Grid operators boss: We are trying to align physics and markets

Schmitt: "Security of supply is a national responsibility. But if you are looking at it on a country-to-country basis, you may forget how much a neighbour can help you cover your security of supply. ." [spinster cardigan/Flickr]

Security of electricity supply should remain a national responsibility although regional coordination can help provide backup in case of need and avoid overcapacity, according to Laurent Schmitt, the Secretary General of ENTSO-E, in an interview with EURACTIV Slovakia.

Laurent Schmitt is General Secretary of European Network of Transmission System Operators (ENTSO-E), which represents 43 electricity transmission system operators (TSOs) from 36 countries across Europe.

Schmitt was interviewed by EURACTIV.sk’s Senior Editor, Pavol Szalai, at the Budapest conference Electricity Market Integration 2.0 in Central and South East Europe.

What issues do transmission system operators have with the legislative package ‘Clean Energy for all Europeans’?

Overall, we are happy with the package, especially with the proposal on market design. This includes going further on scarcity pricing. We are also happy about ENTSO-E being in charge of calculating (generation) adequacy at the European level. (Author’s note: Generation adequacy is defined by ENTSO-E as an assessment of the ability of the generation on the power system to match consumption.)

General adequacy and security of supply is a national responsibility. But if you are looking at it on a country-by-country basis, you may forget how much a neighbour can help you cover your security of supply.

We are trying to have a broader view beyond a single country and figure out in this adequacy calculation, how can countries support each other and avoid overcapacity.

Adequacy is currently calculated on the national level?

Yes, for the moment it is mostly calculated on the national level. ENTSO-E does pan-European adequacy analyses (the seasonal outlooks and the mid-term adequacy forecasts). We are happy that the package proposes to formalise this role further by encouraging the Member States to take into account the results of our pan-European analysis.

But we are not so sure about only taking our pan-European analysis as basis for evaluating the needs for capacity mechanisms. What we want is for national, regional and pan-European adequacy analysis to be consistent in terms of methodology. The package should help with that.

And the European Commission wants to do the calculations on the European level?

The Commission wants to make our methodology a basis for further analysis. They recommended ENTSO-E to play this role and we are perfectly fine with it. That is the interesting piece. But having only the ENTSO-E study as justification of capacity mechanisms looks a bit more problematic. You need to have also the national and regional views.

Is this the most important issue?

The more controversial piece is how to further fertilise cooperation of TSOs for grid controls and grid operation.

Based on facts, we argue there are already ongoing initiatives like the regional security coordinators (RSC) started in 2008 as a result of a blackout that split Europe’s interconnected system in three. The older ones are TSCNET in Germany and CORESO in Belgium. In 2015, a new RSC was created in Belgrade (SCC) and all our members agreed to voluntarily go through regional security coordinators to ‘coordinate’ five services related to operational planning. So now we have additional RSCs in the Nordics, in the Baltics and potentially another in South East Europe. To avoid disparities among regions and that pan-European analysis becomes impossible, we recognise the need to have common calculation methodologies.

The Commission is, however, taking a top-down approach saying it wants to establish separate entities in the region – regional operational centres (ROC) – and give them the decision-making power. This is simply not feasible. The security of supply operation is still managed by TSOs.

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So, you want to keep the responsibility on the country level?

Yes, the country level responsibility has to be acknowledged based on the Lisbon Treaty. It is better to enable bottom-up initiatives, the RSCs. The TSOs know they need to cooperate.

Do they have a sufficient regional overview?

Yes. The RSCs are the tools for regional calculation. Today they are more of advisory bodies with the control and decision being made by the country. And it should stay like that. Security of supply is in the responsibility of the country and the local TSOs, according to the Lisbon Treaty.

In the gas sector, security of supply has been regionalised with the recent regulation.

We compare two different sectors. You cannot store electricity easily. The real-time operation of the grid is of particularly critical nature as compared to the gas. When it comes to intra-day and real-time markets, you must be able to take fast decisions and make splits in the system. The potential scenario of splitting countries is also the way to go in case of a major pan-European crisis.

We are very much in favour of regional security coordination and we want to do more with the RSCs. But not the way it is currently tackled by the energy package.

In your view, is the new legislation shifting too much competence to the regional and European levels?

Yes, for sure. The decision-making is being shifted there, while we don’t have any regional entities in charge of regional security of supply. If you face an extreme scenario of blackout requiring strategic decisions…

Is it a realistic scenario in today’s Europe?

It happens really often. When the grid gets tense in winter, you can end up with an extreme scenario requiring quick market measures. And then you need to give power to the entity which has to manage it. The RSC can make calculations and advise, but the operation has to stay with the TSOs.

Last year, at ENTSO-E’s regional forum in Bratislava, Kamilla Csomai, the CEO of the Hungarian TSO Mavir said she expected the package to clear out the role of TSOs and DSOs. Has it been fulfilled?

It is one of the elements of the winter energy package. There good and bad points. The good thing is that it recognises the need for an organisation to coordinate the DSOs. Like TSOs, they will have a coordinating organisation. In ENTSO-E we put up a forum to agree on certain principles of cooperation between TSOs and DSOs.

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The Clean Energy Package gives, however, a misleading impression that the wholesale and retail markets are separate. That is not what we need. We need a market for prosumers with the same set of bids and offers. And what happens between the TSOs and DSOs has to be managed as part of the grid operations.

Wouldn’t it be easier for you to isolate the retail market? It is the DSOs who have to deal with the prosumers.

Regarding the physical connection points – no doubt. We don’t argue on that. When it comes to market integration, we argue big time. If you isolate the retail market, you isolate all the flexibility of the prosumers from the wholesale operations. If you want to bring more flexibility to these markets, the wholesale needs to be able to tap into these resources.

But at the moment, the flexibility on the demand side is marginal, isn’t it?

It is starting to come. It started with the industrial loads. Now we are seeing more and more prosumers, especially the ones with photovoltaic sources or electric vehicles. We say they have to be integrated into the integrated energy markets.

We are not opposed to DSOs having a role in congestion management. But we will be able to provide inputs about how much flexibility they need. Flexibility should be fed on all levels. And one single platform must be able to arbitrate between flexibility for TSOs and DSOs.

Basically, you are saying that in the future, some cross-border flows may depend on whether I turn my washing machine on or off.

The balancing of the pan-European system will depend mostly on one thing: the indication of real-time price. That is how the demand response is being built right now. It will also depend on other price signals, potentially provided by the local DSOs.

For example, you cannot charge all electrical vehicles in a specific area of the system. If there are many, the DSO will have to seek flexibility for its own congestion management system.

Keep in mind also that although DSOs connect the prosumers physically, TSOs connect through the frequency, which gives a signal to every consumer about how well load and generation are aligned.

We also need to recognise that rules are going differ from country to country. In some countries, DSOs are large, in others they are smaller. Their technical capabilities are going to be very different.

About 70% of interconnections between the EU countries are not accessible for commercial use. Why?

It is a complex topic related to managing security of supply. We have highly interconnected grids. The physics of the grids is such – and it doesn’t concern only interconnections, but also assets within the country – that on average they are used in the range of 30% and 40%. In the future, we should be more transparent about the situations faced by the TSOs.

But you can’t go against the physics. We are trying to align better the physics and the markets and we are progressing step by step.

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