According to provisions for system responsibility in the power system (FoS), Statnett shall define Elspot/Elbas areas (§5) as part of managing:
- Major and long-term operational congestions occurring in the regional and central grid system.
- Foreseen energy deficit situations in defined geographical areas.
We expect that both physical grid framework and market design factors will undergo significant development in the coming years. Statnett has to see all changes as a whole in order to:
- Always have a suitable area division on short and long term.
- Minimize the number of area changes in each geographical area. This has also been an important feedback from the market participants.
Statnett has found that the best way to provide predictability on this issue is to make a prognosis on how we foresee the area division for the next years. The prognosis will be updated when needed. The detailed information about individual changes will be published in separate Exchange Informations.
This prognosis will cover the expected changes from 2015 to approximately 2020. Failures, energy deficit situations, changes in commissioning dates or other new information could change the prognosis or lead to area divisions that are not mentioned in the prognosis.
The changes in the Norwegian power system that are taken into account in this prognosis are:
- New 420 kV Ørskog-Høyanger and Høyanger-Sogndal (NO3-NO5)
- New 420 KV Namsos-Storheia and large scale wind on the coast of Trøndelag (NO3, NO4)
- Southern Norway with new HVDC-connections (NO2)
- Potential increase in industrial consumption in Sunnhordland (NO2) and Finnmark (NO4)
- Nordic Balance Settlement and introduction of Metering Grid Areas
- Flow Based Capacity Management
1. New 420 kV Ørskog-Høyanger and Høyanger-Sogndal
In Exchange Information 24/2013 Statnett published the following:
"Due to the planned commissioning of the new 420 kV line between Ørskog and Høyanger in the North-Western part of Norway, a change in the Norwegian Elspot/Elbas area definitions will take place during 2015. The current interface between areas NO3 and NO5 will be moved from the 132 kV double busbar at Åskåra to the 132 kV lines Mel-Fardal and Høyanger-Fardal."
As of March 2015, the matter of legal access to the construction site of a section of Ørskog-Høyanger is still in litigation, and the completion date of both Ørskog-Høyanger and Høyanger-Sogndal depends on the progress of the legal proceedings. The triggering factor for moving the area interface is, as stated in the Exchange Information, the completion of 420 kV Ørskog-Høyanger. As a result, the consequential adjustment of the interface between NO3 and NO5 will be equally postponed. This interface configuration remains the most likely also after the commissioning of 420 kV Sogndal-Høyanger.
2. New 420 KV Namsos-Storheia and large scale wind on the coast of Trøndelag
The coast of the Trøndelag region has been identified as an important geographical centre for investment in large-scale wind power in Norway, and approximately 1000 MW of production capacity is under development. Construction of a new 420 kV connection will be necessary in order to receive any significant new production in the Fosen and Snillfjord area.
The first step of a development process will be the commissioning of a radial 420 kV connection from a new substation Storheia to existing substation Namsos. With a substantial production infeed in Namsos the predominant bottleneck between NO4 and NO3 will move southwards compared with today. Namsos is currently the northernmost substation in NO3, with a connection to Tunnsjødal in NO4. In order to reflect the planned shift in local power balance in Namsos, and to allow a controlled flow in the Namsos-cut, our assessment is that Namsos substation and the radial connection to Storheia have to be moved to NO4.
As such, and according to the current time schedule, the interface between NO4 and NO3 will from 2018 be 300 (420) kV Namsos-Ogndal and 300 kV Tunnsjødal-Verdal. We emphasize the aspect that the triggering factor for moving the area interface is the commissioning of large-scale wind power connected to a new 420 kV line Storheia-Namsos, and that delays in these projects will equally postpone an area adjustment.
3. Southern Norway towards new HVDC-connections
By 2020, new HVDC-connections to Germany and Great Britain are expected to be in commercial operation. The landing site on the Norwegian side of both cables will be in present-day NO2, in Tonstad (Ertsmyra) and Kvilldal respectively. The plan to upgrade the domestic AC-grid schedule completion prior to the HVDC-connections. With an upgraded 420 kV grid in all corridors in southern Norway, there is limited need for capacity reductions in a state of normal operations.
Years 2015 to 2020 will however be characterized by regular reductions in trade capacity, as extensive outage periods related to grid upgrade will cause bottlenecks to occur. Given the need for a restrained power flow towards the existing HVDC-cables, we are considering three possible alternatives aimed at managing the expected bottlenecks:
a. The current practice, including reductions directly on the HVDC-connections.
b. Splitting NO2 into two sub-areas, defined by the most dominant limitation scenario.
c. Introduction of a sum limitation valid for the HVDC-connections, inspired by the NO1A and DK1A
Further analysis is necessary before a decision can be made. The result will eventually be published to the market via UMM.
4. Potential increase in industrial consumption in Sunnhordland and Finnmark
Depending on the financial circumstances, significant new industrial consumption could be realized in the regions of Sunnhordland in the western part of Norway (NO2), and Finnmark in the north (NO4). Timelines for potential investment and commissioning are still subject to some uncertainty, but it is clear that completion of a majority of the projects will lead to capacity shortage in the regional grids in question.
We believe that the long-term solution to grid capacity issues in both regions is grid reinforcement. However, due to considerable lead times in grid development, it might be necessary to investigate other means of facilitating a more rapid growth in consumption. A customized Elspot area structure could theoretically serve as one of several temporary solutions.
To determine the feasibility of an Elspot area, we have to consider a number of factors. A functioning area must:
a. Have a good balance between consumption, production and exchange capacity. In other words, an area
with a lot of production and very little consumption has to have a reasonably high exchange capacity.
b. Be able to solve the given bottleneck issue. There is no point in establishing an area if it has no real
influence on the issue at hand.
c. Have production distributed among a number of independent market participants. No single production
unit or market participant should be able to control pricing of an area.
d. Have a sufficient amount of flexible production. An area largely comprised of production capacity from
wind, solar or run-of-river will not be able to distribute resources corresponding with the variation in daily
and yearly consumption.
e. As far as practically possible, Elspot areas should not divide river systems. Two hydro-related generating
units divided between two different Elspot areas run the risk of facing contradictory price signals causing
impossible production schedules.
The areas in question meet criteria a., b. and e. fairly well, but both have a limited amount of flexible production, causing price formation to depend on just a couple of market participants.
The majority of production capacity in Sunnhordland is divided between a CCGT power plant and a wind farm facility. In this case, one producer in effect controls the entire flexibility. In Finnmark, inflexible wind and run-of-river hydro constitutes a large share of the production capacity, although distributed among a handful of market participants. In addition, the demand and supply situation varies greatly depending on the hourly, daily and seasonal changes in temperature, wind and inflow.
In both cases, it is reasonable to believe that the absence of flexibility would lead to very volatile prices.
Based on these considerations it is our conclusion that establishing local Elspot areas will not be a suitable short-term solution to potential grid capacity issues in the discussed regions.
5. Nordic Balance Settlement and introduction of Metering Grid Areas
Norway is set to implement the harmonized Nordic balance settlement model in April 2016. The metering methodology of this model requires the introduction of Metering Grid Areas that cannot be divided between two Elspot areas. As a direct consequence, Elspot interfaces can no longer be located to busbars. In the existing area structure both NO1-NO3 and NO5-NO3interfaces are partly defined by busbars, and have to be relocated. Information about new locations will be published separately.
6. Flow Based Capacity Management
The European network code Capacity Allocation and Congestion Management (CACM) states that Flow Based Capacity Management should be the preferred method for capacity calculations, and Statnett is working to realize the outline of the code within the specified timeframe. Studies to identify the most efficient area structure within the Flow Based framework have not yet been conducted, but it is possible that the introduction of Flow Based methodology will lead to changes in the Elspot area structure.
Maintaining an equivalent or improved level of transparency and market information is an important purpose of the network code. As NTC capacity values no longer will be available in the existing form, creating a new context for sharing and interpreting market information will be a major task in the Flow Based implementation process. Examining the Elspot area structure and constructing a method for communicating its characteristics could be a part of this process. Conclusions will be presented to the market as soon as a decision is made.
Lysaker, 8 April 2015
For further information, please contact Statnett:
Tom Tellefsen, Senior Vice president, System operation, + 47 90 53 68 27
Idar Gimmestad, Department Manager, National Control centre, + 47 99 54 88 19