Transcript Capacity payments and new generation

Compañía Administradora del Mercado Eléctrico Mayorista
Argentine Power Sector
Capacity payments, markets and new
Generation
APEX Conference
November 2005
Orlando, USA
CAMMESA
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Outline
WEM – Basic Rules - Global Figures –
Key Indicators
Payments to Generators – Energy,
Capacity & Ancillary Services
Incomes – Hydro and Thermal
Generation
Macroeconomic changes
Investments in new Generation
Expectations - Concerns
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% GDP vs Demand
% GDP Annual Variation vs. Demand
15%
about 3 $/u$s
exchange rate 1$/u$s
10%
5%
0%
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
-5%
-10%
-15%
GDP
Demand
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% GDP vs Demand
Annual GDP Variation vs Electricity Demand
2003 vs 2002
15%
1997 vs 1996
% Annual Demand
10%
5%
0%
-12%
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
-5%
2002 vs 2001 =>
-2% Dem var with
-11 % GDP var
Estimated 2005
vs 2004
2004 vs 2003
-10%
-15%
% annual GDP
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Annual Peak Demand
MW
Annual Maximum Peak Demand Evolution
18000
17000
16000
2200
EXP = 2200 MW
2200
15000
14000
1050
2200
1050 2200
Local = 6700 MW
13000
12000
11000
10000
9000
9035 9325
15700
14790
14359
137541406113481
1226912730
11776
11243
1010410213
8000
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
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Installed Generation Capacity
MW
WEM - Installed Capacity
25,000
60 MW/yr
20,000
15,000
HI
CC
TG
TV
NU
10,000
5,000
0
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
WEM capacity: 1992 = 13267 MW
2004 = 23284 MW  ~70% Increase – Gen => 9700 MW
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Basic Market Operating Rules
 SPOT MARKET (80%)
• SHORT-TERM MARGINAL-COST BASED
• STABILISED SEASONAL PRICES FOR
DISTRIBUTORS (regulated)
• HOURLY PRICES IN SPOT MARKET (capped to
gas prices)
• ADDITIONAL PAYMENT FOR CAPACITY (12
$/Mwh; 90 hours per week)
• REMUNERATION FOR ANCILLIARY SERVICES
 CONTRACT MARKET (20%)
• CONDITIONS AGREED BETWEEN PARTIES
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Payments to Generators
CAPACITY
ENERGY
ANCILLARY
SERVICES
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Payments to Generators
Payments to Generators- $/MWh - 2005 - Typical Plants
60.0
20.0
50.0
15.0
40.0
30.0
10.0
Margin
20.0
5.0
10.0
0.0
0.0
Base load Thermal Gas fired plant
Energy
Run of River Hydro Plant
Capacity
Anc. Services
Reservoir Hydro Plant
Variable Cost
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Capacity Payments
Capacity
 it is paid 90 hours of higher demand per week: labour
days (9 am to 12 pm); weekends (10 peak hours)
 price => 12 $/MW
 Payments to generators that are available in those hours
Capacity Payment Hours & Demand (MWh)
16000
Demand
Capacity Payment Hours
14000
12000
10000
8000
6000
4000
2000
0
mon
tue
wed
thu
fri
sat
sun
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Capacity Payments
Base Capacity => determined
simulations for each power plant
annually
through
Hydro =>average output (related with the river
module) plus spinning reserve
Thermal => all generators required on a dry hydrologic
year with high demand
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Capacity – Hydro & Thermal
Monthly Hydroelectrical Generation - MW
6000
Hydro =>average output =>
stabilises capacity incomes
through the year (seasonal
variations) and related with
inflows variability
5000
4000
3000
2000
Avg output
Annual Hydroelectrical Generation - MW
1000
5000
sep
oct
nov
3500
3000
2500
Rich years
2000
Dry years
1500
1000
500
98
%
94
%
89
%
84
%
79
%
74
%
69
%
21
%
16
%
11
%
6%
0
2%
Thermal => if rich hydro
year => receives payment if
the plant is available even
while not generating
dic
65
%
Expected
output
4500
aug
4000
60
%
jul
55
%
jun
50
%
may
45
%
apr
40
%
mar
35
%
feb
31
%
jan
26
%
0
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Capacity Payments
Signals
Be available (hydro & thermal), especially when
needed (hours of higher demand)
Payments independent of actual dispatch =>
helps to prepare the budget
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Electricity Sector Scenario - Economics
 Tariffs to end consumers => social impossibility
to increase tariffs due to economic crisis and
people impoverishment
 Pesification of natural gas, energy and capacity
prices on the WEM
 Increase of imported fuel and maintenance
costs; gradual increase of natural gas price
 Uncertainty related with exchange rate
evolution and expected performance of the
generation units
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Energy Prices
PURCHASE
DISTRIBUTORS
Regulated
Tariff
SEASONAL
PRICE
(forecast)
SPOT MARKET
STABILIZATION
FUND
HOURLY
PRICE
(real)
LARGE
USERS
SELL
PURCHASE
GENERATORS
15
0
Ago-05
Feb-05
Ago-04
Feb-04
Ago-03
Feb-03
90
Ago-02
Feb-02
Ago-01
Feb-01
Ago-00
Feb-00
Ago-99
Feb-99
Ago-98
Feb-98
60
Ago-97
70
Feb-97
80
Ago-96
Feb-96
Ago-95
Feb-95
Ago-94
Feb-94
Ago-93
Feb-93
Ago-92
Feb-92
Ago-91
u$s/MWh
Spot Price Evolution
Definanciation
of stabilization
fund
4
Monomial $
Monomial u$s
3.5
$ / u$s
3
Distributors
2.5
50
2
40
30
1.5
20
1
10
0.5
0
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Investment in new generation
 Conditions
 Tariff situation permits only to cover variable costs
 Complex Macroeconomic scenario
 5 % annual increase in demand > gradual reduction of



the level of reserves => needs of new generation
(1200/1600 MW) in a couple of years
Restrictions of gas availability (product & transport)
Atomised generation ownership, combining hydro &
thermal interests
Fiscal Surplus due to the increase of economic activity
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Generation ownership
Generation - Participation
Hydro - TOTAL AUS
6%
Thermal - TOTAL AUS
8%
Thermal - AES
5% Hydro - AES
3%
Thermal - CAPEX
5%
Thermal - CMS
4%
Thermal - PLUSPETROL
5%
Thermal - Dock Sud
5%
Thermal - DUKE
Hydro 0%
- DUKE
1%
Thermal - Piedrabuena
2%
Hydro - Petrobras
1%
Thermal - Petrobras
5%
Hydro - Others
2%
Thermal - Endesa
9%
Thermal - Others
5%
Hydro - Endesa
4%
Hydro - HIDISA
2%
Nuclear - National
8%
Hydro - Binational
17%
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New Investment - Agreement
 An agreement was reached where the Treasure




ensures payments of variable costs (including
capacity) and 35 % of marginal rent
Rest of marginal rent => derived to a Fund (FONINVEMEM)
created to finance the installation of new generation
Expected Amount 2007 => enough to finance a
600/1000 MW Combined Cycle plant
All Generators will own shares of the new plant.
Gradual return to initial market conditions (capacity
payment 10 u$s/MW; marginal price; adequate tariffs
to distributors) when the new generation begins its
operation
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Generators & FONINVEMEM
Payments to Generators- $/MWh
50.0
45.0
40.0
Marginal
Rent
35.0
30.0
To Fund
65%
35%
25.0
20.0
To Genco
15.0
10.0
5.0
0.0
Settlements
Capacity+Services
Actual Payments to GENCO
Variable Cost
Energy Margin
To Fund
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Expectations - Concerns
 Tender for new plant to be launched soon
 Agreement to ensure gas availability to operate the



plant efficiently
Increase of fossil fuels costs make hydro and
alternative generation more competitive, but require
a kick off from national government
Capacity payments help to maintain the operation of
existing plants, required to cope with the increase of
demand
Timeline very tight => energy savings and an
efficient use of available reserves to reduce risk of
supply
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Quality, Technology & Transparency
For an Electrical Market without frontiers
¡Thanks for your attention!
Orlando, November 2005
Doubts => [email protected] More info => www.cammesa.com.ar
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