SECURE Project - Security of Energy Considering its Uncertainty, Risk and Economic implications

WP 5.6 Development and application of specific tools for energy security in the Electricity Sector

Objectives

Alongside the general aim of the project, the objective of the electricity Work Package is to provide quantitative inputs for the major issues related to the theme of security of supply mentioned in the call and to assess different policy options in terms of their contributions to reducing energy insecurity. Objectives by tasks are to:

  • Assess optimal investments for the development of the electricity transmission infrastructure
  • Quantify the impact of possible gas shortages/interruptions on the power sector
  • Analyse costs of electricity interruptions at the European level
  • Analyse the current organizational formats of Transmission System Operators, define their implications for security of supply and derive policy recommendations
  • Analyse the effects in terms of security of supply (safety and reliability) of increase presence of distributed generation

Participants: CESI RICERCA/ERSE/RSE S.p.A., OME, FEEM, RAMBOLL, ERIRAS

Description of work

Task 1: Technical/Economic Issues: Optimisation of infrastructure investments 

Lead: CESI RICERCA/ERSE/RSE S.p.A.; ERIRAS, OME


An efficient development of the electricity transmission infrastructure is a key precondition to the achievement of the EU targets for a secure, competitive and sustainable electricity supply in the EU Member States, as witnessed by the recent EU energy strategy and particularly by the EU Priority Interconnection Plan.
However, nowadays a number of uncertainties (e.g. the future developments of load demand, generation supply - especially renewable sources which are assessed apart in WP 5.5 - and electricity prices, the increasing time requirements for the realisation of transmission infrastructures in EU Member States) increase the risk that the development of transmission infrastructure will not adequately support the EU strategy towards a secure, competitive and sustainable electricity supply. One of the possible consequences is the waste of public money (or private money, in case of non-regulated investments) to develop inefficient transmission infrastructures. Furthermore, it is still difficult for transmission system operators to understand the possible implications on EU electricity exchanges of the under-discussion enlargements of the European power system towards Northern Africa, Turkey and Russian Federation.
To provide an enhanced understanding of the aforementioned key developments, in task 5.6.1. we plan first to assess the future trends in load demand, generation and renewables development, transmission and interconnection capacities, and fuel prices in EU and in the neighbouring regions. Concerning the neighbouring regions, the regional experience of project partners (ERIRAS for Russian Federation and IPS/UPS European countries, OME for Mediterranean Partner Countries) will guarantee added value to the investigations.
In the second part of task 5.6.1. we will optimise transmission infrastructure development by means of an optimisation tool in consistency with the scenarios developed in WP4. The DISPAREA (energy/power dispatch by areas) simulation tool, developed by CESI RICERCA/ERSE/RSE S.p.A., will be used to work out optimal configurations for the electricity transmission infrastructure. Two simulations years will be assessed: an intermediate time horizon, i.e. year 2015, and a long-term target year, i.e. 2030. The simulation tool will optimise the energy transfers and transmission/interconnection capacity according to the constraints related to: load-generation balance, generation units capability, hydro generation constraints, imposed non-dispatchable generation (e.g.: co-generation units and some renewable sources), CO2 emission limits in compliance with the Kyoto protocol. The application of the DISPAREA tool will also allow us to assess the benefits given by transmission reinforcement, and identification of potential winners and losers from the development of transmission infrastructure.

Task 2: Technical/Economic Issues: Assessment of the impact of gas shortages risks on the power sector 

Lead: CESI RICERCA/ERSE/RSE S.p.A.; OME, RAMBOLL

Electricity security of supply remarkably depends on fuel security of supply. It is widely recognized that the role of gas in power generation in EU Member States is growing today and will significantly increase in the future, determining risk of insecure supply in case of gas shortages. One of the possible solutions for dealing with this risk is fuel substitution in power plants where this substitution is possible. In contrast with the case of electricity demand response, this substitution could have an important social cost, because the “constrained-in” generation is expected to be less competitive and less environmental-friendly than the “constrained-off” production.
Furthermore, due to the different strategies for electricity generation in EU Member States, the risk of gas shortages could have different impacts on countries and regions. As a consequence, cross-border electricity exchanges between countries and regions could be different. The objective of task 5.6.2 is to quantify the possible impacts of such substitution on power generation and on power transmission sectors in the regions characterized by the largest use of natural gas as a source for electricity generation. The experience of OME and RAMBOLL in the gas sector at a pan-European level will be helpful to provide realistic inputs and case studies on gas shortage risks to be analyzed by CESI RICERCA/ERSE/RSE S.p.A..

Task 3: Technical/Economic Issues: cost of electricity interruptions 

Lead: CESI RICERCA/ERSE/RSE S.p.A.

Electricity security of supply strongly depends also on the investment decisions by transmission and distribution companies. It is widely recognized that low levels of investments normally result in unreliable supplies, while excessive investments can determine unnecessary expenses with a consequent increase of electricity transmission and distribution tariffs to consumers. In a liberalized industry where companies have to justify their expenses to a regulatory or governmental body on the basis of the benefits these expenses provide to consumers, the assessment of Value Of Lost Load (VOLL), jointly with calculations of the Expected Energy not Supplied, is one of the traditional approaches to investigate these benefits.
A number of studies have been conducted to evaluate VOLL, i.e. the cost of electricity interruptions to electricity customers, ranging from analytical evaluations to case studies on major unreliability events and to customer surveys. Task 5.6.3 will broadly analyse the existing studies about the costs of electricity interruptions, with the aim to expand the analytical framework not only to direct economic impacts (e.g. lost labour and materials, lost production, costs of restarting processes, damages, lost food) but also to direct social impacts (e.g. lack of railway transportation, uncomfortable temperatures in buildings, “fear of the dark”) and to indirect impacts (such as disorders during an extended blackout or losses by government or insurance companies).
For the execution of this task CESI RICERCA/ERSE/RSE S.p.A. will outsource 19,000 Euro for technical inputs related to the evaluation of costs of electricity interruptions. For more details on the subcontractor and relevant tasks please see Section B.2.3.4 Sub-contracting.

Task 4: Economic/Regulatory Issues: role and responsibilities of TSOs for security of supply

Lead: FEEM; CESI RICERCA/ERSE/RSE S.p.A.

Transmission System Operators (TSOs) cover a fundamental role in guaranteeing electricity Security of Supply, both at national and international level. Still as they have different missions and regulatory frameworks and also operate under different market rules, there is no unique approach to address the problem, although strict technical and organizational rules and standards of the UCTE Operational Handbook could be seen as a basis for harmonization. The first aim of task 5.6.4. is then to analyze the current organizational formats of TSOs and define for each the implications for security of supply. The study will also present general recommendations for improvements in regulations. The approach will be interdisciplinary, taking into account technical and market/regulatory issues. The second part of task will address the international issues, e.g. propagation of major unreliability events, impact of bulk renewable energy sources on the power system, cross-border trading issues, which concern Security of Supply and TSOs. As recent black outs have shown there are strong interdependencies across systems, where accidents "travel" across Europe creating wide interruption of service. The study will analyse the current situation in terms of energy policy, regulation, investments and operations to show the challenges in terms of security and reliability in a unified framework.

Task 5: Economic/Regulatory Issues: Electricity security of supply with increased presence of distributed generation

Lead: FEEM

Given the forecasted increase of distributed generation (cogeneration of heat and power and small renewable energy sources) and the introduction of Demand Response techniques to control load there is a need to define new decentralized network architectures in order to guarantee an efficient use and the stability of the system.
The aim of the analysis in Task 5.6.5 is to describe the effects in terms of security of supply of these approaches, which could deeply affect the role and responsibilities of different actors in terms of safety and reliability.

Workpackage 5.6 is carried out under the co-ordination of CESI RICERCA/ERSE/RSE S.p.A.

Seventh Framework Programme

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