1

WHOLESALE ELECTRICITY MARKET

AN OVERVIEW

By: Ag. Manager, Market Operations

2

Objectives

1. Appreciate the need and objects for the Power Sector Reforms

2. Have an overview of the WEM and current status

3. Understand the role of Market Operations Section

4. Opportunities and Prospects

3

Outline of Presentation

Brief History

Power Sector Reforms

The changing landscape

The Law

The Market

Prospects & Conclusion

4

Brief History

5History of Electric Power Generation

3 Main periods

Before Akosombo (1914 – 1966)

Hydro Years (1966 – mid 80’s)

Thermal complementation

6History of Electric Power Generation

1914 – 1930 Sekondi-Takoradi (1914) Koforidua (1925) Kumasi (1927) Evening supply Winneba & Swedru Tamale (1930) limited supply

1932 - 1955 Cape Coast Swedru Oda, Dunkwa, Bolgatanga Nsawam Keta32)

1956 - 1966 1956 – Tema Diesel (3 x 650 kW) 1957 – Ho power station 1961-64 - Tema power station 1966 – Akosombo (In 1967

Domestic demand was < 20% of installed capacity

1982 – Kpong Hydro 1997/99 – TAPCO 2000 - TICo VRA Tema Thermals 2012 - Asogli 2013 – Bui Hydro

7

Domestic demand

1967 – 540 GWh

1976 – 1300 Gwh

1980 – 1350 GWh

1984 - 1000 GWh

2004 – 6004 GWh

2010 – 9300 GWh

8

Power Crisis

The 4 major power crises in Ghana

1982 / 1983

1997 / 1998

2002 / 2003

2006 /2007

And now the 5th in 2012

9

Power Sector Reforms

10

Triggers for Reform

Insufficient and unreliable power

Policy shift by the World Bank

NO more concessionary loans for power infrastructure

development 

Need to attract private  investment to the

power sector

11Objectives of reforms

Improve quality & reliability of supply

Improve financial health of the utilities

Introduce competition in supply

Transparency in regulation

Encourage private investment Commercialization

of operations of utilities

POWER SECTOR REFORMSEstablishment of

EC & PURCOperationalized

GRIDCo

Commencement of Reforms

1994 1997 20082005

**Set up of GRIDCo

**Pursuant to The Energy Commission Act, 1997 (Act541) and the Volta River Development (Amendment) Act, 2005 Act 692

Launch of Grid Code

2009 2012

Phase 1 Market

Operation

2014

Launch of Market Rules

On-line Data submission + Dev’t of Rules

2015

13

The Changing Landscape

Electricity Industry

Makers MoversSystem Operator

GRIDCo

Transmission OwnerGRIDCo

UsersBulk Customers, ECG

& NEDCo

GenerationMix: Hydro & Thermal

BUI, VRA, TICO, CENIT, Sunon Asogli

TransmissionBulk System – High Voltage

DistributionMedium & Low Voltage

System

END USERS END USERS

Past

Government of Ghana

VOLTA RIVER AUTHORITY

OTHERS

Akosombo

KpongAsogli

OPEN ACCESS TRANSMISSION GRID

BULK CUSTOMERS

IPPs

CENIT

TICO

Others

VRA Thermals

WAPP

Bui

Government of GhanaPURC

ACT 538Energy Comm. ACT 541

Present

ECG NEDCo EPC

END USERS

GeneratorsLoad Serving

Entities

Scheduling

Dispatch

GRIDCo

Electricity suppliers

Electricity Purchasers

Private bilateral energy transactions

Spot Market

Settlement

The Future

18

The Law

19Legislative Authority for Market Operations

ETU is obliged to perform functions under the Energy Commission Act 1997, Act 541,

LI 1937 & LI 1934 National Electricity Grid Code and Electricity Market Rules

20

LI 1937 It establishes the Wholesale Electricity Market

to facilitate wholesale electricity trading and the provision of ancillary services

Provides the Market Structure comprising a Spot Market and Bilateral Contracts Market

It places the responsibility for the development of Market Rules with the ETU (GRIDCo)

21LI 1937 – The Challenges

Section 5 (2) states that Electricity generated from the Akosombo and Kpong hydro electric dams shall not be the subject for a bilateral contract

Market Participants are unwilling to sign PPAs with VRA and are not motivated to sign PPAs with other IPP’s

Clear guidelines would be required for the treatment of Legacy Hydro

22

LI 1937 – The Challenges (2)Section 7 (2) states that the spot market price for electricity shall be based on the system marginal cost of supply and merit-order dispatch

The EC proposes to price energy from Legacy Hydro at the SMC.

Lack of adequate reserve can result in high prices

23

The Market

24Introduction to Wholesale Electricity Market (WEM)

The purchase (by Bulk Customers) and sale (by generators) of electricity.

It exists when competing generators offer electricity (and ancillary services) to Bulk Customers.

GRIDCo is to develop, coordinate, control and monitor operations in the energy market.

What is a Market?

Anywhere buyers and sellers meet to transact business.

25

Why the Market?Will increase competition (Generation Side)

Breed efficiencyImprove qualityUltimately lead to reduction in priceIncrease customer satisfaction

Fundamental Requirements (WEM)Make electricity transmission independentEncourage more IPP generationCreate a marketplace for electricity & other services

26Who are the Market Participants?

Wholesale Suppliers – VRA, TICO, Sunon Asogli, CENIT Power, Bui Power Authority.

Distribution Utilities - ECG, Enclave Power, NEDCo

Bulk Customers – Mines, VALCO, Aluworks, Diamond Cement, etc.

NB: GRIDCo CANNOT be a Participant.

GovernanceMarket Regulation Market Monitoring

System Operation and Market

Administration

Market Participants

Energy Commission

Market Oversight Panel

ETU [GRIDCo] Transmission

Owners [GRIDCo]

Wholesale Suppliers

Load Serving Entities (LSEs)

PURC

Ancillary Service Providers

28

Responsibilities of Market Operations SectionDevelopment of the WEM

Market Manuals, standards, procedures and policies

Market Monitoring

Management of Transmission Service Agreements, Connection Agreements

Metering, Billing and Settlement

Stakeholder Engagement

29Current activities in the WEM Phase 1 Operations

Submission of load forecasts by Bulk Customers/Distribution companies

Submission of availability declaration by Generators

Development of the system load forecast & generation schedule for next day.

The WEM - How will it work? - 1

Least cost economic dispatch is met by first allowing buyers and sellers to act in their best interest under bilateral contracts.

Buyers and Sellers are in the best position to make purchase and sale decisions.

GRIDCo commits least cost generation to meet Spot Market requirements.

Regulators to ensure that the market is competitive

GeneratorsLoad Serving

Entities

Scheduling

Dispatch

GRIDCo

Electricity suppliers

Electricity Purchasers

Private bilateral energy transactions

Spot MarketSettlement

How Will It Work - Demand and Supply Components

Demand Requirement

MW

Operating Reserve Requirements

Forecast CapacityRequirement

Spot/Balancing

Forecast Energy Requirement

Bilateral Transactions Submitted to GRIDCo

GenerationSupply

33Next StepsDevelop new market rules based on approved Market Design

Develop Ancillary Services Market

Prospects & Conclusion

The Market is the way forward

It is important to get things right the first time

There are opportunities inside and outside of

GRIDCo

35

THANK YOU

36

37

38

39

40

Defines the National Interconnected Transmission System (NITS),

Establishes requirements, procedures, practices and standard to develop, operate, maintain and use of the NITS,

Establishes the Utility as the Independent Operator of the NITS

Set rules that applies to all persons connected to the NITS ( Grid Participants)

Sets obligations for the Utility and Grid Participants Establishes the Grid Code

Legislative Instruments

LI 1934