White Paper on Security of European Electricity Distribution

1. Draft 17.4.2007 Antti SilvastJoe Kaplinsky UNDERSTAND Project meeting arranged by NESA , Finland 3-4 May 2007 White Paper on Security of European Electricity Distribution

2. Structure of the White Paper Analysis of the European power system and review of current national and EU-wide policies on energy supply management a view to distilling essential drivers, future trends and current best practice Key themes Resilient systems Globalisation Sustainability Public acceptability Emergency responses Data Surveys, literature and research articles The internal energy market country reviews by the European Commission (all member states) The annual reports that EU member states prepare for European Regulators’ Group for Electricity and Gas (24 member states) Discussions with electricity experts Also, the ongoing PhD project of A. Silvast

3. Presentation today Technical factors Organisational factors Social factors Defining security of electricity supply Blackouts – examples and impacts Training and standards Outputs for UNDERSTAND project

4. Technical factors Expanded grids Complex and intelligent components Intermittent sources of production Ageing infrastructure

5. Organisational factors Internationalisation Privatisation Outsourcing Competition

6. Social factors Climate change and managing demand Climate change and renewable energy Risk: power lines and cancer Consumer sovereignty Demographics?

7. Defining security of electricity supply Electricity end-use

8. Why electricity supply is critical infrastructure “Critical infrastructure include those physical resources, services, and information technology facilities, networks and infrastructure assets which, if disrupted or destroyed, would have a serious impact on the health, safety, security or economic well-being of Citizens or the effective functioning of governments.” (Green paper On a European Programme for Critical Infrastructure Protection 2005) Key event: Terrorist strikes towards commuter trainsin Madrid in 2004 Electrical supply as a series of tightly interlocking technical and social networks. Primary fuels, generation, transmission & distribution, end-use Commercial, legal and regulatory networks Training and professional networks A break at any point in the chain will result in disruption

9. Blackouts

10. Major blackouts in EU

11. Case 1: Europe 2006 Key event Disconnecting a high voltage line in Germany for the transfer of a ship Main causes The non fulfilment of the N-1 criterion Insufficient inter-TSO co-ordination Recommendations (UCTE) The application of N-1 criteria Transmission system operator’s defence plans Developing standard criteria for regional and inter-regional transmission system operator co-ordination Real-time information platform of the actual state of the UCTE system Adapting the regulatory and legal framework of electricity transmission (more information and control for transmission system operators) Other possible issues “Short term commercial objectives” “Strict constraints through regulation” The role of wind generation

12. Case 2: Italy and Switzerland 2003 Key event Overloaded lines between Switzerland and Italy, resulting to flashovers with trees Main causes The inability of the Swiss system operator to reclose a line The subsequent responses by the Swiss and Italian system operators UCTE area recommendations (UCTE) Mandatory emergency procedures The application of N-1 criteria Day ahead congestion forecasts Real-time data exchange Minimum requirements for generation equipment, defence plans and restoration plans Load-frequency control strategies Wide area measurement system National recommendations (UCTE) Enforce minimum requirements for generation units Enforce defence and restoration plans for operators Evaluate tree trimming practices The blocking of on load tap changers of transformers Other possible issues “The opening of the electricity market” Tree trimming practices

13. Case 3: Sweden and Denmark 2003 Key event A Swedish nuclear plant shut down followed by a 400 kV substation failure in Sweden Main cause Two major faults within 15 minute period Recommendations (Elkraft System, Svenska Kraftnät) Planning and operational standards of the Nordic system Automatic load shedding Possible consumer disconnection Protecting the infrastructure vs. maintaining services during emergencies Strengthen restoration processes Enforce technical requirements for generators Integrated information of the whole Nordic system Communication strategies (distributors, consumers, authorities and the media ) Eliminate the risks of flashovers between two busbars Enforce inspections and scheduled replacements of critical parts Review outsourced maintenance Investments into transmission lines between Denmark and Sweden New generation to southern Sweden Other possible issues Absent: non-problematic blackout

14. The social impacts of blackouts Loss of computers, appliances, lights, electric heating, communication, waste disposal, drinking water, sewage management and mobile phone systems Discovering the impacts Method 1: economic product (e.g. GNP) / electricity consumption Method 2: ask costs directly from users On average, higher costs than with method 1 But notable dispersion: very high costs for some users, low for others Method 3: interview users about experiences Fatalism towards easy blackouts Criticism towards difficult blackouts Technical explanations are usually unacceptable Nature-related explanations are usually acceptable

15. Technical measures for handling blackouts Coordinated planning e.g. Pan-Nordic process: Exchange forecasts for capacity, dimensioned faults, plans for generator shutdowns, investments in interconnections Reserve generation capacity Return to N-1 secure state through ”fast disturbance reserve” Maintenance engineering Reliability centred maintenance: an optimal mix of preventive and reactive maintenance Computerised maintenance management systems

16. Demand-side measures for handling blackouts The customer’s role: awareness of “true costs” of consumption The responses’ impacts in amount of energy For large-scale consumers of industrial, public sector, commercial sector and agriculture, impacts quite well-known For household consumers, impacts are still research-in-progress The moral and value of reducing energy use The ”life politics” of energy use: promoting awareness of energy and energy use as life style

17. Training measures for handling blackouts Education and training for emergency response Team working and communication The importance of common purpose

18. Standards as alternative to regulation and market protectionism The rise of market protectionism Securing supply as political counterforce to market liberalization The rise of regulation Higher continuity and more secure transmission and distribution systems Bureaucratic requirements on the existing institutions and practices Standards Common cross-industry bench-mark knowledge standards Security of supply requires shared tacit assumptions about common goals A forum with industry participation

19. Outputs for the UNDERSTAND project Resilient systems Globalisation Sustainability Public acceptability Emergency responses

20. Thank you for your attention

21. Electricity regional markets in the EU

22. Physical flows of energy in the UCTE system

23. Cross-border exchanges and coordination • In market-based model, future capacity has to be estimated • Available transfer capacity for cross-border exchanges is estimated daily • typical seasonal base load flow models • On this basis, yearly, monthly, weekly, daily or intra-daily auctions of capacity are held http://www.nordpool.com

24. Outsourcing maintenance Background: demands for competition and cost-effectiveness in public and private sector Outsourced service can carry on with less workforce, machines and facilities (too much resources vs. just enough resources) The activities that can be delegated outside electricity companies: Network planning Network monitoring Preventive maintenance Reactive maintenance Customer service

25. Investments and personnel • Much of the present electricity infrastructure put in place in the 1950s to 1960s • a typical design life of 40 to 50 years • In EU, investments have often been reduced to a matter of internal markets, renewables and energy saving • And regulation: ”Member States must have a regulatory framework in place which supports investments.” • The number of personnel in electricity industry, especially under the age of 30, is decreasing The number of personnel in electricity and district heating in Finland

26. Regulation of electricity distribution and transmission The natural monopoly problem⇒electricity companies are monitored and given incentives for competition Regulator as a “protector of consumer rights” Types of regulation Electricity price caps Measuring actual and perceived levels of electricity supply quality Promoting continuity improvement of electricity companies Ensuring good supply continuity levels to consumers A European network of independent regulators (“ERGEG+”): Structures binding decisions for regulators and relevant market players, such as network operators, power exchanges or generators, relating to cross border issues

27. Decentralised generation Centralised systems are too large and structurally coupled? Decentralised: electricity generation near point of use, responsive demand from the users and renewables that require no fuel supply Efficiency + renewability + decentralisation + security? The example of SmartGrids

28. Neoliberal reform of infrastructure (2000-) EU internal energy market Economic rationality as grounds for decisions Independent power producers Increased electricity flows over longer distances Customer utility switching But also: tightening regulation of electricity prices, supply quality and continuity improvement Infrastructure as project of economic rationality and assessment The electric power system in the EU • Infrastructural modernity (1950-2000) • Large-scale transmission • Central planning • Monopolistic provision • Long-term contracts between producers and users • Over-investment in generation • State investment and intervention • Provision of welfare • Infrastructure as project of modernization

29. Public acceptability of generation and fuels • Much public attention on greenhouse emissions, fossil fuel depletion and nuclear safety • Even overshadowing the security of the grid: e.g. move to wind • The rise of climate change policies • Restricting the choice of generation: The European Commission’s binding target of renewable energy in the EU's overallmix to 20% by 2020 • The new rise of nuclear with its low carbon emissions, stable costs and economic efficiency • Market-based mechanisms for renewable generation • The EU Emissions Trading Scheme • The Green Certificate Scheme • Non-market-based mechanisms for renewable generation • Feed-in-tariffs • State subsidies