1. Balancing mechanisms and integration of wind power in The Netherlands Geert Timmers Ecofys Netherlands BV 8 May 2007

2. Balancing mechanisms and integration of wind energy Netherlands Conclusion Can the system of balancing mechanisms used in The Netherlands accommodate large amounts of wind power? Yes But…

3. Balancing mechanisms and integration of wind energy Netherlands Office network

4. Balancing mechanisms and integration of wind energy Netherlands Relevant Ecofys activities Power Systems and Markets Wind energy: strategic and project development consultancy Wind power Prediction Services Energy and Climate Strategy studies RECS, GreenPrices

5. Balancing mechanisms and integration of wind energy Netherlands Wind power Netherlands On-shore: 1500 MW – some 2500 MW Off shore: 228 MW – 6000 MW? Programme responsibility wind power concentrated at 4 parties Grey power value, fixed subsidy Unstable government policy and support schemes Conventional: 20.000 MW

6. Balancing mechanisms and integration of wind energy Netherlands System balancing Netherlands All power producers carry programme responsibility TenneT TSO operates “lean and mean”: most important role for market players Reserve power (not capacity) offered by market parties Dual imbalance pricing system Day ahead programming and trade

7. Balancing mechanisms and integration of wind energy Netherlands Dual balancing prices

8. Balancing mechanisms and integration of wind energy Netherlands Growing loss of wind energy Source: Ummels, Gibescu, Pelgrum and Kling

9. Balancing mechanisms and integration of wind energy Netherlands Simulated power variation 8 GW Benjamin Duguet, Jan Coelingh, Ecofys Netherlands, We@sea project, input ECN

10. Balancing mechanisms and integration of wind energy Netherlands Field survey project Netherlands Together with TenneT TSO Use of balancing mechanisms with 8000 MW wind 14 interviews with stake holders –Programme responsible parties, large and small –Market facilitator, regulator and Ministry –Wind power developers, wind farm owners association Workshop with all stake holders Resulting in set of improvements for short and long term

11. Balancing mechanisms and integration of wind energy Netherlands Opposing views on wind energy Wind power creates undesirable imbalance in (current/ conventional) production portfolio Wind power and conventional production units together define the total power portfolio with its own characteristics

12. Balancing mechanisms and integration of wind energy Netherlands Conclusions from interviews Current balancing mechanism can absorb large amounts of wind power, no separate wind balance Wind balancing tariffs have to be transparent Upper limit determined by wind power share and flexibility of new power plants System improvements enable even more wind power, to be absorbed economically Price uncertainty, risk aversion, unequal market

13. Balancing mechanisms and integration of wind energy Netherlands Future portfolio balancing issues Minimum load issue Low revenues for wind energy: market value prices instead of fixed price PPA’s Increasing imbalance volumes, prices Rapid and large changes, steep ramp rates Balancing system itself will put brake on wind power growth

14. Balancing mechanisms and integration of wind energy Netherlands Key requirements for improvement Transparancy –Insight in balancing cost Flexibility –Intra day and cross border corrections –Subsidy structure, gas contracts –Production portfolio Market depth –Sufficient number of players and volumes

15. Balancing mechanisms and integration of wind energy Netherlands Key improvements - realised Intra day market in Netherlands Intra day market also in Germany, Belgium and France Market connections Belgium-France-Netherlands NorNed interconnection under construction Modifications in dual imbalance pricing system

16. Balancing mechanisms and integration of wind energy Netherlands Key improvements - ongoing Market connection NL-BE-FR-Germany Cross border trading possibilities Germany Agreements on cross border balance management Connection between balancing power and gas RE Support structure stimulating flexibility

17. Balancing mechanisms and integration of wind power in The Netherlands For further questions and discussion, you are welcome at the Ecofys booth Main exhibition hall, G 022 Geert Timmers, g.timmers@ecofys.nl Ecofys Netherlands BV