Digital is an important element for the TSO community
- What are the digital initiatives ENTSO-E have been pursuing this year?
We are seeing significant digital IT investments related to market platforms, system optimisation and transparency with related activities around standardisation and cybersecurity
For market platforms we can mention XBID, for instance, which was launched just before the summer.
The European Cross-Border Intraday (XBID) platform was launched on 12 June 2018. It marked an important step towards creating a single integrated European intraday market. The go-live with the 10 Local Implementation Projects delivers continuous trading of electricity across the following countries: Austria, Belgium, Denmark, Estonia, Finland, France, Germany, Latvia, Lithuania, Norway, The Netherlands, Portugal, Spain and Sweden. Most other European countries are due to take part in a second ‘wave’ go-live with XBID in 2019.
We are also working on several platforms to improve the connectivity of business applications created for power systems between TSOs and power markets, TSOs and DSOs and among TSOs themselves or other types of data hubs at the distribution end.
On the other side, we also have a similar investment related to the management of grid congestion, primarily driven by the introduction of renewable energy into the system at a faster pace than at which the grid can be constructed. There is a need to strengthen and reinforce the grid. This brings up new challenges as to how we manage grid capacity and how we allocate this capacity across various time horizons and various market participants.
We are currently in the middle of a large investment which will enable TSO’s in the future to operate their system from the perspective of pan-European common grid calculations which will be updated several times a day. The idea behind it is to ensure that all security calculations or capacity calculations in different countries and regions are based on the wider view of the integrated energy system. We are currently developing a new platform which will facilitate that.
Lastly, we are working on increasing the transparency between market participants, particularly regarding the usage of data, aiming towards having open data on all events and flows happening on our systems. We have made major investments to our transparency platform which is progressively becoming one of the reference points for every trader or user of our system for optimising its own assets and positions. We have made significant analytical and digital investments regarding the transparency platform. These are all actual deployments.
We have an active R&D committee in ENTSO-E which pulls together R&D teams from our TSO’s, and it is working on digital issues from a mid-term to long-term perspective. Currently, it is focusing on a new TSO/DSO interface with envisaging new flexibility market design with coordinated operations.
We have just succeeded in a new Horizon 2020 project for prototyping various flavours of that platform and facilitating the exchange of data on prosumer flexibility on a pan-European level. The idea is to increase liquidity on the pan-European market by enabling easy exchange and free flow of consumer data from one country to the other. Of course, this assumes that the consumer agrees and has given their consent.
These are some examples of our current, very heavy digital agenda. We also have a chapter on cybersecurity. As the level of digitisation increases, the level of risk increases. Therefore, we are currently focusing on developing a new cyber security strategy.
On the pan-European platforms that we have built, we see a challenge rising from the fact that connecting a wide range of stakeholders across Europe exposes our system from a number of dimensions. Firstly, it exposes TSOs and the data we exchange. Some of that data is classified, so the first layer of our cybersecurity strategy is the creation of an extremely secure environment within the TSOs, in some cases it means going up to the construction of physical lines.
This exposure also raises questions regards a potential attack from outside. For instance, a market participant could be exposed and it could impact directly our system. We are in the early design phase – obviously, we cannot expose too much information about it because this is sensitive information, but we would like the strategy to indirectly imply certain requirement to the balancing party, the aggregators or the utility interacting with our system.
I can say that there is an initiative underway and we take it very seriously. It has several implications, although the TSOs' exposure is a little different to that of DSOs in the sense that we manage much less direct consumer data.
We are more concerned about the hacking of operational data, which could indirectly expose our system to significant incidents. We are living in a complex environment and as our requirements grow, so do our solutions which are developed from that perspective.
- Is there a role for blockchain?
TSOs have a few demonstration projects with blockchain. In some market platforms where there is a settlement component, such as the balancing market, a distributed architecture like blockchain could be foreseen for certain use cases. Our R&D Committee is investigating blockchain and how it could be used versus the needs of the digital grid.
Blockchain will be looked into in a white paper by ENTSO-E that will be published within the next few months and which zooms in the policy matters related to digital investment as well as cataloguing the ‘low hanging fruit use cases’ of digital grid investments.
- What about the physical infrastructure?
At the moment, energy transition means we need to design and construct a grid which is able to withstand the extremely large amounts of renewable energy being fed into it. In the context of the clean energy package, our system will be exposed to more than 50% of variable renewable energy. Managing these renewables in real time is complex. Not only as regards to meeting the demand when renewables are not producing, but also, the system may not be able to absorb the renewable energy during its peak production. This can lead to congestions or even curtailments. Renewables drive an agenda to construct a physical system that is robust and we are actively mobilising the necessary investments and working on a network development plan at a pan-European level to identify the critical bottlenecks which we need to address.
Digital will not replace the need for strong infrastructure. However, we need a smarter operating system on top of that physical grid.
- Challenges we need to work around
The most significant challenge for us at the moment is the issue of capacity calculation. When the grid is constrained in certain areas, the key question is how to allocate the scarce capacity. This relates to the operation of the market itself and to the very, very detailed calculation of transmission and planning of capacity. One could imagine the use of new sensors and dynamic line ratings as means to make optimum use of grid capacity, particularly in very congested corridors. We need to optimise our capacity within the operational timeframe.
- The addition of storage
Storage will enable flexibility and we know that we will need more and more flexibility. We already see areas in our systems where the flexibility is being exhausted. We hope that putting in place new platforms which provide more accurate price signals will develop storage assets in the markets. We also see the use for storage in very specific grid services such as inertia or frequency containment reserve. These are areas where storage could potentially be considered as regulated assets. We do see storage as a mainstream technology – and this includes power to gas as an important option in the mid-term.
- Legal and regulatory frameworks
Our priority is the implementation of European Network Codes which will take until 2020-2022. There remains a lot of work to be done at expert level in national TSOs, in RSCs and at coordination level at ENTSO-E.
The second phase will be the Clean Energy Package which we think is the right way to move forward, especially when it comes to the balancing of the real-time operation of the system. We have reservations on some aspects of the package, of course, but in the vast majority we see it as a move in the right direction.
Implementation of the codes will take another two to four years. If the Clean Energy Package is adopted it will take at least five years to be implemented. So we hope to see more flexibility introduced into our system, be it through demand side response, storage or other services.
- What are the most important elements of the new grid code?
The new balancing platforms, capacity allocation methodologies, and all that comes with our market codes – it’s not fully completed yet but they represent a major progress in how the market operates in Europe. The new codes will offer more transparency in identifying where the constraints and congestions are, and it offers new opportunities to link markets and physical realities. We see network codes as real game changers within the next two or three years.
- The most important message for European Utility Week attendees?
Digital is an important element for the TSO community. It is no longer a focus for only R&D, it is something that is needed today. We need to focuse on the right use cases as the system needs short to medium term solutions that can be successfully deployed. However, digital cannot solve everything. Regional cooperation within all levels, harmonisation of rules, good market design and building necessary infrastructure are all part of the equation.
ENTSO-E is delivering on its traditional and yet crucial mandates – the implementation of network codes, pan-European coordinated network development plans and security of supply analysis, supporting regional cooperation etc. On top of it we are indeed developing an important digital agenda and we hope to make good progress in the next few years while continuing successful completion of our other tasks.
Laurent Schmitt will be a panellist on the Energy Markets Summit Programme on 6 November, "Panel Discussion: Regulation and market design of flexibility markets"
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