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Generation and System Adequacy Standards Identification

Identification of Appropriate Generation and System Adequacy Standards for the Internal Electricity Market.

Description of project:

The EU objective in the field of Energy Policy is to deliver sustainable and secure energy in the competitive European internal market for energy. Internal electricity market (IEM) policies are expected to lead to the development of reliable and liquid electricity markets, both long- and short-term. This can drive investment in a low-carbon electricity system that works in tandem with an emissions trading scheme, effective energy efficiency measures, and targeted support for new low-carbon technologies.

Moving towards greater transparency and coordination among Member States and national policies in terms of security of electricity supply would be highly beneficial in:

  • assessing national preferences with respect to the trade-off between the social value of adequacy and supply cost; 
  • assessing national preferences for available alternative measures to achieve the desired adequacy level (e.g., transmission vs. generation investments);
  • assessing the effects of the policies of each member state on: the security of supply, neighbouring countries’ security levels and supply costs;
  • minimizing the cost needed to ensure adequacy in Europe by exploiting the interdependencies among interconnected national systems.

The objective of the study contracted to ÅF is to provide key input for the definition of a common adequacy assessment methodology, and identify a set of acceptable standards for the evaluation of national electric systems adequacy

Based on the above, the study was set to provide input to the European Commission and its Member States. The study final report outlines a roadmap to establish an appropriate methodology and a set of adequacy standards related to the physical phenomena that can affect the electricity supply, including expected involuntary disconnections, lack of primary resources, high demand, etc. In particular, a common methodology is recommended to identify the need for new generation capacity and to help define the criteria with which to evaluate possible incentives for investments in new generation.

ÅF's services:

  • Theoretical analysis: review of concepts on adequacy and on the metrics definition; Analysis of relationships between overall system adequacy and metrics of generation adequacy; suitable application of each metric; Assessment of Value of Lost Load (VOLL) calculation methodologies (social cost of supply interruptions)
  • Empirical analysis: preparation of a questionnaire submitted to Transmission System Operators and Member States on adequacy evaluation; Survey of the generation adequacy metrics and standards implemented in Member States and a review of their functional pros and cons.
  • Diagnosis: Based on the theoretical analysis and the findings of the empirical analysis, a diagnosis that identifies the cases when a metric is needed; Identification of the criteria that the metric should fulfil, to be representative of system adequacy, as well as transparent, and verifiable;
  • Recommendations for the future: Definition of an appropriate methodology and metrics to assess generation and system adequacy for the internal electricity market, taking into consideration the experience of TSOs and the theoretical framework; Criteria to define adequate standards and VOLL estimation methodology.

 

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