ucl espo/iag/poms perspectives on benchmarking central grids prof. per agrell core/iag school of...
TRANSCRIPT
UCL
ESPO/IAG/POMS
Perspectives on Benchmarking Central Grids
Prof. Per AGRELL CORE/IAG School of ManagementUniversité Catholique de LouvainBELGIUM
Stockholm 09.04.2002
Presentation
Stockholm 09.04.2002
Outline
Three central questions on benchmarking:
Why?Whom?What?
Stockholm 09.04.2002
The European Electricity Market
regulatorregulator
transmission operatortransmission operator
GENERATORSGENERATORSGENERATORSGENERATORSGENERATORSGENERATORSGENERATORSGENERATORSGENERATORSGENERATORSDISTRIBUTORSDISTRIBUTORS
GENERATORSGENERATORSGENERATORSGENERATORSCUSTOMERSCUSTOMERSGENERATORSGENERATORSGENERATORSGENERATORSTRADERSTRADERS
LEGISLATORLEGISLATOR INVESTORSINVESTORS
GENERATORSGENERATORSGENERATORSGENERATORSOTHER TSOOTHER TSO
Stockholm 09.04.2002
Key challenges for the regulator
How to provide the transmission service operator with
Motivation incentives– Cost efficiency
Coordination incentives– Technical efficiency
Stockholm 09.04.2002
Possible approaches
Laissez-faire– Monopolies under competition law (D)
Light-handed regulation– Selective intervention (S)
Relative norms – Pseudo-market arrangements (N, NL)
Absolute norms– Technical (ES) and ad hoc revenue caps (UK)
Stockholm 09.04.2002
Scope of the analysis
National– Sunk costs and PSO etc. can ultimately be paid by
final demand.
International– Social obligations, past inefficiency and sunk costs
may distort market effectiveness.
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Transmission is the key to the electricity market
The physical grid defines– the market place for supply and demand
The congestion management defines– market liquidity, reliability and – market power
The access pricing defines– market entry and future capacity
Stockholm 09.04.2002
Why benchmarking?
The TSOs are the backbone of the electricity market – their incentives and costs directly affect social welfare
The regulators are responsible for the implementation – they need to coordinate incentives and signals to
achieve a coherent cooperation – national comparisons do not make sense
Benchmarking provides feasible and relevant estimates.
Stockholm 09.04.2002
TSO Benchmarking
Three central questions on benchmarking:
Why?Whom?What?
Stockholm 09.04.2002
The TSO is multi-tasking
Open access schedulingEnsuring supply reliabilityCongestion managementReal-time dispatching servicesGrid planningAncillary servicesInformation provisionFinancial settlements (administration, billing, ..)Clearing energy markets….
Stockholm 09.04.2002
Central grid services
Grid owner/leaser Grid owner/leaser
Transmission servicesTransmission services
Grid maintainer Grid maintainer
Grid constructor Grid constructor
System operator System operator
Market facilitator Market facilitator
Grid planner Grid planner
Stockholm 09.04.2002
Function and organization
Grid maintainer Grid maintainer
Systems operator Systems operator
Grid planner Grid planner
Market facilitator Market facilitator
Grid owner/leaser Grid owner/leaser
examples:
ISOISO
Transelec (Chile)
Independent system operator
Grid constructor Grid constructor
Statnett (N)
Transmission company
TOTO
PJM (US)
Wire company
WOWO
?
Hybrid
Stockholm 09.04.2002
Institutional compromise
TSOTSO
ControllabilityEfficiency
Externalities Independence
Stockholm 09.04.2002
Independence
Access rights Capacity investments OperationsSupply/demand implications
Independence requirement favors tight public control
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Efficiency
Information and motivation problems in– Public enterprises– Large structures– Organizations with unclear objectives– Market power
Allocative and productive efficiency favors privatization
Stockholm 09.04.2002
Task interdependency
Stockholm 09.04.2002
Externalities
Information Investment reviews Non-transmission options
Externalities favor integrated TSOs
Stockholm 09.04.2002
Controllability
Information asymmetry Scope of operations ComparabilityComplexity of control
Controllability increases with unbundling
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New solutions for ISO/TO
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Whom to benchmark?
TSOs are heterogenous, integrated multi-output firms – they are constrained, empowered and incentivized in
different ways.– externalites between tasks give different options
Benchmarking needs to – focus on a selected set of « TSO roles » to inform– acknowledge its partial information
Benchmark selected dimensions, but keep the big picture!
Stockholm 09.04.2002
TSO Benchmarking
Three central questions on benchmarking:
Why?Whom?What?
Stockholm 09.04.2002
Budget and impact
Grid maintainer Grid maintainer
Systems operator Systems operator
Grid planner Grid planner
Facilitator Facilitator
Grid owner/leaser Grid owner/leaser
Grid constructor Grid constructor
Share of TSO budget
Social welfare impact
Stockholm 09.04.2002
Benchmarking scope
Input (unobserved/exogenous output)Output (fixed/sunk input)Process (complex system)
– Procedures (ISO9000, control systems)– Incentive systems (int/ext contracts)– Competence (profile, training)– Cooperation (int. organizations, regulators)
Stockholm 09.04.2002
Benchmarking
Grid maintainer Grid maintainer
Systems operator Systems operator
Grid planner Grid planner
Market facilitator Market facilitator
Grid owner/leaser Grid owner/leaser
Grid constructor Grid constructor
ECOM
Construction and maintenance
EC
OM
EC
OM
Stockholm 09.04.2002
What to benchmark?
ECOM is a spotlight on construction and maintenance – the two roles are less complex.
ECOM will be complemented – models to address other activities
ECOM gives one service dimension,together we will address some other
Stockholm 09.04.2002
Finally
Regulators and TSOs share the responsibility– A common goal– Different roles
Benchmarking is a strong incentive to aim for excellence.
Benchmarking is looking forward to find good local solutions to global challenges.