world bank workshop on electricity supply security vs. intermittent renewable energies a tale of two...
TRANSCRIPT
World BankWorkshop on Electricity Supply Security vs.
Intermittent Renewable Energies
A tale of two systems: Brazil and Colombia
Jaime MillánFebruary 18, 2009
1
Presentation
• The Brazilian Energy Auctions in a Nutshell
• Brazilian Treatment of Interruptible Energy Sources
• Brazil and Colombia Compared
• Conclusions
2
Presentation
• The Brazilian Energy auctions in a nutshell
• Brazilian treatment of interruptible energy sources
• Brazil and Colombia compared
• Conclusions
3
Motivation
• No more power shortages and affordable tariffs for the regulated market– Need to gain distance from Cardoso’s reform – But acknowledging the need for new private
investment and some sort of market– Develop hydro potential and local entrepreneurs– Acknowledgment of synergies of joint operation of
hydrothermal system
4
Two Contractual Environments
ACR Regulated
•DISCOS• Captive
customers
ACLFree
Large consumersSelf-generators
ACL “controls” ACR prices
Short-term Market
Generators
Free contracts
Small activity
Auctions•Existing Energy•New Energy•Distributed Generation
Price defined by model
5
ACR• Two type of contracting Old Energy and New Energy with different terms
but procured in auctions organized by CCEE ( Market Operator) annually • Old Energy
Distributors and old generators participate in auctions 1 year planning time, 5 to 15 years delivery time
• New Energy:– 3 and 5 years planning time and 20 years Forward Contracts with physical
backing– Thermal projects call options bid Premium and Strike price compete with
hydro– Special Hydro Projects– Developers compete for hydro projects designed by EPE (Planning
government office) and with cleared EIA– All new energy is allocated prorated to distributors according to their needs.
• Information http://www.ccee.org.br
6
ACL
• Large Consumers and self-generators
• Load is free to sign bilateral contracts (?)
• Self generators can participate in ACR auctions
• Special projects participate in ACR and set up a portion for ACL
• Contracts settled in the Short term market at PLD
7
Several auctions
• Old Energy auctions– Regular auctions
– Adjustment auctions• Max1% of load
• New Energy auctions– 3 and 5 years ordinary auctions
– Renewable
– Special projects
– Reserve auctions• Biomass• Wind
• Distributed energy
8
Product
• Firm energy – Hydro defined by the regulator as the incremental
energy to the system with a reliability based on hydrology and joint operation of the hydrothermal system
– Thermal is energy plant is able to deliver in a continuous basis
– Biomass is the energy produced in the 7 harvest months
– Wind total annual energy
9
Contracts
• New hydro contracts are forward (“quantity”)– Generator assumes price and quantity risks
(difference between production and contracted energy)
• New thermal contracts are “call options” (“Availability”)– generators offer a fix amount (“premium”) and
variable cost (“strike price”). Distributors pay premium and compensates cost when option is exercised
10
Evaluating “Call Options” cost
Unit Price Pd (R$/MWh):
• Pd = (Fd + EO(CV) + EC(CV)) (R$/year) / E(CV) (MWh/year) + ∆KWhere:– Fd is (“premium”)– EO(CV) is expected value of annual operation co; EC(CV) is
expected value of energy bough/sold at the spot market; and E(CV) is the firm Energy of the Project
– ∆K is LNG Adjustment– All values depend on the strike price CV and are computed
by the government before the auction takes place
11
New Energy: Procedure• Distribuitors inform their contractual needs• Each generators to sign bilateral contracts with all
distributors– Contracted amounts cannot be reduced
• A “Menu” of generation alternatives is prepared– Hidro (concesions prepared by EPE)
– Agents presented projects, (thermal, renewables or interconexions)
– Each project has a firm energy
• Two Stage auction. 1. Hydro concesions; 2 Technology competition
• Government to produce environmental licenses for Hydro projects in advance!
12
2 Stage Auction• Hydro candidates bid a contract price• Projects are stacked until energy offered tops demand• Winners receive a “pre-concession”• Projects with “pre-concession” participate in stage 2
– Must offer energy at the price resulting in pre-concession– “pre-concession” becomes a concession only if energy is contracted
in stage 2
• Stage 2 (Hydro vs Thermal)– Hydro and Thermal compete to meet demand at least cost– Initial run, unit and discriminatory
• Administrative definition of quantities to H15 and H30
13
Presentation
• The Brazilian Energy auctions in a nutshell
• Brazilian treatment of interruptible energy sources
• Brazil and Colombia Compared
• Conclusions
14
Renewable Energy
• PROINFRA. To buy 3300 MW in equal quotas for Small Hydro (SH), Biomass, and Wind to be bough by Eletrobras was unsuccessful
• In 2007 auction for renewable with different caps for each; SH, Wind and Biomass
• At present SH can compete in phase 1 Hydro auctions and Biomass and Wind in phase 2
• Special auction for reserve energy – for Biomass in 2008– Wind in 2009 15
Firm Energy for interruptible sources in Brazil
• Biomass and Wind: Declared by the supplier for every month.– Biomass declare for the 7 months bagass
is available
• High penalties for not delivering• Obligation to report wind data on at
least one complete year in the past five years
16
Reserve auctions
• Held for delivery in 1 to 2 years to accommodate changes in positions and/or provide a security buffer
• Technology Driven: Special features to accommodate intermittent supply, connections to the grid, and uncertainty in resource (wind)– May increase cost without a proportional
increase in security17
The new wind reserve auction
• MEM Open consultations on February 10 (Portaria # 52)
• Product is total energy in year independently of when it is produced
• 20 year CER contract starting in January 2012• Generators can pull resources for connection to the
grid• Handling of uncertainties in production
18
• Handling of uncertainties in production
– Contract is divided Five four year periods to adjust quantity to real production
• + balances <10% passed to next period or valued at Min {VR, Average PLD}
• + negative <10% valued at VR• Quantity for next period is adjusted to the valued observed in the
precious capped by the original quantity
– Annual balances up to 10% from contract annual quantities are passed to next year
• Negative balances >10% are valued at 1.1 contract price (VR) and paid in 12 monthly quotas
• Positive balances > 10% at Min { VR, Average PLD}
19
Presentation
• The Brazilian Energy Auctions in a nutshell
• Brazilian treatment of interruptible energy sources
• Brazil and Colombia compared
• Conclusions
20
Energy Auctions prices in R$/MWh
140
105
129
135135
135135
138 137
126
65
76
8992
102
60
70
80
90
100
110
120
130
140
150
2005 2006 2007 2008 2009 2010 2011 2012
R$
/MW
h
Energia Nova 2007
FA 2007
Energia Nova 2006
Energia Nova 2005
Energia Existente
Leil‹ o de Ajuste (A-1 de 2007)
Source: PSR
21
1ª New energy auction: 28.800 Gwh/year, 2009 y 2010
Gás Natural42%
Bioamassa3%
PCH1%
Hidro29%
Diesel7%
Óleo Comb.
1%Carvão17% Dic 2005
Natural gas
22
New Energy Auction 2006
Biomassa4%
PCH5%
Hidro55%
Biogas1%
Diesel17%
Óleo Comb.17%
Natural Gas1%
Gás Natural18%Óleo
Comb.1%
Diesel6%
Hidro52%
Biomassa6%
Cogeração18%
A-3
A-5
14734 GWh/year
9671 GWh/year
25% SOE
23
Small renewable“A-3” 2007
PCH25%
Biomassa75%
Limited participation 20% of registered plants (2,800 MW)
402 GWh/Año SH
1226 Gwh/Year Biomass
24
New Energy Auction 2007
Óleo Comb.100% Carvão
40%
Gás Natural15%
Óleo Comb.14%
Hidro31%
A-3 A-5
11423 GWh/year
20253 GWh/year
100% Oil
Hydro
CoalNatural Gas
Oil
25
2008 Auctions
• Reserve Auction – 8.800 GWh Year of biomass contracted
• Less than expected
– Price between 90 and 100 $/Mwh
• New Energy A-3 and A-5 mostly fossil fuel generation
• Special Projects Santo Antonio and Girau bring new hydro energy at low prices
26
Prices
57,567,3
75,583,1
63,0
94,9107,0
121,8129,3
132,3
113,9114,8
0
20
40
60
80
100
120
140
2005 2006 2007 2008 2006 2009 2008 2009 2010 2008 2009 2010
1º 2º 3º e 4º Hidro Termo
Energia "Velha" Energia "Nova"
R$/M
Wh
Santo Antonio RS78
Jiraud RS71.80
ACL 2010 RS175
ACL 2011 RS 135 27
Colombia CC at 13.998 usd/mwh
Canasta Energética Total Subastado7635 GWh/Año
Hidro63%
Fuel Oil 222%
Carbón15%
Canasta Energética Subasta Principal
Hidro7%
Carbón37%Fuel Oil 2
56%
1 N, 2 E 1N, 5 E
40 Existing plantsplantas existentes, The existing part of 2 special plants 3 new plants, 1 new agent6 hydro plants in the GPSS
28
Brazil ColombiaObjectives Reliability and affordability
Facilitate use of hydro potential and local investors
Small renewables treatment evolves
Efficiency and reliability
Nondispatchable < 20 MW do not participate in the MEM
Contracting Mandatory 100% of demand for distributors (ACR) and Free (ACL)
Auctions for; Existing, new, reserve, adjustment and distributed
ISO contracts Firm Energy Options covering the whole demand in two actions
•Regular•GPPS
Bilateral voluntary forward contracts
Product contracts for Energia Garantizada with physical backing. Hydros: Forward Contracts; Fuel: Call Options. Different products but compete in 2 phase auction
Firm energy Options OEF,
Planning Period
New energy , 3 and 5 years, Old energy, 1 year, Reserve. 1 to 2
Existing 1 year; New , 3 years; GPSS>3 years
Commitment Period
New energy: Hydro, 20;thermal 15; reserve 20
Old energy: 5-15
New Up to 20;Existing 1;Special 10
Procurement Hybrid Auctions for old, new and adjustment energy
Descending Clock for OEF
Closed envelope GPPS with a cap
29
Product definition facilitate treatment of intermittent resources in Brazil
• Colombia: Availability of Energy during Scarcity Event– Firm Energy for the Reliability Charge (Energía Firme para el Cargo
por Confiabilidad or ENFICC): maximum energy that a generation plant (Hydro or Fuel) is able to deliver on a continual basis during a year.
• Brazil (Energía Garantida): Incremental Energy that the plant contributes to the System when jointly operated with a given probability of been exceeded.
– When intermittent are a small share large reservoir capacity smooth needs for availability on a continuous basis
30
Presentation
• The Brazilian Energy auctions in a nutshell
• Brazilian treatment of interruptible energy sources
• Brazil and Colombia Compared
• Conclusions
31
Conclusions
• Both countries managed to procure new resources and avoid shortages but:– Brazilian goal of bringing large amounts of new hydro has
been delayed by environmental hurdles – Colombian was able to contract large amounts of hydro but
goal of bringing new players was not met or barely met– Brazilian Old and New energy managed to moderate prices
but renewal of concessions poses a new threat
• Processes are work in progress and subject to improvements
32
Conclusions…
• Intermittent Energy sources participation facilitated in Brazilian auctions but limited by cost of resource
• More difficult to handle intermittent in Colombia within the framework of the CC, limited hydro storage– One possible solution may be to procure on a limited basis
reserve energy following the Brazilians
• Two lessons– Think in the objectives before you come with a
procedure– Think again
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