Title: N' Keith Tovey, M'A' PhD, C'Eng MICE
1(No Transcript)
2The changing face of the Electricity Market in
the UK
???????????? ???? ????? ?????????????? ? ????????
???????????? ????????? ??????
17th June 2003
N. Keith Tovey, M.A. PhD, C.Eng MICE
Energy Science Director Low Carbon Innovation
Centre University of East Anglia, Norwich
3The changing face of the Electricity Market in
the UK
- A brief review of the UK Electricity Industry
prior to 1990. - ??????? ????? ????????? ??????????
????????????????? ????? ????????????? ? 1990 ? - The Electricity Markets in the 1990s after
Privatisation - ????? ?????????????? ? 1990 ? ????? ????????????
- The New Electricity Trading Arrangements
- ????? ??????? ??????? ???????? ????
- The Supply of Electricity since 1990
- ???? ?????????????? ? 1990
4The changing face of the Electricity Market in
the UK
- A brief review of the UK Electricity Industry
prior to 1990. - ??????? ????? ????????? ??????????
????????????????? ????? ????????????? ? 1990 ?
- Electricity Generation and Supply
- differences in approach between England / Wales
and Scotland. - ????????? ? ???? - ??????? ????? ?????????
- Fuels used for generation
- ???????, ???????????? ??? ?????????
5The Generation and Distribution of Electricity
have always been different in Scotland compared
to England and Wales
6Most Generating Capacity is in the North - most
demand is in South
MW
Generating Capacity Surplus/Deficit on February
12th 1800 ve generating capacity exceeding
demand -ve demand exceeding generating capacity
7Immediately prior to Privatisation
At start of New Electricity Trading Arrangments
Mid 1990s
8???????????? ???? ????? ?????????????? ? ????????
- Demand has risen by 50 since 1970
- Large rise in output from CCGT since 1993
- Nuclear output increased steadily but is set to
decline - Coal Oil generation has fallen rapidly since
Privatisation
9Electricity Generation - pre 1990
- Decision on how electricity was to be generated
was done on a generating set basis - Generating Sets to run were selected on Merit
Order. - Based on Marginal Costs (i.e. the fuel costs)
- Some generating sets were run OUT of MERIT ORDER
where system constraints were an issue. -
- Generators sold electricity to Regional
Electricity Boards. - Electricity Boards sold to consumers in their
Area only. - Prices to consumers varied between regions
10???????????? ???? ????? ?????????????? ? ????????
- Most Generating Capacity in North
- Most coal-fired stations in North
- Most Oil-fired stations in South
- Nuclear stations - distributed around coast
- Most Hydro stations are in Scotland
Significant power flows North gt South
11Privatisation of Electricity Supply Industry 1990
Central Electricity Generating Board
National Power PowerGen Nuclear Electric
- Coal Fired Power Stations
- Oil Fired Power stations
- Gas Turbine Stations
- Hydro Stations
- Nuclear Stations
- Transmission
National Grid Company
12 Regional Electricity Companies
12 Regional Electricity Companies
12Typical UK Electricity Demand in Winter 2003
13Typical UK Electricity Demand in Summer 2002
1st August 2002
14The changing face of the Electricity Market in
the UK
- A brief review of the UK Electricity Industry
prior to 1990. - ??????? ????? ????????? ??????????
????????????????? ????? ????????????? ? 1990 ? - The Electricity Markets in the 1990s after
Privatisation - ????? ?????????????? ? 1990 ? ????? ????????????
- The New Electricity Trading Arrangements
- ????? ??????? ??????? ???????? ????
- The Supply of Electricity since 1990
- ???? ?????????????? ? 1990
15The changing face of the Electricity Market in
the UK
- The Electricity Markets in the 1990s after
Privatisation - ????? ?????????????? ? 1990 ? ????? ????????????
- The bidding process - Pool Input and Pool Output
- ??????? ?????? ?????? ? ??????? ????
- The Electricity Pool
- ????????????? ???
16Simplified Diagram of the Electricity
Pool England and Wales
17The Operation of The Electricity Pool 1990 - 2001
- Only the Generators (gt100 MW) bid into the POOL
to supply electricity e.g. National Power (now
Innogy), PowerGen etc. - The National Grid Company published projected
demands for the following day and invited bids. - The Generators supplied bids for each generating
set in each station for each half-hour period of
the following day. - The NGC sorted bids to determine which generating
sets would be used for each particular period,
and which ones would have capacity made
available.
18Scotland
England and Wales
19System Marginal Price 19.31 SMP
10000 MW
10000 MW
Companies up to and including B successful
10000 MW
1 50 Roubles
20The Operation of The Electricity Pool
- All Companies who were successful are paid the
SMP for all units generated irrespective of what
their bid was. - The bids were for the single half-hour period and
fresh bids were required for all half hour
periods. - It was possible for companies to bid 0 and this
would guaranteed that they generated and paid
SMP. - However, if all Companies did the same they would
have to generate electricity for nothing. - In addition to the SMP, there was also a
capacity charge relating to the generating
capacity which was requested to be available.
21The Operation of The Electricity Pool
- Capacity Charge paid to all Generators who had
been requested to have capacity available. - -based on formula
- LOLP (VOLL - SMP)
- Loss of Load Probability
-
Value of Lost Load
VOLL was set by the Regulator at around 2400
per MWH LOLP normally a very low figure but
could become significant if there was a shortfall
in generating capacity Capacity Charge signal
to ensure sufficient capacity was available. Pool
Input Price (PIP) SMP LOLP (VOLL - SMP)
22????????????? ???
- System Constraints
- Some Power Stations constrained ON to ensure
security of supply even when their bid was more
expensive. - Some Power Stations constrained OFF even when
their bid was cheaper (-excess of capacity in one
region). - Constrained Stations paid their Bid Price
- POOL Output Price (POP) PIP Uplift
- Uplift represented the additional charges
incurred to National Grid Company because of
System Constraints - Suppliers purchased Electricity at POP
23????????????? ??? A Review
- Need for strong Regulatory Body to ensure prices
were not fixed. - Evidence suggested price manipulation took place
in early years. - Regulator required major generators to dispose of
some stations. - The lack of Demand Side Bidding was a weakness
- Charges for Transmission Losses were averaged
over whole Network.
- Customers in North subsidise those in South
- Generators in South subsidise those in North
- Issue not resolved
24The changing face of the Electricity Market in
the UK
- A brief review of the UK Electricity Industry
prior to 1990. - ??????? ????? ????????? ??????????
????????????????? ????? ????????????? ? 1990 ? - The Electricity Markets in the 1990s after
Privatisation - ????? ?????????????? ? 1990 ? ????? ????????????
- The New Electricity Trading Arrangements
- ????? ??????? ??????? ???????? ????
- The Supply of Electricity since 1990
- ???? ?????????????? ? 1990
25The changing face of the Electricity Market in
the UK
- The New Electricity Trading Arrangements
- ????? ??????? ??????? ???????? ????
- The basic principles
-
-
- ???????? ????????
-
- Gate Closure and Final Physical Notification
-
- ???????? ??????? ? ????????????? ??????????
- ???????????
-
-
- The Balancing Mechanism
- ????????????? ????????
26????? ??????? ??????? ???????? ????
- The basic principles ???????? ????????
How does it differ from the Pool?
- Both Generating and Demand Side Bidding Takes
Place -
- Most Electricity (gt90) is traded outside NETA
Balancing Mechanism - NETA favours generators and suppliers who can
guarantee specific levels of generation/supply in
advance. - NETA favours generators and suppliers who can
guarantee flexibility in output / demand at short
notice.
27????? ??????? ??????? ???????? ????
- The basic principles ???????? ????????
How does it differ from the Pool? - continued
- Generators and Suppliers are penalised if they
deviate from their agreed level of generation /
supply. -
- System security is maintained via the Balancing
Mechanism ????????????? ???????? - Renewable Generators e.g. Wind and small CHP
(10 MW) can be adversely affected.
28????? ??????? ??????? ???????? ????
- The basic principles ???????? ????????
- Generation and Supply focuses on
- Balancing Mechanism ????????????? ????????
- (BM) Units
- Generating BM Units may be a single generating
set or a collection of small generating sets. - Demand BM Units may be a single large demand
consumer or a collection of small consumers. - Trading can take place between Generating and
Demand BM Units - Only the volume traded ( not price) has to be
notified.
29The New Electricity Trading Arrangements
- Gate Closure and Final Physical Notification
- ???????? ??????? ? ????????????? ??????????
???????????
- Each Generating or Demand BM Unit notifies System
Operator of the projected Volume of Electricity
to be Traded for each half hour period by 1100
on preceding day. - Initial Physical Notification (IPN)
- System Operator checks sufficient capacity is
available.
GATE CLOSURE ???????? ???????
- Initially 3.5 hours before REAL Time - later
reduced to 1 hour. - Final agreed Volumes to be traded noted before
Gate Closure. - Final Physical Notification (FPN) ??????????
??? ?????????? ???????????
30 The Balancing Mechanism ?????????????
????????
Summary
3.5 hours
1 hour
- Changes to contract position cannot be made
after Gate Closure - The Balancing Mechanism is operated after Gate
Closure to provide System Security
31The New Electricity Trading Arrangements ?????
??????? ??????? ???????? ????
The Balancing Mechanism ?????????????
????????
- To allow system to remain stable
- Too little electricity on the system
- Generators can OFFER to INCREASE output
- Suppliers can OFFER to REDUCE consumption
- If OFFER is agreed then Generators / Suppliers
are PAID for any electricity increased / reduced
under the OFFER.
32The New Electricity Trading Arrangements ?????
??????? ??????? ???????? ????
The Balancing Mechanism ?????????????
????????
- Too much electricity on the system
- Generators can BID to REDUCE output
- Suppliers can BID to INCREASE consumption
- If BID is agreed then Generators / Suppliers PAY
for any reduction in generation / increase in
demand under the BID.
33 The Balancing Mechanism ?????????????
????????
Generators / Suppliers may submit OFFERs or BIDs
which differ for different levels of deviation
from the Final Physical Notification
National Grid Company normally accepts OFFERS /
BIDS which are cheapest unless System Constraints
prevent this.
34 The Balancing Mechanism ?????????????
???????? What happens if System Operator has got
it wrong?
- OFFERs / BIDs cannot be cancelled
- UNDO BID removes an OFFER and is usually less
than the OFFER - UNDO OFFER removes a BID and is usually more
than the BID - OFFERs / UNDO BIDs or BIDs / UNDO OFFERs
are submitted in pairs
35????? ??????? ??????? ???????? ???? What happens
if a Generator / Supplier is out of balance?
- Unexpected changes in Demand
- Equipment Failure
- Generator / Supplier has too much electricity on
the system too much generation / too little
demand - charged for imbalance at System Sell Price
- Generator / Supplier has too little
electricity on the system too little
generation / too much demand - charged for imbalance at System Buy
Price
36????? ??????? ??????? ???????? ???? How well has
it performed since starting on 27th March 2001?
From OFGEM Review of First Year of
NETA Wholesale prices of electricity are now 40
lower than they were 5 years ago.
37????? ??????? ??????? ???????? ???? How well has
it performed since starting on 27th March
2001? Average Prices
From OFGEM Review of First Year of NETA
38????? ??????? ??????? ???????? ???? How well has
it performed since starting on 27th March
2001? Average Sell and BuyPrices
From OFGEM Review of First Year of NETA
39????? ??????? ??????? ???????? ???? How well has
it performed since starting on 27th March 2001?
Average OFFER and BID Prices for different
Generators
From OFGEM Review of First Year of NETA
40Impacts of Pool and NETA on one Coal Fired Power
Station
Fiddlers Ferry
- 2000 MW Coal Fired Station
- built 1971
- 110 MW Auxiliary Gas Turbines
- now only 55 MW of AGT
41Impacts of Pool and NETA on one Coal Fired Power
Station
- Coal
- Used to come from Lancashire and Yorkshire
- High Sulphur Content
- but
- Coal is cheaper from Poland and Russia and South
Africa - Low Sulphur Content
- Electro-Static Precipitators dont work
- Inject sulphur into exhaust gases.
- Labour Force
- Approximately 650 in 1989
- Now approximately 250 for same output
42The changing face of the Electricity Market in
the UK
- A brief review of the UK Electricity Industry
prior to 1990. - ??????? ????? ????????? ??????????
????????????????? ????? ????????????? ? 1990 ? - The Electricity Markets in the 1990s after
Privatisation - ????? ?????????????? ? 1990 ? ????? ????????????
- The New Electricity Trading Arrangements
- ????? ??????? ??????? ???????? ????
- The Supply of Electricity since 1990
- ???? ?????????????? ? 1990
43The Supply of Electricity since 1990 ????
?????????????? ? 1990
- Large Consumers (gt 1 MW)
- ??????? ???????????
- Intermediate Consumers (100 kW - 1MW)
- Domestic Consumers
- ??????? ??????????? (?????????)
44The Supply of Electricity since 1990 ????
?????????????? ? 1990
- Large Consumers (gt 1 MW)
- ??????? ???????????
- Before privatisation
- Could only purchase from the Local\Regional
Electricity Company (REC) supplier in their
region - After privatisation
- Consumers gt 1MW could purchase from ANY REC not
just their own regional Company (second tier
RECs).
- From 1994 Consumers gt 100 kW were included in
Deregulation
45The Supply of Electricity since 1990 ????
?????????????? ? 1990
- Domestic Consumers ??????? ???????????
(?????????)
Transition Arrangements to 1998 ???????? ?
?????????? ??????? ?? ?????? ?? 1998
Domestic Consumers did not benefit from
competition until September 1998. Prices to
Domestic Consumers were regulated according to
the formula RPI - X E F
RPI is a measure of inflation X was a factor
set by Regulator - initially 5 but later
reduced. E was an energy conservation factor
whereby costs of such measures could be
passed on to the consumer F was a levy designed
to promote exploitation of Renewables
46The Supply of Electricity since 1990 ????
?????????????? ? 1990
- Domestic Consumers ??????? ???????????
(?????????) - September 1998 - June 1999
Regions of England and Wales were progressively
Deregulated so that Domestic Consumers could
purchase their electricity from any
supplier. Implementation of Deregulation in
stages allowed any initial problems encountered
to be sorted out. After Deregulation, the RPI -
X E F formula no longer applied. To allow
new suppliers to gain a foothold, the existing
suppliers could not reduce their prices in their
own area for a further transition period of a few
years.
47????????????? ??? Supply Side
Domestic Consumers ??????? ???????????
(?????????) Post Deregulation
Prices to consumers have fallen. e.g. a Domestic
Consumer in East Anglia ?????????
?????? 7.48p (3.74 Roubles) per kWh before
1998 - now 5.62p (2.81 Roubles) per
kWh However, such savings only achieved by
those cutomers who have switched.
48????????????? ??? Supply Side
- Domestic Consumers ??????? ???????????
(?????????) - Tariff Structure ?????????
???????????
- The unit charge to the consumer has three
components. - The actual unit charge as determined by the
Supplier - A distribution charge (payable to local REC as
distributing company) which is same for all
suppliers in a region - A meter reading charge.
- The domestic consumer does not see these
different component parts on their bills.
49????????????? ??? Supply Side
Impact on Suppliers of Renewables Obligation
Certificates (ROCs) ??????????? ????????????
????????????? ?? ????????????? ??????????????
??????????
- Since April 1st 2002, all suppliers must
provide a minimum percentage of electricity from
renewable sources. - The percentage is set to increase each year to
10.4 by 2010. - Compliance is indicated by Renewable Obligation
Certificates. Failure to meet this requirement
incurs a fine at the Buy-out price - initial 3p
per kWh (1.5 Roubles per kWh) and rising in line
with inflation - currently 3.051p per kWh. - But-out fines are recycled to companies in
proportion to ROCs they hold - thus trading is
occuring in ROCs at a surcharge price as high as
4.8p per kWh (2.4 Roubles). - Domestic prices are set to rise slightly because
of this Renewable Obligation.
50Conclusions (1)
- Key Changes in Electricity Market in UK
- April 1st 1990 Privatisation Electricity
POOL Established - Large Consumers benefit from Deregulation
- 1994 Intermediate Consumers benefit from
Deregulation - 1998 All Consumers benefit from Deregulation
- 27th March 2001 NETA replaced POOL
- 1st April 2002 Renewable Obligation comes into
force - The POOL and NETA were not used in Scotland
The Future BETTA (British Electricity
Transmission and Trading Arrangements). It is
planned to extend NETA to include Scotland in
October 2004
51Conclusions (2)
- Key Changes in Electricity Market in UK
- Prices to consumers have fallen as a result of
Deregulation (up to 20 in some cases) - Wholesale prices of Electricity have fallen by
40 over last 4 years, and 20 since
introduction of NETA - Prices to consumers have changed little since
introduction of NETA - to early to see full
effect as prices by Suppliers only tend to
change once a year or so. - Most electricity gtgt 90 is traded outside
Balancing Mechanism Trading - NETA favours Generators / Suppliers who can
guarantee output / supply in advance - NETA favours Generators / Suppliers who can be
flexible to make adjustments during Balancing
Mechanism Trading.
52The changing face of the Electricity Market in
the UK
???????????? ???? ????? ?????????????? ? ????????
- Some Useful WEB Sites
- www.bmreports.com/ Up to date information of
NETA Market - www.ofgem.gov.uk/ The UK Regulator
- www.elexon.co.uk/ Documents and
Modifications to NETA - www.nationalgrid.com/uk/ The System Operator
- www2.env.uea.ac.uk/gmmc/energy/enpoint.htm
- the Energy Web Page at UEA giving links to many
Energy Web Sites in UK and overseas.
This presentation is available over Internet
at www2.env.uea.ac.uk/gmmc/energy/env2e02/NETA.ppt
53?.?.???? ?.?., ?-? ??????????? ???? ?????????
????????????? ???????????? ????????????
????????? ??????
k.tovey_at_uea.ac.uk
Energy Science Director Low Carbon Innovation
Centre
School of Environmental Sciences University of
East Anglia Norwich NR4 7TJ
54N. Keith Tovey, M.A. PhD, C.Eng MICE Energy
Sciences Director Low Carbon Innovation
Centre University of East Anglia Norwich NR4
7TJ k.tovey_at_uea.ac.uk
Will be aiming to reduce Carbon Dioxide Emissions
by 60 by 2025 Was launched on 21st May 2003
55School of Environmental Sciences University of
East Anglia
Oceanography
Climate Change
60 Faculty 50 Support Staff 120 Research
Workers 120 PhD Students 80 MSc Students 380
Undergraduates
Hydrology
Geology
Politics
Sedimentology
Economics
Geological Hazards
Energy
Risk
Resources
A 5 Research Department 4 International Research
Centres
56The changing face of the Electricity Market in
the UK
- A brief review of the UK Electricity Industry
prior to 1990. - ??????? ????? ????????? ??????????
????????????????? ????? ????????????? ? 1990 ? - The Electricity Markets in the 1990s after
Privatisation - ????? ?????????????? ? 1990 ? ????? ????????????
- The New Electricity Trading Arrangements
- ????? ??????? ??????? ???????? ????
- Some Implications for Renewable Generation and
Combined Heat and Power. - ??????????? ??? ????????? ?? ??????????????
?????????? ? ??? ????
57- The Supply of Electricity since 1990
- ???? ?????????????? ? 1990
- Large Consumers
- ??????? ???????????
- Domestic Consumers
- ??????? ??????????? (?????????)
- - Transition Arrangements to 1999
- ???????? ? ?????????? ??????? ?? ?????? ?? 1999
- Deregulation in the Domestic Market
- ?????? ????????????? ?? ????? ???????
???????????? - Tariff Structure
- ????????? ???????????
- Impact on Suppliers of Renewables Obligation
Certificates (ROCs)
58Some Implications for Renewable Generation and
Combined Heat and Power. ??????????? ???
????????? ?? ?????????????? ?????????? ? ??? ????
Most CHP Schemes in UK are small average size for
those under 10 MW is 650 kW
59Some Implications for Renewable Generation and
Combined Heat and Power. ??????????? ???
????????? ?? ?????????????? ?????????? ? ??? ????
- Small CHP Generators
- Often do not have resources to compete in
Trading - Rely on Suppliers who are not so keen to take
electricity as their Imbalance position might
be affected - Since 2000
- 61 reduction in output from small CHP
Generators after NETA - At same time have seen prices for fuel for
generators increase by around 14 - The few Trading in NETA saw reduction of 17 in
income
60Some Implications for Renewable Generation and
Combined Heat and Power. ??????????? ???
????????? ?? ?????????????? ?????????? ? ??? ????
- Wind Generation has been affected -
- cannot predict wind so cannot guarantee output
- cannot trade in Balancing Mechanism.
- In 2002 the Renewables Obligation will assist
Wind but there was one year before this was
introduced
- Consolidation of groups of small CHP units
together has been shown to reduce risk of NETA
trading. - However, only marginally improvements are
possible from consolidation of several Wind
Farms.
61Some Implications for Renewable Generation and
Combined Heat and Power. ??????????? ???
????????? ?? ?????????????? ?????????? ? ??? ????
District Heating
- CHP units using Pass Out Turbines should be
suited to NETA because of flexibility - In UK there are very few schemes like this 10
MW
62- The Supply of Electricity since 1990
- ???? ?????????????? ? 1990
- Large Consumers
- ??????? ???????????
- Domestic Consumers
- ??????? ??????????? (?????????)
- - Transition Arrangements to 1999
- ???????? ? ?????????? ??????? ?? ?????? ?? 1999
- Deregulation in the Domestic Market
- ?????? ????????????? ?? ????? ???????
???????????? - Tariff Structure
- ????????? ???????????
- Impact on Suppliers of Renewables Obligation
Certificates (ROCs)