Market mechanisms in Norway / Nordel Reserves Adequacy and Demand Response. Security of supply. Grid Operation Division, Bjørn Walther

 Political willingness and consensus on liberalization  Legal framework put in place and adjusted to ensure competition  Regulator established in all countries  Independent Transmission System Operator (TSO) created in all countries to facilitate market development Driving Forces behind Liberalization

Forming a Nordic Electricity Market Requirements: Co-operation between all five Nordic TSOs on issues required to form one common market Co-operation regulated in: “The Inter-Nordic Transmission System Operation Agreement” Inter-Nordic Transmission System Operation Agreement StatnettFingridSvenska KraftnätEltraElkraft System

Governing Bodies Example: Statnett

The mix of electricity generation The Nordic electricity market in 2003 (%)

Peak load versus available capacity Norway

Great variation in generation Norway

Various markets and their timescale RKOM A catalyst to secure sufficient regulating power to be available in the Balance Market Time

Option Market as a catalyst for the Balancing Market places including options when needed RKM Elspot 12 hours in advance The hour of operation The market place Generation Consumption RKOM Duration one week Option market Catalyst for RKM G C

The Nordic intra-day Market (Elspot) Purchase Sale 0 Volume in MWh Price in NOK System price 124

Common Nordic Balance Management Upward regulation Downward regulation Price MW Highest up regulation Price = Sales price Lowest down regulation Price = Purchase price Spot price = base price

Norwegian balancing Need Duration curve (frequency control only) The highest value for upregulating i BM  10%

Common Balancing Market Established 1 th September 2002 Results so far: –Efficient balance control –Lower total control costs for the TSOs –Improved overview and reliability due to simplified routines –Equalisation of the Balancing Power Price –Increased interest in offering on the Balancing Market –Harmonisation of balance settlement –TSOs work as one company in this respect

Activation of demand response (DR) Day-ahead Market according to price –More eksplisit response –More flexible products Balancing Market according to situation –According to deviation in forecasted consumption –According to disturbances Present in both markets –Excluded in RK-Market if activated in Elspot

Demand response in day-ahead Market

Acquisition of Reserves Options Overwiew from the beginning, nov 2000

Nordic perspective The Nordic potential for DR is large Increasing need of operating reserves and DR, as a consequence of more windpower installed Nordic coordination is important and will reduce the total cost of keeping the necessary amount of capacity reserves

Market prices The Nordic Electricity Market Euro = 8.30 NOK ( ) JanFebMarAprMayJunJulAug SepSep OctNov D e sc NOK/MWh Norways last politica l decided price Source: Nord Pool

How to ensure Security of supply Supply / demand balance in normal years Power exchange capacity against continental Europe Price elasticity in demand A set of ”tools” for extreme years

Conclusion –The Nordic Experience Reduced prices to the customers Better service to the customers Cost efficient operation Flexible power flow Reduced overcapasity Focus on the economy

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