First South East European
Regional CIGRÉ Conference
SEERC
Portoroz, Slovenia, 7—8 June 2016
Regulatory framework for demand side
response as necessary precondition for
fair network usage cost allocation
Ljubo Knežević, CGES, Montenegro
Paper structure
• Introduction
• Network charging practices in the region
• Recent demand evolution in Europe
• Opportunities of DSR regulatory framework
• Trends and experiences of Montenegrin electric
power system
• Demand side response incentives and network cost
allocation fairness
• Conclusions
First South East European Regional CIGRÉ Conference - Portoroz, Slovenia, 7—8 June 2016
SEERC
1/7 Introduction:
Why regulatory framework &DSR?
• DSR is „ultimate“ electricity market goal
• Than shall it have any relation with price regulation?
• End consumer’s total electricity cost still consists of
significant percenage of regulated expence
• Is it the case that we shall avoid introduction of new regulated
segment?
• Still – vast variety of grid usage regulation practices
prove – there is still no unified methodology for fair
network usage cost allocation?
• Is there any reason to believe that it is (among other factors) due to
low appreciation of the end consumer’s flexibility?
First South East European Regional CIGRÉ Conference - Portoroz, Slovenia, 7—8 June 2016
SEERC
2/7 Network charging practices
First South East European Regional CIGRÉ Conference - Portoroz, Slovenia, 7—8 June 2016
SEERC
2/7 Network charging practices
First South East European Regional CIGRÉ Conference - Portoroz, Slovenia, 7—8 June 2016
SEERC
2/7 Network charging practices:
Where the difference comes from?
• different level of:
•
•
•
•
power system development
network reliability
production adequacy or
energy sources availability
>>> energy pricing structure can be different in
different regulatory environments.
First South East European Regional CIGRÉ Conference - Portoroz, Slovenia, 7—8 June 2016
SEERC
2/7 Network charging practices:
Where the difference comes from?
• It is likely that much more harmonized approach
should be expected
• especially in the area governed by the same legal
principles:
• In one hand it is obvious that this is not the case. But
• recent initiatives do confirm that the need for
common general principles in network charging is
recognized.
First South East European Regional CIGRÉ Conference - Portoroz, Slovenia, 7—8 June 2016
SEERC
2/7 Network charging practices:
Where the difference comes from?
• all transmission and distribution system operators
across the Europe found their:
•
•
•
•
network planning,
Development
maintenance and
operation
• on the same legal and technical principles
• where the difference comes from?
First South East European Regional CIGRÉ Conference - Portoroz, Slovenia, 7—8 June 2016
SEERC
3/7 Recent demand evolution
First South East European Regional CIGRÉ Conference - Portoroz, Slovenia, 7—8 June 2016
SEERC
4/7 Oportunities of DSR regulatory
framework
• new options to diligent end consumers;
• fair network cost allocation among all network users
based on theirflexibility;
• new possibilities for efficient system balancing and
even countertrading;
• Increased market competition;
• value added in the electricity market by introduction
of different levels of network service quality (e.g.
flexible users / non-flexibles users)
First South East European Regional CIGRÉ Conference - Portoroz, Slovenia, 7—8 June 2016
SEERC
5/7 Trends and experiences of
Montenegrin electric power system
Gradients of distribution consumption trends by municipalities
from 2007. To 2014 (left) and 2013 – 2014 (right)
First South East European Regional CIGRÉ Conference - Portoroz, Slovenia, 7—8 June 2016
SEERC
5/7 Trends and experiences of
Montenegrin electric power system
Monthly peak load – average load ratio for transmission distribution connection points in Montenegro in 2014
First South East European Regional CIGRÉ Conference - Portoroz, Slovenia, 7—8 June 2016
SEERC
6/7 Demand side response
incentives and network cost
allocation fairness
power related network charge
First South East European Regional CIGRÉ Conference - Portoroz, Slovenia, 7—8 June 2016
SEERC
6/7 Why power-related charge
• absolute freedom of “time of use” selection is one of the
main principles on which electricity consumption is based.
• Every consumer shall be entitled to continue using the electricity
whenever he has a need – hence it is logical that consumer shall
contract and pay the network usage based on the connection point
capacity and availability (quality parameters) and not based on time
of use;
First South East European Regional CIGRÉ Conference - Portoroz, Slovenia, 7—8 June 2016
SEERC
6/7 Why power-related charge
• comfortable use of electricity assumes highly available grid
with the sufficient network capacity and comfort level is
much more related to the grid availability when it is really
needed than to overall availability during the month;
• amount of energy taken from the system (time of use) is
already taken into account for the total electricity expense
through the price of the energy itself - doublecounting
• System planning and development is performed based on
the prediction of power components – power flows, peak
demand, transfer capacities. Consequently investment and
maintenance expenses are almost exclusively related to the
estimated power, not the energy;
First South East European Regional CIGRÉ Conference - Portoroz, Slovenia, 7—8 June 2016
SEERC
6/7 Why power-related charge
• This kind of charge would:
• favour users with high power factors (efficient level of connection
point usage) and
• would leave significant financial resources for compensation of
flexible consumers, ready to harmonise their system usage with
current system conditions.
First South East European Regional CIGRÉ Conference - Portoroz, Slovenia, 7—8 June 2016
SEERC
7/7 Conclusions
Aim of the paper was:
• to focus on power related network charge as one
but powerful instrument
• attempt to revive the discussion over this old
instrument but in new circumstances
Proposed solution:
Improves cost allocation fairness and in the same
time incentivises demand flexibility
First South East European Regional CIGRÉ Conference - Portoroz, Slovenia, 7—8 June 2016
SEERC
Thank you!
First South East European Regional CIGRÉ Conference - Portoroz, Slovenia, 7—8 June 2016
SEERC
Question for Author
Power related tariff would favour users with high power factors
(efficient level of connection point usage) and therefore would
inherently support the development of DSM. However, Power
factors achieved by the industry consumers and conventional
generation are today much better that power factors achieved
by the end cosmumers and this ratio might persist on the
current level regardless of the tariff incentives. How can one
defend the power related tariff by knowing that it is shifting the
tariff costs from the industry to the end consumers having also
in mind that large parts of the distribution and transmission
networks have been designed with attention for the industry
consumers and generators?
First South East European Regional CIGRÉ Conference - Portoroz, Slovenia, 7—8 June 2016
SEERC
Question for further discussion
DSM is one of important corner stones of the Smart
Grids innovation environment. What other kinds of
Smart Grids technologies could be implemented in
the network areas with low ulilization times due to
season related issues?
First South East European Regional CIGRÉ Conference - Portoroz, Slovenia, 7—8 June 2016
SEERC