Design Principles of the Future Balancing Philosophy in the Finnish Power System

of the master’s thesis Author Petteri Pakalén Title Design Principles of the Future Balancing Philosophy in the Finnish Power System Degree programme Advanced Energy Solutions Code ELEC3048 Thesis supervisor Prof. Sanna Syri Thesis advisor(s) M.Sc. Mikko Heikkilä Date 16.9. 2019 Number of pages 76+10 Language English Abstract The Nordic synchronous power system has come to a situation in which the operational security is challenged due to the reformation of the power system, which especially concerns the electricity production palette. In addition, European regulation has set demanding requirements with tight deadlines for the European TSOs regarding system operation and balancing. In order to tackle the challenges and to comply with the regulatory obligations, the Nordic TSOs have concluded a cooperation agreement, which defines the roles and responsibilities of the TSOs concerning the future Nordic balancing cooperation. The upcoming modifications, which relate to market solutions and power balance management, engender questions on how the changes affect the Finnish power system balancing and how the system should be balanced in the future. This thesis includes a literature review and an empirical research. The literature review creates an overview of the current Nordic power system balancing. In addition, it introduces the key elements of the future Nordic balancing cooperation. The empirical part analyses quantitatively and qualitatively the influences of the upcoming changes on the power system balancing and whether the changes promote proactive or reactive balancing design. According to the findings, Fingrid should exercise reactive power system balancing in the future. The upcoming changes will increase the responsibility of the market participants to control their own balance in a more accurate manner closer to real time. In addition, various forecasts and plans related to the forthcoming balancing periods are likely to become less reliable in the future, which shakes the foundations of proactive balancing performed by Fingrid. Thus, proactive balancing actions of the TSO could result in flawed outcomes and inefficient balancing performance due to, for instance, counter activations. Furthermore, some examples within EU area have shown that the introduction of reactive balancing design is likely to reduce the volume of system imbalances and the amount of balancing product activations. Despite the benefits, reactive balancing requires further research from the congestion management point of view as power grid conditions may set limitations on the balancing design.The Nordic synchronous power system has come to a situation in which the operational security is challenged due to the reformation of the power system, which especially concerns the electricity production palette. In addition, European regulation has set demanding requirements with tight deadlines for the European TSOs regarding system operation and balancing. In order to tackle the challenges and to comply with the regulatory obligations, the Nordic TSOs have concluded a cooperation agreement, which defines the roles and responsibilities of the TSOs concerning the future Nordic balancing cooperation. The upcoming modifications, which relate to market solutions and power balance management, engender questions on how the changes affect the Finnish power system balancing and how the system should be balanced in the future. This thesis includes a literature review and an empirical research. The literature review creates an overview of the current Nordic power system balancing. In addition, it introduces the key elements of the future Nordic balancing cooperation. The empirical part analyses quantitatively and qualitatively the influences of the upcoming changes on the power system balancing and whether the changes promote proactive or reactive balancing design. According to the findings, Fingrid should exercise reactive power system balancing in the future. The upcoming changes will increase the responsibility of the market participants to control their own balance in a more accurate manner closer to real time. In addition, various forecasts and plans related to the forthcoming balancing periods are likely to become less reliable in the future, which shakes the foundations of proactive balancing performed by Fingrid. Thus, proactive balancing actions of the TSO could result in flawed outcomes and inefficient balancing performance due to, for instance, counter activations. Furthermore, some examples within EU area have shown that the introduction of reactive balancing design is likely to reduce the volume of system imbalances and the amount of balancing product activations. Despite the benefits, reactive balancing requires further research from the congestion management point of view as power grid conditions may set limitations on the balancing design.