE, NE, BS, SWE, FUI, cEE, cSE- and rO ~3300TWh ~3000MW All regions coupled! ~3500TWh Possible sequence of European market coupling (please note that the sequence and timing is only indicative and does not represent any agreed position of the PCG) Source: Project Coordination Group (PCG) slide, 17th Florence Forum, 10&11 December 2009 SEM 25TWh Hungary 40TWh Poland 150TWh Romania 55TWh ~1000MW Other SEE countries 2010 2011 2012 2013 2014 2015 ~1000TWh = approximative yearly consumption ~3000MW = approximative interconnection capacity between areas to be coupled 125
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Powering Europe: wind energy and th
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CONTENTS chapter1 Introduction:
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1 INtrODUctION:aeUrOpeaNVI
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available for dealing with variable
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Europe has a particular competitive
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odies ENTSO-E and ACER, the key del
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maINchalleNgeSaNDISSUeS
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4.1 Wind generation and wind plants
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such as in Spain, demonstrate that
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With the very high shares of wind p
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power capacity reaching 265 GW in 2
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tablE 1: RolEs anD REsPonsibilitiEs
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Grid infrastructure upgrade Reinfor
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Institutional and regulatory aspect
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Legend The grid maps depict the evo
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European renewable energy grid 2020
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European renewable energy grid 2040
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2 WINDgeNeratIONaNDWIND
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operates below its peak efficiency
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tablE 1: oVERViEw of winD tURbinE C
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fiGURE 2: winD tURbinE PowER CURVE
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grid, such as large conventional ge
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Of special interest for system oper
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fiGURE 6: ExaMPlE of thE sMoothinG
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temperature gradients, wind speeds
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fiGURE 10: foRECast aCCURaCy in sPa
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1.4 Impacts of large-scale wind pow
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cONNectINgWINDpOWertOth
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2.2 An overview of the present grid
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network element is important for sy
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The implementation of further liber
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to 24 hours ahead). Furthermore, we
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INtrODUctION While today’s power
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alancingdemand,conventional
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alancingdemand,conventional
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Page 73 and 74: Improvedwindpowermanagemen
Page 75 and 76: WaySOfeNhaNcINgWINDpOWe
Page 77 and 78: Waysofenhancingwindpowe
Page 79 and 80: Windpower’scontributiont
Page 81 and 82: Windpower’scontributiont
Page 83 and 84: Nationalandeuropeanintegra
Page 91 and 92: 92 aNNex:prINcIpleSOfpOWer
Page 93 and 94: 4 UpgraDINgelectrIcItyNetWOrk
Page 95 and 96: transportation of power from genera
Page 97 and 98: ImmeDIateOppOrtUNItIeSfOrU
Page 99 and 100: lONgertermImprOVemeNtStO
Page 101 and 102: it compares favourably to a radial
Page 103 and 104: It was found that despite TEN-E, th
Page 105 and 106: • Reduce dependency on gas and oi
Page 107 and 108: technology with the following typic
Page 109 and 110: network planning carried out by the
Page 111 and 112: The studies either allocate the tot
Page 113 and 114: existing distributed assets includi
Page 115 and 116: SUmmary Upgrading the European n
Page 117 and 118: 5 electrIcItymarketDeSIgN Pho
Page 119 and 120: arrIerStOINtegratINgWIND
Page 121: DeVelOpmeNtSINtheeUrOpeaN
Page 125 and 126: • Wind power support schemes are
Page 127 and 128: guideline and subsequent network co
Page 129 and 130: ackgrOUND Wind power in the EU has
Page 131 and 132: INtrODUctION This study aims to ana
Page 133 and 134: Introduction However, this study in
Page 135 and 136: SUmmaryOffINDINgS Numerous st
Page 137 and 138: methODOlOgy This chapter describes
Page 139 and 140: methodology 4.2 Modelling Modelling
Page 141 and 142: aNalySIS 5.1 Modelling results Meri
Page 143 and 144: analysis In order to assess the mer
Page 145 and 146: analysis Merit order and volume mer
Page 147 and 148: analysis fiGURE 9: EnDoGEnoUs inVEs
Page 149 and 150: analysis fiGURE 11: total installED
Page 151 and 152: analysis fiGURE 14: tRaDE flows foR
Page 153 and 154: analysis fiGURE 15: sEnsitiVity anD
Page 155 and 156: analysis and natural gas in the bas
Page 157 and 158: analysis equilibrium price of €90
Page 159 and 160: cONclUSION The modelling analysi
Page 161 and 162: aNNex 7.1 Assumptions in the model
Page 163 and 164: annex fiGURE 19: lonG-tERM MaRGinal
Page 165 and 166: annex The Classic Carbon model is a
Page 167 and 168: annex marketpowermodelling Al
Page 169 and 170: eferences,glossaryandabbre
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eferences,glossaryandabbre
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