Using distributed flexibility for ancillary services:

the role of Elia as catalyst for new market developments

Hans Vandenbroucke, Market Development

"Chaire ORES Smart Grids - Smart Metering", March 30th, 2017

Disclaimer: some elements of this presentation have, for the sake of easiness of understanding, been

represented in a more simplified way than what they are in reality

Need for additional flexibility: a multi-dimensional approach

Context Impact for Grid Operators Necessary Answers

Flexibility needs

More important & more volatile

Flexibility sources

New technologies & players

… with challenges

& opportunities …

A rapidly changing

environment …

… requires an ambitious but

pragmatic approach

Keep “needs” under control

• Enforced Balancing Responsible Party (BRP) role

• Dynamic “needs” dimensioning

Cover “needs” efficiently

• Reserve sharing

• Cross border integration

• Shorter term procurement

• Open market to all

All technologies (batteries, load,..)

All players (independent BSP)

All voltage levels (TSO & DSO levels) The regionalisation

of the electricity

sector

RES

development

Decentralisation,

digitalisation &

new players

Year aFRR+ mFRR+ FRR- aFRR- mFRR-

2016 910 140 770 140 140 -

↓

2021 1240 175 1065 1000 175 825

2023 1240 175 1065 1000 175 825

2027 1240 175 1065 1000 175 825

NEEDS VOLUMES

FCR R1

aFRR R2

mFRR R3

Trend

NEW

Source: Adequacy study and assessment of the need for flexibility in the Belgian electricity system - April 2016, available on www.elia.be

Increased flexibility needs for balancing [MW]

Product opening

Open our products to all:

• Technologies • Market parties • Voltage levels

• Energy bidding rules • Generic prequalification rules • Generic activation controls • Generic Rx performance controls • Merit order activation

Market rules harmonization Contractual harmonization

Product development: A global roadmap with 3 major steps

Steps in function of regulation / EU discussions

1 standardized contract for all flexibility

2016 2020

7

+ Q3 2016: R1XB with DE

+ 05/2017: R1 new technologies (e.g. batteries)

FCR: Roadmap

+ 2018/19: Generic FCR contractual framework

R1 product type

Technology

TSO GEN>25MW

TSO Non-conventional

DSO connected

Asym up / down

R1 down R1 down R1 down

R1 up R1 up R1 up

Sym 100 / 200 Mhz

R1 sym R1 Sym R1 sym

R1 product type

Technology

TSO GEN>25MW

TSO Non-conventional

DSO connected

Asym up / down

R1 down R1 down R1 down

R1 up R1 up R1 up

Sym 100 / 200 Mhz

R1 sym R1 Sym R1 sym

Be

gin

nin

g 2

016

Sin

ce O

ct

2016

Distributed

flexibility

8

Product Detailed description Types Offered by

Secondary

reserves (R2)

• automatically and continually activated both upstream and downstream.

• It kicks in quickly (between 30 seconds and 15 minutes) and remains active

as long as it is needed.

R2-up TSO GEN>25MW

CIPU

R2-down TSO GEN>25MW

CIPU

aFRR roadmap

R2 is the most important balancing

product for Elia

• 85% of the balancing energy activated

• Setting the imbalance price for at least

80% of the time

• Together with R1 accounting for 60 -

70% of the AS budget

Challenges

• Needs for reserve volumes are slightly

increasing

• Future of historic providers

(conventional power plants) is uncertain

and expensive (must run)

Potential solutions

• Cross border integration: technically

very complex and requires Cross Border

capacity (= will take time)

• Diversification: Wind (pilot R2 wind),

CHP & Load

Elia has initiated a pilot project with willing industrial consumers or aggregators to develop an

R2 (aggregated) non-CIPU product (incl. distributed flexibility)

mFRR Target Model

9

R3 Standard

[CIPU units]

ICH Up

[TSO GUs]

R3 Flx

[Aggregator]

Free bids

Up /Down

[CIPU units]

R3 Generic

Up/Down

[BSPs]

Free bids

Up/Down

[BSPs]

As Is (2017) To Be

Non contracted mFRR Contracted mFRR Legend:

R3 Standrad

[CIPU units]

ICH Up

[TSO GUs]

R3 Flex

[Aggregator]

Order of activation

MO: free prices MO: free prices No MO: no prices No MO: fixed prices

Order of activation

R3

Contingency

[BSPs]

Bid Ladder platform

R3 Generic

Up/Down

[BSPs]

R3

Contingency

[BSPs] *

Energy Bids

Reserve Bids

TBC *

TBC *

National MO

merged with XB

CMO

Distributed

flexibility

Non-reserved tertiary control power BidLadder Pilot Project

The BidLadder Pilot creates a platform to allow free bids for energy balancing from TSO-connected non-

CIPU generation and load offered to Elia by a BSP*, i.e. independent aggregators, grid users or BRPs.

(R1/)R2 Free Bids R3

Standard

R3

Flex ICH

The bigger “balancing” picture:

Today: Free Bids only by BRPs via CIPU

BidLadder Pilot: BSP offering non-CIPU generation and load

10

* BSP = Balancing Service Provider

ARP workshop - 16 March 2017

The BidLadder pilot project:

a pilot for a new product and transfer of energy

• The pilot project starts without Transfer of Energy and with delivery points connected to the Elia network.

• However, the ambition is clear, i.e. to also enable delivery points from DSO networks and to enable Transfer of

Energy.

• Transfer of Energy is a “feature” that will not be limited to one product, also R3 and other products will evolve

including ToE

ARP workshop - 16 March 2017 11

TSO ** DSO

Without ToE* 1/7/2017

With ToE

* ToE = Transfer of Energy

** Including delivery points within a TSO-connected CDS

and delivery points with a submeter

Current scope pilot

project

DSO involvement

needed

Adapted legal

framework needed

mFRR roadmap

2017 2018 2019 - 2020

Step 2 : merit order activation Step 3 : EU standard products Step 1: product opening

Towards EU integration

Reservation • Technological neutrality

• Monthly sourcing • Stop ICH

• EU standard capacity product

• Dynamic dimensioning

• Weekly/daily sourcing

Activation • EU standard energy products • Bid Ladder v1: free bids

open to TSO DPs

• Bid Ladder v2: Common merit order activation for

all R3 products

Free bids DSO DPs

Distributed

flexibility

0

50

100

150

200

250

300

350

400

2013 2014 2015 2016 2017

Off

ere

d V

olu

me

in M

W

R3DP-R3 Flex Volume Offered in MW

Increase of offered volumes and suppliers – share distributed flexibility

13

Offered volume of mFRR from Non Conventional

Units (including demand response) has been growing

over the years, in line with product opening/redesign

Distributed flexibility prequalified for R3 Flex in

2015 (679MW ) increased to 885MW in 2016.

Available R3DP Flex ~ 500MW

Role for DSO in prequalification embedded in

TRD/RTD (and in SO Guideline art 182,5)

0

2

4

6

8

10

12

2012 2013 2014 2015 2016 2017

Number of R1 Belgian Suppliers

R1 CIPU Suppliers R1 Non-CIPU Suppliers

# suppliers increases

R1 diversification not only in Belgium but also at EU

level

R1 down volume from distributed flex ~12MW

since August 2016

Distributed flexibility is an additional source of liquidity for supply of ancillary services

Access to market is primordial: grid users and aggregators (Balancing Service Providers/BSP)

ELIA has opened product portfolio to all players, all technologies and all voltage level

Transfer of energy needs to be addressed to allow independent BSPs to be active in R3-market with

activation price (in a full merit order activation)

Legal inititiave ongoing

Coordinated access to distributed flexibility requires dynamic congstion management and sound data

management

Close cooperation beween TSO ad DSOs via coordination agreements

Conclusions

14

Many thanks for your attention!

ELIA SYSTEM OPERATOR

Boulevard de l'Empereur 20

1000 Brussels

+32 2 546 70 11

info@ elia.be

www.elia.be

An Elia Group company