Transcript Background to National Grid`s Baseline analysis

Background to National Grid’s Baseline
analysis
14 August 2007
Agenda
Baselines during TPCR 2002 - 2007
 Consultation during the TPCR 2007 – 2012
 Ofgem’s modelling requests
 National Grid’s Network Analysis
 Ofgem’s Updated and Final Proposals

Baselines during TPCR 2002 - 2007
How were the baselines set?
 Baselines set on ‘Maximum Physical Entry
Capacity’ (MPEC) methodology

 Theoretical
maximum through each ASEP
 Ignored interactions between ASEPs
Obligations (SO baselines) set at 90% of MPEC
 Baselines in aggregate (9755 GWh/d)
acknowledged to be in excess of Physical
capability of the system
 Essentially purely a nodal model (no substitution)

Consultation during TPCR 2007 – 2012

Problems with current arrangements?
High baselines coupled with zero priced capacity on the day
discouraged Long-Term Signals and encouraged Short-Term
bookings
 Problems for new entrants (ASEPs) – not able to secure capacity
which was not yet booked at existing entry points





View that current arrangements were not flexible enough to
deal with changing demands for capacity
Debate over retention of entry specific baselines or move to
more aggregated level?
Should modelling be based on supply substitution or load
absorption?
Discussion whether baselines should exceed physical
capability of the system (at peak)
Load Absorption vs Supply Substitution




Purpose of the modelling was to determine the maximum
supply capability at different points on the system
Starting point for any network analysis is that supply
equals demand
How do you increase supply, yet keep supply and
demand in balance?
Load Absorption:


As supplies are increased at entry points, demands are increased
pro-rata to keep supply and demand in balance
Supply Substitution:

As supplies are increased at entry points a corresponding other
supply point is reduced (demands kept fixed)
Ofgem’s initial modelling request

Network:



Initially for 2 years 2007/8 and 2008/9
Demand side: central case forecast 1 in 20.
Supply side:

Initially just TBE Auctions + scenario for 2007/08 for all entry
points and for 2008/09 for MH and IoG Initially, employ both
supply substitution and 50/50 supply substitution/load absorption




Using least favourable node as supply balance
Modelling work produced four sets of data on “baseflows”
(which reflected the initial supply scenario)
Also produced “free increments” (reflecting network
capability at individual nodes or zones)
Modelling involved around 4 x 26 sets of analysis (104
man days effort)
Ofgem’s further modelling request

Network:



Settled on using only 2008/9
Demand side: central case forecast 1 in 20.
Supply side:

Settled on using three TBE scenarios (Auctions +, Transit UK and
Global LNG) using supply substitution




Using least favourable node as supply balance
Modelling work produced three sets of data on
“baseflows” (which reflected the initial supply scenario)
Also produced “free increments” (reflecting network
capability at individual nodes or zones)
Modelling involved 3 x 21 sets of analysis (58 man days
effort)
Ofgem’s Initial Proposals

Ofgem’s Initial Proposals (June 2006):
Decided on entry point baselines
 Baselines should be set consistent with physical capability of the
network (to include planned investments)
 NGG NTS to introduce methodology for substituting baselines (in
response to auction signals)
 Modelling work favoured supply substitution
 Proposed baselines were set on average of 3 TBE scenarios of
‘baseflow’ + 90% of ‘free-increments’


NGG NTS re-iterated that baselines should not exceed
physical capability of the system and in their view, Ofgem’s
IPs did exactly that

Within response to IP document, NGG NTS outlined its views for
modelling network capability and baselines
National Grid’s Network Analysis

Based on
 2006
plan ( i.e. on 2005 TBE data)
Central Supply scenario
 2008 Network
 Hence included planned investments such as those on East
Coast, Trans-Pennine pipeline

 Zonal
analysis (High case/Low case capabilities)
 Taking strong account of network interactions on the
system; and
 Capacity commitments already sold
NTS Entry Zones
St.Fergus
NORTHERN
TRIANGLE
Glenmavis
EASINGTON
AREA
Teesside
Partington
Burton Point
WEST
UK
EAST
COAST
Hornsea
Aldbrough
Hatfield Moor Easington
Barrow
Hole House Farm
Theddlethorpe
Bacton
Int
e
rco
Dynevor Arms
Milford Haven
Avonmouth
Isle of Grain
Humbly Grove
WytchFarm
nn
ect
or
SOUTH
EAST
Zonal Best/Worst Case - Peak day 2008 (mscm/d)
Supply
Easington
Caythorpe
Hornsea
Aldborough
Hatfield
Welton
Theddlethorpe
Saltfleetby
Bacton
IOG
Bletchingley
Barrow
Fleetwood
Teeside
St Fergus
Glenmavis
Partington
Byley
Hole House Farm
Burton
Milford Haven
Dynevor Arms
Humbly Grove
Avonmouth
Wytch Farm
sum
Base
Network
105.28
8.31
18.00
19.99
2.31
8.68
23.68
0.00
190.03
25.33
0.00
22.20
0.00
27.40
138.71
9.33
20.29
8.12
8.31
1.84
31.51
4.54
7.38
14.42
0.00
695.6624
Easington Area
Best
Worst
262
182.1
0
0
88.3
15.3
0
25
0
0
124
8
0
8.1
8.3
1.8
31.6
0
3
4.5
0
579.9
32.9
0
115.8
9
0
62.5
0
47
62.6
0
20.29
0
0
1.8
28.4
0
7.38
10
0
579.77
South East Area
Best
Worst
46.1
108.7
0
0
18
10.1
0
36.6
0.9
0.9
0
0
0.2
51.5
0
0
227
126
48.7
0
18
137
0
20.3
8.1
8.3
1.8
28.6
0
7.38
10
0
580.38
48
0
48.4
82.8
8
0
8.1
8.3
1.8
31.6
0
3
4.5
0
578.3
Northern Triangle
Best
Worst
41
85.2
0
8.31
0
9.8
0
20
0
2.31
0
8.7
23.7
49
0
0
178.9
84
25.3
25.33
0
0
290
174.9
0
0
0
1.8
16
0
0
4.5
0
581.2
3
8.12
8.3
1.8
82.4
0
3
4.5
0
578.67
East Coast
Best
Worst
381
22.2
0
0
131.7
0
0
0
8.3
1.84
29.7
0
0
4.5
0
579.34
West UK
Best
Worst
85.3
0
0
0
0
0
23.7
0
170.1
25.3
0
22.2
0
27.4
128.3
0
0
0
0
1.84
88.4
0
0
7.3
0
579.84
0
Zonal High/Low Capabilities
Zones
East Coast
Northern Triangle
West UK
Total over these
zones
Zonal Capabilities at peak
(GWh/d)
Best Case
4127
3142
958
8227
Worst Case
3338
1895
958
6191
Zonal Capabilities on cold
winter day
(GWh/d)
Best Case
Worst Case
6431
4747
Zonal Capabilities on
summer day
(GWh/d)
Best Case Worst Case
5034
3111
Principles of allocation

No reduction in existing entry capacity commitments
allowed
Based on maximum daily quantity booked for winter of 2007; plus
 Incremental capacity released at each entry point from 2007

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Any remaining capacity allocated on pro rata basis in
proportion to expected peak level of supply
Highlighted interactions between zonal capabilities
If optimise Northern Triangle first, this results in reducing East Coast
and West Coast zones below capacity rights already sold
 East Coast zone chosen as starting point, hence based on ‘high’
case capability of 4127 GWh/d
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Combined with Milford Haven at obligated level (950 GWh/d)
Results in only 1895 GWh/d of capability in Northern Triangle
Zonal Proposed Baselines
Zones
East Coast, set at
with sub-constraints of:
Easington Area
South East Area
Theddlethorpe
Northern Triangle
West UK
Total over these zones
Zonal Capabilities
(GWh/d)
4127
1679
2221
275
1895
958
6980
National Grid’s initial proposals for baselines
ASEP
Easington
Hornsea
Garton
Hatfield Moor
(storage)
Theddlethorpe
Bacton
Isle of Grain
Barrow
Teesside
St. Fergus
Cheshire
Hole House
Farm
Burton Point
Milford Haven
Barton Stacey
Total over these
nodes
1
Mscm/d
136
20
24
GWh/d
1473
221
255
Existing
licence
baseline
GWh/d
1062
175
420
33
360
54
22
42
196
39
62
63
163
44
451
2120
425
669
685
1769
480
848
1745
453
712
761
1677
214
227
1768
453
240
234
1342
214
25
266
26
26
24
81
21
260
878
232
55
950
50
55
950
90
973
10544
9292
7286
Ofgem’s Initial Proposals
National Grid
Proposal1
GWh/d
1062
175
420
These baselines are based upon investment within the PCR to increase capability up to the existing licence baselines for Bacton, Easington and Isle of Grain with no further
investment assumed. We are still to confirm the capex assumptions underlying Ofgem’s baselines.
Ofgem’s Updated Proposals

Ofgem’s Updated Proposals (September 2006):
 Stated
that “baselines should be set at levels consistent
with the simultaneous physical accommodation of
possible flows under a wide range (although not all
possible) scenarios across entry points”
 Clarified that baselines will be set such that no baseline
is less than the amount of obligated capacity already
sold
 Proposed reduction of proportion held back for shorterterm auctions to 10%

NGG NTS outlined concerns that not yet seen
baselines which meet Ofgem’s stated aims
National Grid’s Proposals for all ASEPs
Easington
Bacton
Isle of Grain
Milford Haven
St Fergus
Teesside
Barrow
Theddlethorpe
Burton Point
Hole House Farm
Barton Stacey
Hatfield Moor (Storage)
Garton
Cheshire
Hornsea
Canvey
Portland
Fleetwood
Caythorpe
Wytch Farm
Blyborough (Welton)
Aldbury
Palmers Wood
Glenmavis
Partington
Avonmouth
Dynevor Arms
Winkfield
Tatsfield
Total
Current
Total
Obligated
GWh/d
1062
1745
453
950
1677
761
712
848
55
26
90
54
420
214
175
0
0
0
0
3.2
0
0
0
99
215
149
50
0
0
9758
NGG
Proposed
(2008)
GWh/d
1062
1768
453
950
1341.6
234
240.1
227
55
26
90
22
420
214
175
0
0
0
0
0.3
0
0
0
79
215
149
8
0
0
7729
Ofgem’s Final Proposals

Ofgem’s Final Proposals (December 2006):
Stated that believed baselines reflected physical capability of the
network
 Baselines were consistent with the allowances made for NGG
NTS in respect of the costs of buying back capacity


National Grid believed FP baselines still carried risk as
above its proposed baselines
Ofgem's
FPs (Dec)
GWh/d
East Coast
4465
Easington Area
1661
South East Area
2193
Theddlethorpe
611
Northern Triangle
2370
West UK
958
North West
666
South West
355
Total
8814
NGG
Proposed
(2008)
GWh/d
4127
1679
2221
227
1895
958
510
239
7729
Note that no zonal analysis performed for NW or SW zones
NGG
Analysis High
GWh/d
4127
1679
2221
227
3142
958
510
239
8976
NGG
Analysis Low
GWh/d
3338
1895
958
510
239
6940