{"id":200,"date":"2020-05-29T09:35:32","date_gmt":"2020-05-29T08:35:32","guid":{"rendered":"https:\/\/blogs.ncl.ac.uk\/supergenenhub\/?p=200"},"modified":"2021-07-07T13:16:09","modified_gmt":"2021-07-07T12:16:09","slug":"how-should-the-security-contribution-of-interconnectors-be-calculated","status":"publish","type":"post","link":"https:\/\/blogs.ncl.ac.uk\/supergenenhub\/2020\/05\/29\/how-should-the-security-contribution-of-interconnectors-be-calculated\/","title":{"rendered":"How Should the Security Contribution of Interconnectors be Calculated?"},"content":{"rendered":"\n

Feedback provided to BEIS Panel of Technical Experts on ‘Modelling de-rating factor ranges for interconnected countries in the capacity market in the 2020 Electricity Capacity Report’<\/p><\/blockquote>\n\n\n\n

The GB capacity market is designed to ensure that there is\nenough electrical generating capacity to meet peak demands. Approximately \u00a3700\nmillion was allocated in the \u2018T-4\u2019 capacity auction in 2020, with the portfolio\ncovering a range of technologies, including renewables, demand side response,\nand interconnectors. With the total capacity of electrical interconnectors doubling\nto more than 20% of peak demand in the next five years, they can and do make a\nsubstantial contribution to GB system security.<\/p>\n\n\n\n

Determining a monetary value for the security contribution of interconnectors is difficult compared to that of either conventional or renewable capacity, as interconnectors can both increase and reduce system demands. Earlier this month, the Supergen Energy Network (SEN) Hub responded to a call for feedback from the Electricity Market Reform (EMR) Delivery Body on the methodology for calculating interconnector de-rating factors (a link to our response<\/a>). The call is of interest to the SEN hub as it lies at the intersection of network operation with \u2018Markets and Regulation\u2019 and \u2018Risk and Reliability\u2019 work packages.<\/p>\n\n\n\n

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Table 1: Total interconnector capacity is projected to increase from 4 GW at the start of 2019 to more than 11 GW by the end of 2022. Source: OFGEM<\/a> <\/figcaption><\/figure>\n\n\n\n

What is the GB Capacity Market for?<\/h2>\n\n\n\n

The UK Government\u2019s EMR reforms of 2013 attempts to solve\nthe \u2018missing money\u2019 problem in medium term planning of power systems. The\nproblem states that energy-only markets fail to incentivise the building of\ngeneration due to the marginal cost of energy (in \u00a3\/MWh) being too low when the\nsystem margin is tight. The EMR introduced a number of reforms to incentivise the\ninvestment in capacity required to meet system peaks, one of which was the GB\ncapacity market.<\/p>\n\n\n\n

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Figure 1: GB half-hourly transmission system demand for December 2019. As well as providing energy, interconnectors provide value by being responsive to peaks when they occur. <\/figcaption><\/figure>\n\n\n\n

For conventional generators (such as nuclear or gas), the method of calculating the capacity market value of a generator is relatively straightforward. Historic data from forced outages (periods where plant is unable to supply power due to unexpected equipment failure) are collected; from this, an overall de-rating factor is calculated based on the likelihood of a generator being unavailable during a system peak. A similar method can be used for renewable generators, based on the coincidence of meteorological patterns and demand. Generators are then paid in proportion to their de-rating factor.<\/p>\n\n\n\n

How are the Interconnectors accounted for in the analysis?<\/h2>\n\n\n\n

Interconnectors are treated in a similar way in the\ncalculation of their contribution to security, using de-rating factors.\nHowever, interconnectors are generally more complex than generators, with power\nflows largely driven by price differentials. For example, nuclear power on the\nFrench system tends to be inexpensive compared to gas turbines that are common\nin the GB system, and so the GB system frequently imports through the French\ninterconnector. On the other hand, if the energy price is higher on the French\nsystem (perhaps due to unforeseen nuclear generation outages) then the\ninterconnector is likely to export to France, potentially reducing security.<\/p>\n\n\n\n

The EMR Delivery Body models the countries to which the GB\nsystem is connected using an \u2018economic dispatch model\u2019. Prices during system\nstress events are estimated and the resulting flows used to determine interconnector\nde-rating factors. The model uses many decades of weather data, allowing the\nimpact of increasing penetrations of renewables in future years to be factored\nin.<\/p>\n\n\n\n

The estimation of de-rating factors for interconnectors\nacross many countries years into the future makes for a very challenging modelling\ntask. Whilst the approach used by the EMR Delivery Body has only been presented\nat a high level (i.e., with few technical details), there were two issues which\nwe identified and highlighted in our response. These points were based on a\ncombination of our understanding of these high-level details (as described here<\/a>)\nand the published capacity market rules.<\/p>\n\n\n\n

What was our feedback?<\/h2>\n\n\n\n

We considered their approach using the principle of\nparsimony: a model should be as concise as possible, whilst still being able to\nexplain all significant phenomenon. Implicitly, this requires a judgement of\nwhat constitutes the main \u2018thing\u2019 that a model is trying to predict or explain.<\/p>\n\n\n\n

It follows, therefore, that the method should be validated\nagainst the model out-turn (the \u2018reality\u2019 the model is predicting). In this\ncase, the out-turn is the expected flows of interconnectors during formal system\nstress events up to five years in the future. Only a validation against an\napproximation of this reality is likely to be meaningful, not least because\nthere is yet to be a formal system stress event, but also because there are\nmany exogenous factors (e.g. transmission constraints) which can have a\nsignificant impact on resultant power flows.<\/p>\n\n\n\n

This point is particularly relevant as, until last year, the\ncapacity market rules stated that the economic dispatch model should be\ncompared against an historic benchmark. There are several reasons as to why\nthis hindcast-based approach is not advisable \u2013 for example, the generating\nfleet in countries such as Germany is due to change significantly in the next\nfive years. However, it is our view that the outputs of a model should still be\nvalidated publicly, with decision makers made aware of the method of validation\nand the results. The validation could be, for example, against periods of high\nLoss of Load Probability (LOLP), or some other indicator of system stress. <\/p>\n\n\n\n

The second point we raise is on a similar topic. If you do<\/em> compare historic interconnectors\nflows against the LOLP, it appears to be the case that some countries tend to\nexport when the LOLP is high, whilst others tend to import. (Exports during\nstress periods could occur, for example, if two countries have highly\ncorrelated peak demands.) As a result, some interconnectors may in fact be\ntending to diminish the system security, even if most interconnectors are\nimproving security. The capacity market rules do not explain how this effect\ncould be taken into account in the analysis. Our judgement is that this is a\nmajor part of the \u2018reality\u2019 of interconnectors, which should therefore be\nrecognised by the method.<\/p>\n\n\n\n

What is the future for interconnectors within the GB system?<\/h2>\n\n\n\n

Generally, it is known that interconnectors provide huge benefits to the GB system. Social welfare benefits of interconnectors are measured in hundreds of millions of pounds per year, with strong evidence of positive impacts in terms of reduced system carbon intensity and increased network resilience. It is important, however, for methods of remuneration within the capacity market be made robust, so that decision makers and investors can be fully informed as to their value within the system, both today and in the future.<\/p>\n\n\n\n

Read<\/a> our response submitted to BEIS\u2019 Panel of Technical Experts (PTE)<\/p>\n\n\n\n

Author Bio<\/h2>\n\n\n\n
\"\"<\/figure><\/div>\n\n\n\n

Dr Matthew Deakin is a postdoctoral research associate with the Supergen Energy Networks Hub at Newcastle University. His research interests include whole energy systems analysis, power system planning and operations, and smart grids.<\/p>\n\n\n\n

Additional contributions to this post were made by Sarah\nSheehy (Durham University), Dr David Greenwood (Newcastle University), Prof.\nFurong Li (University of Bath), Dr Robin Preece (University of Manchester), Dr\nSara Walker and Prof. Phil Taylor (Newcastle University).<\/p>\n","protected":false},"excerpt":{"rendered":"

Feedback provided to BEIS Panel of Technical Experts on ‘Modelling de-rating factor ranges for interconnected countries in the capacity market in the 2020 Electricity Capacity Report’ The GB capacity market is designed to ensure that there is enough electrical generating capacity to meet peak demands. Approximately \u00a3700 million was allocated in the \u2018T-4\u2019 capacity auction … Continue reading How Should the Security Contribution of Interconnectors be Calculated?<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":6716,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-200","post","type-post","status-publish","format-standard","hentry","category-uncategorised"],"_links":{"self":[{"href":"https:\/\/blogs.ncl.ac.uk\/supergenenhub\/wp-json\/wp\/v2\/posts\/200","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.ncl.ac.uk\/supergenenhub\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.ncl.ac.uk\/supergenenhub\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.ncl.ac.uk\/supergenenhub\/wp-json\/wp\/v2\/users\/6716"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.ncl.ac.uk\/supergenenhub\/wp-json\/wp\/v2\/comments?post=200"}],"version-history":[{"count":3,"href":"https:\/\/blogs.ncl.ac.uk\/supergenenhub\/wp-json\/wp\/v2\/posts\/200\/revisions"}],"predecessor-version":[{"id":335,"href":"https:\/\/blogs.ncl.ac.uk\/supergenenhub\/wp-json\/wp\/v2\/posts\/200\/revisions\/335"}],"wp:attachment":[{"href":"https:\/\/blogs.ncl.ac.uk\/supergenenhub\/wp-json\/wp\/v2\/media?parent=200"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.ncl.ac.uk\/supergenenhub\/wp-json\/wp\/v2\/categories?post=200"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.ncl.ac.uk\/supergenenhub\/wp-json\/wp\/v2\/tags?post=200"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}