Brainstorming Session 1: Define the Scope of CBA 3 Brainstorming Session 1: Define the Scope of CBA 3.0 - storage Improvements Group 1

Scope of CBA3.0 Improvements: Storage 1/2 Main topics/indicators that require improvement Justification on why this is important What would look this indicator in an ideal environment  General principles - Clear reference to what is STORAGE? (principle concept of storage – specific benefit) - Flexibility – Holistic treatment? - Quantify all benefits - Arbitrage benefits (related with SEW) - Why a CBA methodology for storage and not for other power plants? - Contribution to RES integration during lifetime – Seasonal storage effect (related to arbitrage) General over-arching description of importance/role of storage; Increased monetisation – greater specificity SoS (Flexibility and Adequacy) - Increase system flexibility to the system to integrate RES generation – Storage response related to fault ride capability during active power operation - Adequacy benefits. Benefits in terms of reducing local reliability of the system (reduces ENS) - Availability of de-centralised storage (small devices) – value of optimisation in the DSO services – Communication between TSO and DSO. Observability and availability for contributions in local and global. SoS (Ancillary Services) - Contribution to the ancillary services – System services like as frequency/voltage management, frequency regulation, increase system inertia & system resilience - Found a methodology to capture benefits at less than 1 hour resolution - Not monetisation of ancillary services benefits increases. Capacity market monetisation

Scope of CBA3.0 Improvements: Storage 2/2 Main topics/indicators that require improvement Justification on why this is important What would look this indicator in an ideal environment RES and CO2 - CO2 value – avoided damage in terms of climate impact - Improve CO2 assessment (dispatched different power plants, reduce CCGT production). Displaced CO2 - Reduced RES curtailment - RES allocation in long term – contribution of Storage and transmission in terms of time and geography Avoided Cost (network) - Quantify the benefits in terms of network investment deferral - Contribution for saving transmission investment costs in future (relation between short and long term) - Contribution to savings in congestion managements Losses - How are losses treated for storage projects. It is possible that storage projects can reduce losses

Frame the “how” to improve the CBA indicators chosen as necessary to improve in the morning session main topics/indicators that require improvement – copy paste brainstorming session 1 What would look this indicator in an ideal environment– copy paste brainstorming session 1 How is to be implemented (assumptions on method, view on resources, how long will it take ) – consider doing this in the TYNDP frame where we need to assess around 200 transmission projects and around 30 storage ones)  General principles Clear reference to what is STORAGE? (principle concept of storage – specific benefit) Flexibility – Holistic treatment? Quantify all benefits Arbitrage benefits (related with SEW) Why a CBA methodology for storage and not for other power plants? Contribution to RES integration during lifetime – Seasonal storage effect (related to arbitrage) - Reference to EC Document - Definition + Scope of storage (sector coupling) - Arbitrage benefits (???) SoS (Flexibility and Adequacy) Increase system flexibility to the system to integrate RES generation – Storage response related to fault ride capability during active power operation Adequacy benefits. Benefits in terms of reducing local reliability of the system (reduces ENS) Availability of de-centralised storage (small devices) – value of optimisation in the DSO services – Communication between TSO and DSO. Observability and availability for contributions in local and global. SoS Adequacy - EENS calculation (test for storage and consider technology type) DSO consideration - SAIDI and SAIFI calculation DSO benefits - Flicker, Power Quality Coordination TSO and DSO - Qualitative indicator (total MW of storage under control of TSO)

Frame the “how” to improve the CBA indicators chosen as necessary to improve in the morning session main topics/indicators that require improvement – copy paste brainstorming session 1 What would look this indicator in an ideal environment– copy paste brainstorming session 1 How is to be implemented (assumptions on method, view on resources, how long will it take ) – consider doing this in the TYNDP frame where we need to assess around 200 transmission projects and around 30 storage ones) SoS (Ancillary Services) Contribution to the ancillary services – System services like as frequency/voltage management, frequency regulation, increase system inertia (synthetic & synchronous) & system resilience Found a methodology to capture benefits at less than 1 hour resolution Not monetisation of ancillary services benefits increases. Capacity market monetisation Indicators for SoS services: - Frequency stability, voltage stability and inertia – Avoided costs and avoided CO2 costs - Storage for balancing energy – Avoided costs Find a methodology to capture benefits at < 1 hour resolution (???) RES and CO2 CO2 value – avoided damage in terms of climate impact Improve CO2 assessment (dispatched different power plants, reduce CCGT production). Displaced CO2 Reduced RES curtailment RES allocation in long term – contribution of Storage and transmission in terms of time and geography SEW - Check for Storage - Long term effects

Frame the “how” to improve the CBA indicators chosen as necessary to improve in the morning session main topics/indicators that require improvement – copy paste brainstorming session 1 What would look this indicator in an ideal environment– copy paste brainstorming session 1 How is to be implemented (assumptions on method, view on resources, how long will it take ) – consider doing this in the TYNDP frame where we need to assess around 200 transmission projects and around 30 storage ones) Avoided Cost (network) Quantify the benefits in terms of network investment deferral Contribution for saving transmission investment costs in future (relation between short and long term) Contribution to savings in congestion managements - Use adequacy metric (EENS and LOLE) - Local impact Question 4: What are the most important 3 improvements you consider ENTSO-E should work on in the next CBA 3.0 Principles (4 votes) Ancillary Services (3 votes) SoS (2 votes) Avoided Costs (1 vote)

Framing the work of the work-stream - Storage Objectives of the work-stream Principles (Rationale and Context – Ref. Regulation) Ancillary Services (New category (separate from SoS, Avoided costs for frequency, voltage and inertia – New Method) SoS (evaluate and expand, EENS for Storage based on existing precedents (National Grid) Deliverable/s Principles (Improved documents and Consistency) Ancillary Services (Avoided cost methodology and Test case/Case Study) SoS (EENS for Storage reviewed and redefined, Cost of new entry for capacity market and DSO consideration – Metric) Members of the group [type and resource estimation] Principles (Administrative task – Low impact: Time + people) Ancillary Services (National TSO, Market design representation, Technical and Third Party (EASE)) SoS (TSO and DSO, Technical and Market design representation) Timeline Principles (short – term) Ancillary Services (Longer time requirement) SoS (Moderate time requirement)

Brainstorming session 1: define the scope for CBA 3.0 improvements Group 2

Main topics/indicators that require improvement Justification on why this is important What would look this indicator in an ideal environment SoS Reactive Power Indicator Flexibility Considering extreme climate situations Balancing Ancillirary Services Lack of SoS-Figures in last TYNDP. CBA 2 indicators are still generalized. Difficulties to show the Benefits of SoS for transmission projects In future scenarios we expect more critical grid situations and we have to show the contribution of the transmission projects   SEW The only indicator which is per definition monitised. Important for NPV To capture all the benefits Renaming SEW. Not reflecting the true meaning Split SEW in a Socio and Economical Part Additional benefits of RES The main reason for energy transition is not captured yet. NTC Explanation is unclear. Main input for CBA-Calculations More accurate and harmonized methodology Redispatch Explanation of Redispatchsimulations Methodology Everybody understands everything Consistency NDP & TYNDP To make TYNDP more reader friendly

What is the CBA impact on the overall investment decision process If a business case is given for someone Projects should be assessed in an economic and socio “way”. Two ranking systems for projects. Monetised Ranking  Investment Decision Socio Ranking  What is the benefit for the society? Companys will earn money… Project promoters decides to build a project based on an “own” CBA. CBA in TYNDP is for the public

Frame the “how” to improve the CBA indicators chosen as necessary to improve in the morning session main topics/indicators that require improvement – copy paste brainstorming session 1 What would look this indicator in an ideal environment– copy paste brainstorming session 1 How is to be implemented (assumptions on method, view on resources, how long will it take ) – consider doing this in the TYNDP frame where we need to assess around 200 transmission projects and around 30 storage ones)  SoS Reactive Power Indicator Flexibility Considering extreme climate situations Balancing Ancillirary Services    We had kind of longer discussion on a possible implementation of this/these indicator/s without coming to a concrete solution SEW Split SEW in a Socio and Economical Part Giving a clear definition of this indicator and clearly explain what is included under it.

Framing the work of the work-stream -SEW Objectives of the work-stream giving a clear definition of what is meant under this indicator Renaming the indicator so that it reflects what is covered by it For monetising the „additional“ benefit of RES and CO2 the outcome of already existing studies should be used determining the actual impact of CO2 (not only the monetary value as for CO2 costs) giving a monetary value per ton CO2 and/or per MW/MWh of included RES Deliverable/s Monetary values in € per [t],[MW],[MWh]   Members of the group [type and resource estimation] Project promoters Academics

Result of the vote: most important indicator 6 votes: SEW 4 votes: SoS 3 votes (each): NTC, Redispatch, Consistency (between NDPs and TYNDP) 2 votes (each): Residual Impact, VOLL 1 vote: Losses 0 votes: Storage

Brainstorming session 1: define the scope for CBA 3.0 improvements Group 3

define the scope for CBA 3.0 improvements (1/3) Main topics/indicators that require improvement Justification on why this is important What would look this indicator in an ideal environment Weighting results for time horizons & scenarios: Decision are being made by different stakeholders, guidance is needed to compare projects when they rank differently in different years and scenarios (e.g. project X is better in Scenario A in 2030, but project Y is better in Scenario B in 2040) Guidance for weight of scenarios Economic lifetime and Discount rate NPV calculation should properly take into account reasonable lifetimes of infrastructure. Unjust comparison between AC and DC if a single value (25 years) is used for all, because it differs in reality. Guidance for economic life time and discount rate in CBA, with different values depending on the technology. Security of Supply: Adequacy Flexibility 1) No monetization so far. Relevant to include the monetisation of EENS in the TYNDP. 2) Adequacy is a problem in the extremes, not in ‘normal’ conditions. Monte Carlo analysis can show these extremes. 3) HVDC links can provide ancillary services. That’s an added value to be monetized. 1) Set a VOLL and use it to monetize EENS. 2) More calculations (100s of M. Carlo years) 3) (no specific suggestion; Ancillary services in general should be worked on) Modelling Regional differences exist and should be accounted for in simulations (e.g. importance of river flows in Nordic Regions) Reference network in non ENTSOE countries: how to update? New plants? More differences between countries (such as generator properties) when constructing input parameter set (extension of PEMMDB)

define the scope for CBA 3.0 improvements (2/3) Main topics/indicators that require improvement Justification on why this is important What would look this indicator in an ideal environment Redispatch Effect of an internal reinforcements. Fictitious market area should be better. Instead of full-network redispatch simulations, use a zonal approach with fictitious market areas. Capacities: Internal lines NTC Clustering Clustering: complex / long term projects. 5 year rule is not suitable for some long term projects. Delta NTC: what about a single line? NTC is 0? IF single monopole? NTC is 0 Do we consider as « internal line » if between EU border to neighbouring country? Useful to clarify for the reader. (no specific suggestion) Offshore grid « Borders » in projects with both internal and cross border assets > how to interpret modelling and indicators. New type of infrastructures. E.g., fictitious market area(s) for the offshore grid(s) that are modeled. Benefit allocation per country Important to motivate investors. Stakeholders are interested in these figures. National governments/NRAs trust ENTSO-E values. Report benefits on a per-country basis.

define the scope for CBA 3.0 improvements (3/3) Main topics/indicators that require improvement Justification on why this is important What would look this indicator in an ideal environment Storage Ancillary services Type of storages ? (no specific suggestion; Ancillary services discussion is important) CBA: which weighting factor for each criterion? Stakeholders want to know how to trade-off indicators against each other. In the PCI process, the European Commission does something like this. It would be good if it is already done by ENTSO-E. Provide guidance on how to trade-off CBA (MCA!) criteria against each other. VOLL Need to harmonize. Important to monetize adequacy. Monetized adequacy with VOLL defined in €/MWh CO2 and RES Monetization of CO2. important to know about the other sector. (we are focusing on electricity sector but how about CO2 we saved if the quota is used by other sectors?) 1. Define societal value of RES in €/tonne (e.g.: 200 €/tonne) 2. Then you have: a) CO2 included in SEW through generation costs (e.g.: 30 €/tonne) b) Additional societal value: (200 – 30) * “avoided tonnes of CO2”

Frame the “how” to improve the CBA indicators chosen as necessary to improve in the morning session main topics/indicators that require improvement – copy paste brainstorming session 1 What would look this indicator in an ideal environment– copy paste brainstorming session 1 How is to be implemented (assumptions on method, view on resources, how long will it take ) – consider doing this in the TYNDP frame where we need to assess around 200 transmission projects and around 30 storage ones) Weighting results for time horizons & scenarios: Guidance for weight of scenarios Average Best Estimate as a basis and then range based on the others Probability assigned to scenario Define risk. Goal is to fill in the gap between ENTSOE tasks and the PCI process. Maps of beneficial projects per scenario? Map of projects ok for all scenario? … that’s post processing (also link with NPV computation). Could be done in two weeks. Economic lifetime and Discount rate Guidance for economic life time and discount rate in CBA, with different values depending on the technology. Ask ACER to propose one discount rate and live time for NPV computation per technology (AC and DC). Security of Supply: Adequacy Flexibility   More calculations (100s of MC years) Result of the Monte Carlo simulations. Look at the MAF how much time it takes. Adequacy : ENS. Perhaps do a MAF-like assessment at a project-level. Possibly only for few projects. (Is it easy to define which projects needs this analysis?) Ancillary services FCR (if allowed to resize the reserves) (no specific suggestion)

Frame the “how” to improve the CBA indicators chosen as necessary to improve in the morning session main topics/indicators that require improvement – copy paste brainstorming session 1 What would look this indicator in an ideal environment– copy paste brainstorming session 1 How is to be implemented (assumptions on method, view on resources, how long will it take ) – consider doing this in the TYNDP frame where we need to assess around 200 transmission projects and around 30 storage ones) VOLL Monetized adequacy with VOLL defined in €/MWh  External body (ACER) to propose an harmonized value. You could also compute VOLL dividing Cost of peak units by the LOLE. CO2 and RES 1. Define societal value of RES in €/tonne (e.g.: 200 €/tonne) 2. Then you have: a) CO2 included in SEW through generation costs (e.g.: 30 €/tonne) b) Additional societal value: (200 – 30) * “avoided tonnes of CO2” (no specific suggestion) Modelling More differences between countries (such as generator properties) when constructing input parameter set (no specific suggestion) Redispatch Instead of full-network redispatch simulations, use a zonal approach with fictitious market areas.

Frame the “how” to improve the CBA indicators chosen as necessary to improve in the morning session main topics/indicators that require improvement – copy paste brainstorming session 1 What would look this indicator in an ideal environment– copy paste brainstorming session 1 How is to be implemented (assumptions on method, view on resources, how long will it take ) – consider doing this in the TYNDP frame where we need to assess around 200 transmission projects and around 30 storage ones) Capacities: Internal lines NTC Clustering (no specific suggestion)  (no specific suggestion) Offshore grid E.g., fictitious market area(s) for the offshore grid(s) that are modeled. Benefit allocation per country Report benefits on a per-country basis Storage CBA: which weighting factor for each criterion?

Important elements to improve 6 votes: SoS – Ancillary services 6 votes: SoS – Adequacy 5 votes: SoS – Value Of Lost Load 5 votes: Defining the (monetized) societal value of reducing CO2 and integrating RES 4 votes: Report benefits per country 3 votes: Guidance for offshore grid assessment 3 votes: Guidance for weighting scenarios 1 or 2 votes for 5 remaining topics

Framing the work of the work-stream – SoS : ancillary services Objectives of the work-stream Set the scope (define which ancillary services to consider, which time frame, etc.), How to monetize ? Deliverable/s   Guidance for scope Members of the group [type and resource estimation] TSO experts / modellers Storage promoters experts DC and AC experts. Timeline (no specific suggestion)

Framing the work of the work-stream – SoS - Adequacy: a lot of Monte-Carlo years Objectives of the work-stream Check feasibility of doing many more simulation runs Method to select projects Deliverable/s Guideline on how many simulations should be done, which extremes to look at Members of the group [type and resource estimation] TSO modelers Academics People from the MAF team Timeline (no specific suggestion)

Framing the work of the work-stream – SoS - VOLL Objectives of the work-stream Let an external body (e.g., ACER or EC) define the VOLL in €/MWh for different countries, actors, time frames. Deliverable/s VOLL values.   Members of the group [type and resource estimation] ACER / NRAs Consumers’ representatives Timeline (no specific suggestion)

Framing the work of the work-stream – CO2 and RES: define societal value of CO2 and use for additional benefits indicators Objectives of the work-stream Define the indicators Define a methodology Deliverable/s (no specific suggestion)   Members of the group [type and resource estimation] Academics Economists Timeline