entso-e public workshop: presentation of 3 cba guideline · 2020-04-17 · presentation of 3rd cba...

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ENTSO-E Public Workshop: Presentation of 3rd CBA

Guideline 8 November 2019

ENTSO-E premises, Avenue de Cortenbergh 100 1000 BrusselsGround Floor

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Agenda

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1. CBA Process

How to improve the CBA guideline …

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… only following Reg. 347 (2013)

3 Month 3 Month 3 Month 2 weeks

Public consultation

ACER opinion

EC/MS opinion

ENTSO-E adoption ofcomments

EC approval Publication


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… as applied for CBA 2

3 Month 3 Month 3 Month2 Month 2 weeks

Public consultation

ACER opinion

EC/MS opinion


EC approval Publicationintensediscussion

AC

ER

EC

inte

rnal

app

rova

l

inte

rnal

app

rova

l

inte

rnal

app

rova

l

discussion with EC

CBA 2.0 CBA 2.1

discussion with EC


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… and for CBA 3

3 Month 3 Month 3 Month6 Weeks from 2 weeks

Public consultationACER opinion

EC/MS opinion


EC approval Publicationintense discussionACER and EC

inte

rnal

app

rova

l

inte

rnal

app

rova

l

inte

rnal

app

rova

l

discussion with EC discussion with EC

experiencefrom CBA 2

ideas forimprovement

publicworkshop

publicwork-streams

07.11.2017 ~6 Month

CBA 3 drafting

continous discussion with EC and ACER

publicworkshop

inclusion ofACER

comments

18.12.2018

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Workstreams

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Workstreams: who was involved? External Stakeholders: all ENTSO-E non-direct stakeholders

- Consultants

- Academia

- Utilities

- Manufacturers

- Investors

… mainly all industry professionals were involved

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Workstreams: why?

• Good experience including „external“ parties in the

CBA 2 process

• For CBA 3: starting from the very beginning with

help of external experts

• Defining together the core issues

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Workstreams: the starting point

Common Framework for improving the CBA:

• Comments from the public consultation

• Direct observations from ACER

• Direct observations from EC

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Workstreams: the scope

• to maximize external stakeholder

input

• content mainly drafted by the

external stakeholders

• to give sufficient time to mature how

to contribute

Anticipate and go beyond consultation

The workstreams: how

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Storage

SoS

SEW

Kick-off


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Storage

SoS

SEW

Kick-off

Physical meetings

Draft by participants

CommentsReviews

Weekly webco


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Storage

SoS

SEW3 deliverables drafted by the workstream participants


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Storage

SoS

SEWGood

starting point for

CBA3 in 1 merged

document

The workstreams: outcomes

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SoS

Adequacy:- Adequacy

- ENS from Monte Carlo

simulations

- Sanity check

Ancillary Services: Balancing Energy- Focus on exchanging Balancing

Energy

- Drawn upon projects/studies like

TERRE, iGCC, PICASSO, MARI

- Drawbacks

- Next steps


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SEW

No proposed methodology but recommendations:

- Retain current SEW definition

- Include more formal and thorough explanations of the

indicators

- Provide context

- The indicator should be clearly delineated


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No proposal for a dedicated methodology but a comprehensive overview of storage project benefits*

*Benefits that are described here might also apply for other types of projects

Storage

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Next Steps

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Next Steps

• Since 09. November 2019: 3rd CBA Guideline out for consultation until 9 December 2019

• In parallel: inclusion of additional ACER and EC comments

• Official Submission to ACER end of 2019• Application in TYNDP2020 planned

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3. Changes from CBA 2 toCBA 3

A modular approach

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CBA 3.0 officially

approved

implementationTYNDP2020

CBA 3.1

CBA 4.0 officially

approved

implementationTYNDP2022

CBA 3.2

• Preparing and publishing the CBA 3 as described (following Reg. 347/2013)• Additionally for each TYNDP publishing the implementation guideline

• Gives more flexibility and possibilities for improvement, tests of new methodologies

Example:

ACER

EC

ACER

EC

Improvements:• more flexible• more time for improvements• time for testing methods

Idea:• leaving the main document

more general• details in implementation

Project benefits based on promoters’ input• B7.1: Balancing Energy Exchange

• B9: Avoidance of the renewal/replacement costs of infrastructure

• B10: Synchronisation with Continental Europe (for Baltic States)

• B11: Reduction of necessary reserve for re-dispatch power plants

NTC calculation

• Introduction of seasonal NTCs

Storage Projects

• In principle no special treatment• Improvements will come along

with general CBA 3 improvements (e.g. on flexibility)

Indicator Overview

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B1: SEW

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SEW – main changes

• Indicator delimited to the economic

benefits that stem from wholesale

energy market integration

• Total generation costs considered

updated

Cost Terms in Market Simulations Description

Fuel costsCosts for fuel of thermal power plants (e.g. lignite, hard coal, natural gas etc.)

CO2-Costs

Costs for CO2-emissions caused by thermal fired power plants (ETS). Depends on the power generation of thermal power plants and CO2-Price.

Start-up-costs / Shut-down costs

These terms reflects the quasi-fixed costs for starting up a thermal power plant to at least a minimum power level.

Operation and maintenance costs Costs for operation and maintenance of power plants.

DSR-Costs

Costs for Demand Side Response (DSR). DSR is load demand that can be actively changed by a certain trigger.

Better framed in its scope:

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B2: Societal benefit due to CO2 variation

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CO2 – main changes

• Indicator extended by inclusion of the effect of societal costs (formerly

part of the B4 Societal well-being indicator)

• Impact of losses to be considered

Better framed in its scope:

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BackgroundCOP 21 Paris agreement, Article 6, 20152050 European long term strategyGoal : zero net emission by 2050

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CO2 management in CBA 2Implicitly taken into account via EU ETS CO2 price

Within SEWWithin losses prices

Fuel cost

EU ETS CO2price

Marginal costfor each plant Hourly

marginal priceper bidding

zone

Lossescost

Merit order SEW

Scenario V1 V2 V3 V4 BE 2025

ST 2030

DG 2030

EUCO 2030

EU ETS CO2 price

(€/ton)17 17 71 76 25,7 84,3 50 27

BUT : The EU ETS price does not capture the full societal impact of CO2

CCGT new = Fuel cost + EU ETS CO2price

86 €/MWh = 56,2 + 29,8

Example on ST 2030 :0,3538

ton/MWh* 84,3 €/ton

New methodologyAdditional ex-post consideration through a CO2 societal cost

SEWValue CO2 emission variation resulting from change of generation plans to thedifference between societal cost and EU ETS price

LossesValue CO2 emission variation resulting from change of losses volumes to thedifference between societal cost and EU ETS price

Note: using the difference between societal cost and EU ETS cost avoiding double accountingwith what was already implicitly taken in the SEW and the losses

Guide investments toward a reduction of CO2 emissionIncrease NPV for investments that lower CO2 emission and decrease NPV for the other.

No other simulations needed (ex post computation)

ExampleA

B Fictious exampleETS price = 27 €/tonSocietal cost = 100 €/ton

Impact of the interconnecor A B

Nuclear @ 14€/MWh + 1000 GWh/yr

Gas @ 85 €/MWh - 300 GWh/yr

Coal @ 100€/MWh - 900 GWh/yr

Spillage avoided + 100 GWh/yr + 100 GWh/yr

CO2 0 - 0,8 Mton/yr

SEW = 56,5 M€/yrin which 0,8*27 = 21,6 implicit CO2 price

Complete CO2 societal cost <SEW> = 100*0,8 = 80 M€/yr

Additional CO2 societal cost <SEW> = 80 – 26,6 = 58,4 M€/yr

Conclusion SEW Losses Additionnal societal CO2indicator

+ 58,4M€/yr

- 14,6 M€/yr + 43,8 M€/yr

Market substitution Losses

+ 0,20 Mton CO2/yr

Additional CO2 societal cost <Losses> = 0,20 * (100 – 27 )= 14,6 M€/yr

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B3: RES integration

RES - main changes

• No methodological changes

• No monetisation - as already fully captured under CO2

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B4: Non-direct greenhouse

emissions

Non-CO2 – main changes

• New indicator • Introduced new methodological based on post-processing

the market simulations output

From CBA 3: “The non-CO2 indicator/s can be calculated per fuel type by multiplying the specific emission factor (for all emission types) in [t/MWh] by the respective generation in [MWh].”

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B5: Losses

Losses – main changes

• Streamlined the description• Double counting issues with respect to the monetisation

solved

Issues identified in TYNDP 2018Potential for partial double-counting with SEW

• Demand curves used in the market studies contain losses (built using historical time series)

• This part of the demand is already monetized in B1: SEW (consumer surplus)o Change in consumer surplus = change in prices multiplies by demand

• Compensation has to be made in losses results

• In TYNDP 2018, ”quick mitigation” was done due to process timeline constraints:o Assumption: fixed losses part is 2% of the demand in all market areaso Compensation (subtracted from monetized results) per hour for each market area:

0.02*Demand*[MarginalCost(WithProject)-MarginalCost(WithoutProject)]

• In the 3rd CBA Guideline, the problem had to be handled in a detailed way

Issues identified in TYNDP 2018 (2)High loss increases for several projects

• TYNDP Study Team performed analysis to see the effects of:o Different climate years (3 instead of only 1 used in TYNDP 2018)o Different market toolso Different hurdle cost values

• Result: potentially significant effects on losses results

• Usage of 3 climate years on all available market tool outputs to be usedo Will be part of the Implementation Guidelineso More robust and aligned results are expected

Improvements in 3rd CBA Guideline (1)Partial double-counting with SEW

1) Basic formula for losses monetization (for a given market area and hour):

2) Two possible assumptions can be made for compensation:a) Compensation with assuming a given proportion of the demand as losses:

o Similar to TYNDP 2018 approach, but country-specific values instead of uniform European value

o Compensation term:

K*Demand*[MarginalCost(WithProject)-MarginalCost(WithoutProject)]

o Data collection for country-specific assumptions needed from TSOs

DeltaLosses(monetized)=Losses(WithProject)*MarginalCost(WithProject)-Losses(WithoutProject)*MarginalCost(WithoutProject)

Improvements in 3rd CBA Guideline (1)Partial double-counting with SEW

b) Compensation with the computed losses:• Assumption: losses computed in the reference case are included in the demand• The formula for the monetized delta losses simplifies to:

o For PINT projects:

o For TOOT projects:

• Advantage: no additional data collection needed, simpler formulas (one single price times delta losses)

DeltaLosses(monetized)=MarginalCost(WithProject)*[Losses(WithProject)-Losses(WithoutProject)]

DeltaLosses(monetized)=MarginalCost(WithoutProject)*[Losses(WithProject)-Losses(WithoutProject)]

Improvements in 3rd CBA Guideline (2)Other improvements

• Generally streamlined descriptions

• Possible usage of DC load-flow is more detailed. Formula added to estimate losses on a given branch basedon DC load-flow results:

o P: active power flow from the DC calculationo R: resistance of the brancho U: voltage levelo cosφ: assumed power factor to estimate the effect of reactive flows

• Example for explanation of double-counting issue and the two different assumptions, with detailed deductionof the formulas

• More detailed formulas for easier implementation

• Other specific details (climate years, market tool outputs, general instruction for network simulations) to be included in the Implementation Guidelines

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B6: SoS Adequacy

Adequacy – main changes

• New indicator• Introduced new methodological

SoS : adequacyAdequacy: Ability of a power system to provide an adequate supply of electricity in order to meet the demand at any moment in time. An interconnector can bring an adequacy benefit if the two countries it links are not facing adequacy stressed event at the same time.

Benefit materialized through two concepts:• Decrease the need of generation capacity (while keeping the SoS level constant)• Decrease the Energy Not Supplied (ENS) in the countries (i.e. improving the SoS of the area)

Prerequisites• Refined model of hazards (climate, plant and grid outages)

o LOLE is a very scarce phenomenono Need to model deepness of such events and their simultaneity between countries

• Realistic SoS level starting point

SoS : adequacyModeling adequacy benefit

Approach MonetizationCompute the capacity that is no longer needed to reachthe same SoS capacity when the project is added

Cost of best new entrant

Compute the amount (MWh) of avoided ENS thanks to the projetct

Value of Loss Load(VoLL)

Workstream output Methodology based on the second approach (avoided ENS )

Be careful to have realistic SoS starting point

Add a cap value based on a simplified generation capacity savings approach ( )

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2

2

1

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B7: SoS Flexibilty

Flexibility – main changes

• Restructured and reworded• Divided into “energy” and “capacity” part• Methodology for balancing energy exchange• Main principles for balancing capacity exchange/share

SoS – Flexibility (balancing energyexchange)

Step 1: Common platform • Assumption that such a common plattform will be in service in the

future

Step 2: Balancing needs• Definition of the balancing needs as Upward and Downward Demand

Step 3: Available cross border exchange capacity for balancing energy

• Using Market simulations to determine the actual utilization of the respective border

Direct outcome form public work-streamMain

Idea

SoS – Flexibility (balancing energyexchange)

Step 4: Imbalance netting• Netting out the imbalance between the countries (e.g. upward vs.

downward demand)

Step 5: Balancing bids and offers• The match between supply and demand will be made by the cheapest

cost under constraints of limited capacity on the interconnector

Note:• The method will become very complex when considering more than 2

countries• What balancing bids and offers to use?

Direct outcome form public work-streamMain

Idea

SoS – Flexibility (balancing energyexchange)The full assessment of balancing energy exchanges can only be realised when platforms for

exchanging balancing energy exist. There is a challenge around the choosing the right balance between complexity and feasibility of completing assessments timescales and

resource level. On the other hand, producing full models for balancing energy markets may be too time consuming. For these reasons, this benefit is addressed by qualitative assessment

indicated in the table below

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B8: SoS Stability

Stability – main changes

Reworded, restructured and divided into:

• B8.0: Qualitative indicator (kept from CBA 2)• B8.1: Stability• B8.2: Blackstart service• B8.3: Voltage/reactive power service

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B9: Avoidance of renewal/replacement

of infrastructure

Renewal/Replacement – main changes

New methodology introduced

Methodology:

• Prerequisite: The new project eliminates the need for replacing or upgrading existent infrastructure

• In such a case, the new project enables the TSO to avoid the investment costs required by the existing transmission grid to maintain the existing level of grid reliability and security.

• Indicator given in M€

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B10: Synchronisation with continental

Europe

Synchronisation – main changes

• New methodology introduced

Methodology:• This indicator applies only for smaller energy systems („energy islands“)• Assumption: higher risk of blackouts• Monetisation:

Energy not supplied cost (EUR)=VOLL (EUR/MWh)*Consumption (MWh/h)*Duration (h)

Note: Although displayed as single indicator, this benefit will be internalised under “system security”

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Redispatch

Redispatch for all projects

RD1

MS1

RD2

MS2

SEW

∆RD

SEW

∆MS

• In CBA 2: Introduction of redispatch method for internal projects only• Basically the same method can also be used for cross-border projects

MS: Market SimulationRD: Redispatch Simulation

with project without projectImprovements in CBA 3:• More detailed description

giving better guidance• Also for cross-border projects

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• Indicator taken from the “missing benefits” from TYNDP18.• Main idea:

• There are power plants contracted for re-dispatch• The maximum power of re-dispatch is a direct indication for the need of contracting

power plants• A reduction in maximum re-dispatch power denotes that less power plants need to

be contracted.

• To be defined in the Implementation guidelines:• What monetisation factor to be used?• Is there a regulatroy framework in the respective country

RD Power [MW] Benefit [MW]

Monetary Benefit [M€] (factor: 20k€/MW)

Without project(reference)

18.000 - -

With project 16.000 2.000 40

B11: REDUCTION OF NECESSARY RESERVE FOR REDISPATCH POWER PLANTS

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Reference Grid

Reference Grid: TYNDP2018 practiceUnder

ConsiderationPlanned, But Not Yet in Permitting

PermittingUnder

Construction

• Projects NOT included in the reference grid

• Assessed as PINT projects

• Projects included in the reference grid

• In TYNDP18: CD <= 2027• Permitting included if properly

documented • Assessed as TOOT projects

Permitting: Starts from the date when the project promoters apply for the first permit regarding the implementation of the project and the application is valid

Reference Grid: the scope

To strengthen the maturity and enhance the likelihood of the

reference grid

Reference Grid: initial ideas

In the NDP Agreements PCI status + commissioning date

Finance, Regulatory framework Technical feasibility Routing feasibility

Public consultation/Public

acceptance

Fulfilling Legal Requirements in the

interested country/ies

Final Investment Decision

Environmental Impact Assessment Permits General Design Public tendering

Year of commissioning wrt

Study horizon

Expert judgement

References: conservative

forecasts like MAF

Reference Grid: initial ideas

In the NDP Agreements PCI status + commissioning date

Finance, Regulatory framework Technical feasibility Routing feasibility

Public consultation/Public

acceptance

Fulfilling Legal Requirements in the

interested country/ies

Final Investment Decision

Environmental Impact Assessment Permits General Design Public tendering


Study horizon


Study horizon

Expert judgement

References: conservative

forecasts like MAF

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Reference Grid: Changes in CBA 3 more detailed definition of the reference grid base on the maturity of projects

Ref

eren

ce g

rid

existing grid

matureprojects

in national plan

Commissioning year

fulfills legal requirement

Reference to MAF studies

final investment decision

environmental impactassessment

request for permits

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5. Outlook for TYNDP 2020

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TYNDP in the European framework

Scenarios Collection of projects

Identification of system needs

Cost-benefit analysis

Projects of Common Interest process

TYNDP process

Q4 2019Q4 2019

Q2 2020Q3 2020 for consultation

Scenarios• What futures do we chose to describe? • Joint release with ENTSO-G (ENTSO for gas)• Draft 2020 Scenarios planned for release by mid-November 2019

System needs• How to fit the system to the futures described in the scenarios? • Identification of network bottlenecks• Market studies to identify additional investment needs (SoS and market)• System stability analysis (inertia and voltage): is the system ready to deal

with a large amount of RES?

Projects Assessment• How will transmission and storage projects contribute to the

future system?

2019 2021Today

Oct 2020 Apr Jul Oct 2021 Apr

Release of the final

TYNDP2020Jun

ACER opinion on draft TYNDP 2020

MarSubmission of draft TYNDP2020 to ACER

Oct

Release of draft Identification of System Needs 2040 & Opening of submission

window for future projects addressing system needs

Apr

Publication of draft TYNDP 2020 for

consultation (including CBA results)

MidAug

Opening of submission

window22 Oct

Cost-Benefit Analysis of projects

Jan - Jul

Overview of the TYNDP 2020 processRelease of

draft Scenarios

2020Nov

Beginning of PCI process (5th list)

CBA 3.0 and TYNDP

TYNDP 2020 implementation guideline will be based on CBA 3.0

CBA assessment based on indicators of CBA 3.0

Project benefits based on promoters’ input NO more parallel process/Guideline

(No more Missing Benefits)

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CBA related Planned workshops / webinars

January 2020

Workshop/webinar on the project sheets and the project level benefitsObjective: provide all needed information so that promoters can prepare before the submission of additional information (foreseen in April-May 2020)

April 2020 Workshops to further explain the additional information required and the publication of projects information & of CBA results in the project sheets.

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6. Wrap-up session

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7. Conclusion

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8. Back-up slides

SoS – Stability (Frequency Stability)

MARKET SIMULATIONS

QUANTITATIVE INDICATORDEFINITION

MONETISATION SIMULATION WITH AND WITHOUT THE

PROJECT• Hourly dispatched

generation and demand for each synchronous area for different scenarios

• Aggregated dynamic studies

• In each hour, the reference incident is simulated

• ROCOF and frequency excursions are used to quantify the FSI

• Monetization of the indicator is the most challenging issue

For the FSI, only the projects that affect it can be monetized. See the qualitative table already present in the CBA 2 for each project

ONGOING

TEST PHASE

• By comparing the results it is possible to evaluate the benefits of a project

entso-e public workshop: presentation of 3 cba guideline · 2020-04-17 · presentation of 3rd cba...

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