price of electricity in spain. comparison with europe

PRICE OF ELECTRICITY IN SPAIN COMPARISON WITH EUROPE .

1

§  Liberalization of the Spanish electrical system .

Regulatedmonopoly(un0l1998)

• Oneorseveralagencies,underthecontrolofthegovernment,performalltheac7vi7esforproduc7on,distribu7onandtransporttheelectricalenergy.

•  Singlerateregulated.

Liberalizedmarket(since1998)

•  Separa7onofac7vi7es,betweennaturalmonopoliesandac7vi7esincompetence.

•  Freedomtochoosesupplieraccordingtoprice.

•  Improvetheefficiency,competences,andsecurityofthesystem.

•  Decreasethecostoftheelectricity.•  Safeguardtheinterestofconsumersensuringthetransparencyofthetransac7ons.

2

Price of the electricity in Spain Comparison with Europe INTRODUCTION

Naturalmonopoly•  Transport,thenetworksbetween400kVand220kV,alsoincludesinterna7onalnetworks

• Distribu7on,thenetworkswithlowerthan132kVconnec7ngthetransportnetworkwiththeconsumers.

Ac0vi0esincompetence• Genera7on,regardingalltheelectricalproduc7on.

• Commercializa7on,salesofenergytofinalconsumers/clients.

§  Agents and activities .

3


•  EconomicCoordina7on:Thisac7vityisperformedbytheMarketOperator(OMIE)thatreceivesbidsforthesalesofenergy,setsthepricefortheenergydistributed.Further,duetoimportantexchangeofenergybetweenSpainandPortugal,existamarketoperatorcontrollingbothsystems(OMEL).

•  TechnicalCoordina7on:Thisac7vityisperformedbytheSystemOperator(REE)thatverifytheprogramofthemarketoperatorandperformnecessarycorrec7ons.Atlast,performthemonitoringoftheelectricalsysteminreal7me.

Naturalmonopoly

4


•  Theelectricaldemandismanifestedbyagroupofconsumersofdifferentsizeandwithdifferentuseoftheelectricity.

• Althoughtheuseoftheelectricitydependsofthedecisionsoftheconsumers,ithasaregularandpredictablebehavior.

• Astheelectricityisdifficultandexpensivetostore,itmustbeproducedasitisconsumed.


§  Characteristics of the electrical demand .

5

•  TheSpanishelectricalreportsystemproducedin2016byREE,indicatesthedemandcoveragewasinthefollowingorder:

•  Thepricesofenergyproducedbydifferenttechnologies,isshownfromthecheapertothemostexpensive:renewable,nuclear,coalandcombinedcycle.

•  Cheaperproduc7onofenergy,many7mes,needsexpensivetechnologiesfortheregula7onofthesystem,andalsonotalwaystherenewablesareavailable.

§  Electrical generation in Spain .

6


SPANISH WHOLESALE ELECTRICITY MARKET .

7

•  CentralizedTraining Poolmarketmodel•  DecentralizedTraining Bilateralcontracts

Price of the electricity in Spain Comparison with Europe WHOLESALEELECTRICITYMARKET

§  Market reference models .

•  BILATERALCONTRACTS:

•  POOLMARKET:

Inthecentralizedmarketthepoolistheuniquebuyerforthesellerandtheuniquesellerforconsumers.

Inthebilateralcontractmodel,producersandconsumersdefinebilaterallytransac7onsindependentlyandprivately

8

Price of the electricity in Spain Comparison with Europe WHOLESALEELECTRICITYMARKET

§  Market reference models .

POOL MARKET MODEL .

10

• Electricityistradedusingastandarduniformauc7onmodel,workinginasymmetricmanner:

• Alltheen77esabletosellanamountofpower(notlinkedintobilateralcontract)submittheirproduc7onbidsandthecorrespondingmarketpricesbythehours(delivering7me.) OFFERBIDS

• Buyers,whoareelectricityconsumersandelectricitydistribu7oncompanies,submitbidsforanamountofneededelectricitywiththecorrespondingpriceforeachhour.

DEMANDBIDS

Price of the electricity in Spain Comparison with Europe

§  How does it work? .

POOLMARKETMODEL

11

• Bidsclassifica7ons:

Simplebids• OfferBids:

Complexbids

• DemandBids


§  Aggregate curves .

POOLMARKETMODEL

12

•  Oncethedemandandtheofferbidsarepresented,themarketoperatorassemblesthebidstocreatetheaggregatecurves.

•  TheaggregatecurvesarecreatedbyusingaMeritordermethod: Theaggregatedemandcurveisorganisedintermsofenergy-price,fromthemostexpensivetothecheapest.

Theaggregateoffercurveisorganisedintermsofenergyprice,fromthecheapesttothemostexpensive.


§  Aggregate curves -Matching method .

POOLMARKETMODEL

13

• Overlappingthetwocurvescreatedtheresultwillbethemee7ngpoint.

• Theme7ngpointestablishesthequan7tyofenergytobeexchanged(EQ)andthepriceoftransac7on(EP):

Allthesellingbidswithapricelessthanthemarginalpriceareaccepted,theothersarerefused. Allthebuyersofferswithapricegraterthanthemarginalpriceareaccepted,theothersrefuse.


§  Aggregate curves - Matching method .

POOLMARKET

14

• Allthetransac7onswillbeexecutedaccordingtotheMEETINGPOINT:

Eachbuyerwillpaythepurchaseamountofenergyatthepriceofthemee7ngpoint(EP). Eachproducerwillreceiveanamountcorrespondingtothepriceofthemee7ngpoint(EP).

1.  Un7l12pmthemarketoperator(OMIE)receivesbidsofsaleandpurchase,byproducersandtraders,forallthehoursofthenextday.ThedatesofthetableareforahourHofthedayD.

Price(R/MWh)

Supply(MWh)

GeneratorCompany

Price(R/MWh)

Demand(MWh)

TradersCompany

12 200 Red 25 200 Orange

13 100 Blue 23 100 Yellow

15 50 Red 22 150 Purple

16 150 Green 13 50 Yellow

17 50 Green 11 50 Purple

18 50 Blue 10 50 Orange

20 50 Red

§  Example .

15

Price of the electricity in Spain Comparison with Europe POOL

2. Theintersec7onofthedemandandsupplycurves,setthemarginalpriceofthesystemandtheenergyexchanged.Inthiscase,16R/MWhand450MWh.Suppliedenergyfromallproducerswillsellatapricelowerorequaltothemarginalprice,atthesame7metheenergyreceivedbythebuyersissetatapricegreaterorequalthanthemarginalprice.

§  Example .

Price of the electricity in Spain Comparison with Europe POOL

16

TIMING SCHEDULE OF THE MARKET .

17

Ø Theprocessstartsonedaybeforeday(D-1),andlastsun7ltheday(D)

4.1. Market rules 17

the congestion will have a higher clearing price, whereas the area upstream of the congestionwill have a lower pool price.

Market splitting is the congestion management method for day-ahead capacity allocation usedbetween Portugal and Spain. When congestion happens, energies from both zones of MIBEL areintegrated through the market splitting procedure and instead of having one single equilibriumprice (MIBEL) there are two separate prices (one for Spain and one for Portugal).

4.1.5 Price structure

Once the daily programming horizon is established, different processes from the market areperformed during the previous day (D-1) and the day (D) for which the demand has to becovered. Figure 4.4 illustrates all the steps of this procedure, so that generation and demandcurves are optimally adjusted [OME07].

Figure 4.4: Price structure of the Spanish electricity market. Own elaboration. Source: OMEL

Day D-1

Simple matching method

The simple matching method obtains for each hour the marginal price and the volume of elec-tricity that is accepted for each production and purchase unit. Selling bids are ordered upwardsstarting at the lowest price, whereas demand bids are ordered downwards starting at the highestprice. Once the aggregate supply and demand step curves are built, the market price is fixed as

Price of the electricity in Spain Comparison with Europe MARKET‘STIMINGSCHEDULE

18

§  Time line structure .

Ø Twooperatoractorsinvolved:-MarketOperator(OMEL)-SystemOperator(REE)


§  Operators .

19

Ø Mostofthepowertransac7ons,around80%ofthefinalpowerØ Eachdayisdividedinto24hourlyperiods.Ø Foreachof24hourlyperiods,priceswillbedeterminedbythematchingmethod

Ø DAILYMARKETØ Before11:00a.m.buyer’sandseller’sbidsareoffered

-  Simplematchingmethod:

-  Complexmatchingmethod

-Simplebids-Complexbids

18 Chapter 4. Empirical Model

the point where both curves meet (see Figure 4.5). Then, as a result of what is called market-clearing algorithm (more details in subsection 4.3), the market price and a batch of acceptedproduction and consumption bids are set every hour. The market price is the price of the lastunit of the last bid whose acceptance has been required in order to meet the demand that hasbeen matched (the unit with the highest price). All supply bids offering prices lower than theestablished market price and all demand bids offering prices higher than the market price willbe accepted.

Figure 4.5: Day-ahead market matching procedure for one hourly period. Own elaboration. Source:OMEL

This mechanism is repeated every hour and it affects the daily programming schedule corre-sponding to the day after the deadline date for the reception of bids for the session, and com-prising twenty-four consecutive programming hours (twenty-three or twenty-five periods ondays on which the clocks are changed).

Complex matching method

Once the simple matching method has been applied, the market operator executes the simpleconditioned matching, finding a solution which complies with the conditions derived from thecomplex bids, except the minimum income condition (it satisfies the conditions of indivisiblebids, the restrictions derived from the load gradient and the conditions of planned stoppage).

Afterwards, the minimum income restriction is added in an iterative procedure which performsseveral simple conditioned matchings. The process works as follows: all sale bids correspond-ing to production units that do not comply with the minimum income condition are successivelyeliminated until all the sales bids corresponding to the production units considered in the so-lution satisfy the condition. This process is called complex matching and marginal prices aredetermined. This is the first provisional solution and it represents the day-ahead market price("Programa Básico de Casación", PBC).

PBC(“ProgramaBásicodeCasación”)provisionalsolu7on,whichrepresenttheday-aheadmarketprice.


§  Day D-1 Daily Market .

20







Day D-1



§  Day D-1 .

21








Day D-1



§  BilateralcontractsOncethesimpleandcomplexmatchingprocedureshaveconcluded,themarketoperatoraddsthena0onalbilateralcontractsinordertofindthePBF

PBF:-representsthehourlyproduc7onanddemandscheduleonthenetwork

-determinatesthehighestquan7tyofpowerproduc7onrequiredtocovertheelectricitydemand.

PBF(“ProgramaBásicodeFuncionamiento”)

§  Day D-1 .








Day D-1



§  Technicalrestric0ons

Ø LastprocessperformedtodeterminethepriceoftheDAILYMARKETØ Toverifytheenergysupplyistechnicallyfeasible,becausePBFisbasedonanunlimitedcapacityininterna7onalinterconnec7ons.

Ø Solu7onprocedure:thesystemoperatoragreesthewithdrawalofblocksofsaleorpurchasebidsaffectedbytechnicalconstraints

Thenit’sobtained: PDVP(“ProgramaDiarioViableProvisional”)


§  Day D-1 .

23

Intradaymarket:

Ø AdjustmentmarketØ LastresortresellersØ Organizedin6sessionsduringthedaysD-1andDØ Theamountofenergymanagedismuchlowerthaninthedailymarket.Ø Thematchingmethodisthesameasinthedailymarket







Day D-1



Modelos de subastas. Mercado mayorista español 41

El mercado español

Mercado intradiarioLas ofertas simples contienen un precio y una cantidad de energía para cada hora, pudiendo incorporar, opcionalmente, condiciones complejas. Dichas condiciones pueden ser las siguientes:

Gradiente de carga.

Ingreso mínimo o pago máximo.

Aceptación completa en la casación del tramo primero de la oferta.

Aceptación completa en la casación en cada hora del tramo primero de la oferta.

Mínimo número de horas consecutivas de aceptación completa del tramo primero de la oferta.

Energía máxima.

Modelos de subastas. Mercado mayorista español 42

El mercado español

Mercado intradiario• Sesiones del mercado intradiario:

9 h13 h17 h20 h24 h28 hHorizonte

14:2010:2006:2003:2023:2019:35Publicación PHF

12:4508:4504:4501:4521:4517:45Hora Cierre

12:0008:0004:0001:0021:0016:00Hora Apertura

6ªsesión

5ªsesión

4ªsesión

3ªsesión

2ªsesión

1ªsesión

§  Day D Intraday Market .

24


§  Day D - Intraday Market .

25


Ø  Technicalrestric0ons:anotherrevisionoftechnicalconstraintsshouldbedoneonordertoguaranteesupplyquality.

Thereareafewlaststepstoensurethatenergyissuppliedundercondi7onsof:anddemandsarebalancedatall7mes.







Day D-1



-quality-reliability-security

§  Day D .

26


Ø  Thesystemoperatorcontrolinreal7methenetworkusing:•  Ancillaryservices•  Devia0onmanagement







Day D-1



PHF(“Programahorariofinal”)

§  Final price .

27


PHF(“Programahorariofinal”)


§  Final price .

28

29


30


31


Price of the electricity in Spain Comparison with Europe PRICEOFELECTRICITYINEUROPE

PRICE OF ELECTRICITY IN EUROPE .


§  Europe Markets .

•  The Central European countries, such as Germany, FranceandNetherlands,adoptamarketdesignsimilartoSpain,inusingacentralizedmarketiden7fiedwithapoolmarket

•  Foreachhour,withtheauc7onthepriceisset.InUK,theauc7ontakesplaceeveryhalfhour.


§  Price in central Europe .


•  Themostdevelopedandsophis7catedelectricitymarketinEuropeistheGermanmarket,amarketdesignthatsupportsbilateralcontracts(producers-consumerscontracts).

•  Franceenergyproduc7onisalmosten7relybasedonnuclearpowerplantswithverylowflexibility.Franceisaveryimportantsellerofenergydueto58nucleargenera7ngsta7onsthatonen,generatemorethantheneed.

•  Electricalinterconnec7onsfavorthereduc7onofpricesbyallowingtheflowof

electricitytomarketswithhigherprices.

§  Price in central Europe .

•  ThemarketinnorthEuropeiscalledNorthPool.•  Inthismarket,par7cipateNorway,Finland,andtheBal7c

countries.,withmarketconcerinauc7onsofbidofsuppliesandbidsofdemands.

•  Inthesecountries,thesystemisbasedinpool,thesystemisbasedinhydropowerby95%.


§  Price in North Europe .


§  Electricity prices for household consumers, second half 2015 (EUR per kWh) .

Ø  Germany is the second country with the higher price of electricity Germanyhaseliminatedthebasicenergyneedsbasedinnuclearenergy,andhaschangedthisbasicenergyneedsinrenewableenergy.Thecostoftherenewablehasincreasedthepriceofthefaretothesmallconsumersduetotheincen7vesthatthegovernmenthastopaytotheproducersofthistypeofenergy.


In spite of the European economical crisis and that the consumer consumed less energy, the price of the energy in Europe raised year after year for the small consumers. However, the price of the electricity was lower in the wholesale market, this is caused for the incentives to the renewable energies.


•  PCR(pricecouplingofregions)istheini7a7veofsevenEuropeanPowerExchangestoharmonisetheEuropeanelectricitymarkets.

•  Theobjec7veisequalizethepriceoftheelectricityinthisregionsofEurope.


§  PCR project .

https://www.electricitymap.org/


q Websites:•  RedEléctricadeEspaña,www.ree.es•  OMIE,www.omie.es•  nergiza.com/que-es-el-pool-electrico/•  antonionarejos.wordpress.com/2012/10/04/como-funciona-el-pool-electrico/•  blog.gesternova.com/como-funciona-el-pool-electrico-incluso-lo-vas-a-entender•  mifacturadeluz.com/funcionamiento-del-pool-electrico/

q Documents:

•  Regula7onofElectricalSystems,JulioUsaola

•  AncillaryServicesinSpain:dealingHighPenetra7onofRES–byIgnaciodelaFuente-REE•  Script:“Modelosdesubastas.Mercadomayoristaespañol”.Master´sdegreeElectricalEngineering,ElectronicandAutoma7c

•  MarketPowerinSpanishElectricityAuc7on–AitorCiarretaandMariaPazEspinosa–December2004

•  MasterThesis:Theeffectofrenewableenergyproduc7onintheSpanishelectricitymarket–byCris7naPizarro(2010-2011)

•  ReportforConfindustria:Acompara7vestudyofelectricitymarketsinUK,SpainandNordPool–byNERA(June2002)

§  Bibliography .

44

Price of the electricity in Spain Comparison with Europe Bibliography