1 the liberalization of the spanish electricity system and its effects on its environmental...
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The liberalization of the Spanishelectricity system and its effects on its
environmental performance
Luis Jesús Sánchez de TemblequePedro Linares
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• THE LIBERALIZATION PROCESS IN SPAINDescriptionResults
• ENVIRONMENTAL IMPACTS OF THE ELECTRICITY SYSTEM ONTO THE LIBERALIZATION PROCESS
• ENVIRONMENTAL POLICY APPLIED FOR THE SPANISH ELECTRICITY SECTOR
DescriptionAdaptation to the liberalized frameworkSuccess of the environmental policy
• TRENDS DETECTED IN THE ENVIRONMENTAL IMPACT OF THE LIBERALIZED ELECTRICITY SECTOR
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THE LIBERALIZATION PROCESS IN SPAIN
OBJECTIVE to lower electricity prices because of competition forces.
- Protocol: Ministry of Industry Utilities
- Electric Power Act 54/97
General framework of the liberalized electric sector.
Two types of activities:
LIBERALIZED REGULATED
Generation Transmission
Retail Distribution
Economic management
Technical management
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Installed powerInstalled power (MW)
0
10,000
20,000
30,000
40,000
50,000
60,000
1990 1991 1992 1993 1994 1995 1996 1997 1998
MW
Fuel+Gas Coal Nuclear Hydro Special regime
5
Electricity productionEnergy produced (GWh)
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
1990 1991 1992 1993 1994 1995 1996 1997 1998
GW
h
Hydro Nuclear National coal Imported coal Gas Fuel Special regime
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- Peninsula: thermal (50-46%), nuclear (35%) and hydroelectric (15-19%).4 main electricity generation companies: ENDESA
IBERDROLAUNIÓN FENOSAHIDROCANTÁBRICO
10 new generation companies in 2004.Islands: thermal.
- Two generation regimes:GENERAL REGIME: Production > 50 MW (except bilateral contracts).
OFFER Generators Pool-based system Eligible costumers
DEMAND DistributorsSuppliers
Pool price: marginal price determined on the basis of a merit order. Obligation to bid. Three negotiating sessions.
Description: electricity generation.
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Description: general regime.
DISTRIBUTION2,648 €
TRANSMISSION579 €
RETAILING251 €
MARKET
6,523 €
PRODUCTION9,480 €
TOTAL CHARGES
12,985 €
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INSTITUTIONS27 €
ENDCONSUMER
Market prices
Regulatory charges
INCENTIVEDomestic Coal
255 €
CAPACITY830 €
Non Peninsular130 €
INCENTIVECHP&Renewables
712 €
Stranded Cost447 €
EXTRANUCLEAR COSTS
583 €
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BilateralContracts
System Operator
Market Operator
Contractsfor Differences
Ancillary ServicesMarket
DailyMarket
Managementof TechnicalConstraints
Futures Market(Standardized
products)
PhysicalContracts
Market Operatorin co-operation with
System Operator
SCHEDULED ENERGY
Wholesale Electricity Market
IntradailyMarket
Description: general regime.
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ECONOMIC OPERATION
Management of standardized power
transactions
MARKETOPERATOR
TECHNICAL OPERATION
Supervision and control of system security & quality of bulk supply
SYSTEMOPERATOR
Description: general regime.
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IntradailyMarket
Market ofAncillary Services
RestrictionsManagement
Daily Market of Generation / Demand
+Bilateral Contracts
+International Exchanges
Bas
ic D
aily
P
rog
ram
Fe
asib
le D
aily
P
rog
ram
Fin
al D
aily
Pro
gra
m
Management of Ancillary Services
End of programming
Tim
eDescription: general regime.
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SPECIAL REGIME:
Cogeneration
Self-generators Production <= 50 MW Others forms
Renewable energy producers
Not obliged to bid.
Remuneration: wholesale market price plus a premium or economic incentive.
PLAN FOR THE PROMOTION OF RENEWABLE ENERGY
SOURCES: to cover at least 12% of the Spain´s total energy
demand with renewable energies by the year 2010.
Description: electricity generation.
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Description: special regime.
Annual evolution of gross demand and sold energy special regime in peninsula
0
50.000
100.000
150.000
200.000
250.000
1989 1%
1990 1%
1991 2%
1992 3%
1993 4%
1994 6%
1995 6%
1996 9%
1997 10%
1998 11%
1999 13%
2000 14%
GW
h
Gross Demand Special Regime
Special Regime s/ Annual Gross Demand
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Description: special regime.
WASTEOTHERS
RENEW.
CHP
WIND
HYDRO
Production during 2000 (TWh)
COGENERATION 17,0RENOWABLE 8,9WASTE 1,6TOTAL 27,5
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Description: special regime.
Installed power at 2000 (TW)COGENERATION 5,0RENOWABLE 3,7WASTE 0,4TOTAL 9,1
HYDRO
WIND
CHP
OTHERS
RENEW.WASTE
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Description: special regime.
Parque eólico
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The liberalization process has been speed up recently, the treshold for eligible
customers was lowered:
INITIALLY: 15 GWh / year consumption.
All consumers regarded as qualified by 2007.
NOW: 1 GWh / year consumption.
All high voltage customers regarded as qualified by July 2000.
All consumers regarded as qualified by January 2003.
Description: opening of the market time schedule.
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System based on regulated third party access. The access fees for the transmission and distribution system:
are regulated. are determined on the basis of voltage levels and use of the network. reflect all the costs of the system operation. are approved by the Government. are maximun amounts to be charged.
TRANSMISSION: Above 220 kV.
Planning is mandatory.
Responsible for the tramsmission system operation:
MARKET OPERATOR (OMEL)
SYSTEM OPERATOR (REE)
DISTRIBUTION Below 220 kV.
Companies are designated by the Government in each zone.
Captive customers provided by the distribution companies.
Description: access to the transmission and distribution network.
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UNBUNDLING:
Management unbundling: complete legal separation of the entities engaged in the three regulated activities. The integration into a holding of companies is allowed.
Unbundling of accounts and creation of Chinese walls. Obligation to disclose information.
Description: access to the transmission and distribution network.
REGULATORY AUTHORITIES.
Ministry of Economy National Electric Regulatory Comission
PUBLIC SERVICE OBLIGATIONSSecurity of supply
PUBLIC SERVICE MARKET Universal service
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SPANISH STRANDED COSTS
CTC regime to compensate to each plant due to an expected decreased of the electricity price in the market to estimated 6 PTA/kWh.
calculates the maximun amount of compensation.
regulated tariff.has a cost yearly recovered in
transmission fees.
Remuneration of capacity reserves to be paid for ensuring that utilities cope with whatever demand of electricity.
Charge to compensate for the abandonment of nuclear plants.
CHP
SUPPORT MECHANISMS to promote Renewable electricity
Demand side management schemes
Description: transitional regimes.
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Mechanisms designed are functioning correctly. Decisions based on the market signals.
Quite positive Demand has been covered satisfactorily. Power plants are producing based on their economic costs. Eligibility is enlarging very rapidly.
lower electricity pricesOther changes more competition have not been realized yet due to:
change in technology Large degree of concentration of electricity production (ENDESA+IBERDROLA=80%). CTC protect to a certain existing firms. Small capacity of international interconnections. Large increase increase in the special regime production.
Results.
• STRUCTURE AND ORDER REMAIN AS BEFORE THE LIBERALIZATION
• PRICES ARE ALSO MORE OR LESS STABLE
• INCREASE COVERED BY SPECIAL REGIME ENERGY
• NO SPACE FOR NEW INVESTMENTS
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ENVIRONMENTAL IMPACTS OF THE ELECTRICITY SYSTEM ONTO THE LIBERALIZATION PROCESS
The mayor aspects of the liberalization process wich may affect the environmental impact of the electricity system are those affecting GENERATION:
CHANGES DUE TO LIBERALIZATION EFFECTS
Change in risk allocation. Change in the technology portfolio towards low private cost and less capital intensive technologies (natural gas combined cycles).
Change in dispatch and plannig criteria.
Chage in the role and capabilities of the regulator.
To promote different technologies depending on the national energy policy.
Change in the increase of demand. Its impact will depend on the changes in the technology portfolio.
In the short term: specific impact will improve and general impact will get worse.In the long term: liberalization may worsen even the specific impact,
UNLESS REGULATION INTERNALIZES SOCIAL COSTS. In Spain that aspects are: Natural gas combiend cycle power plants.
Old coal power plants (CTC´s, subsidies).Hydro and nuclear (CTC´s).
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ENVIRONMENTAL POLICY APPLIED FOR THE SPANISH ELECTRICITY SECTOR. Description.
The spanish environmental policy applied to the electricity sector is composed by:COMMAND AND CONTROL LEGISLATION
The most used instruments. Two types: Emissions control (certain SO2 and NOx limits).
Inmission control (regional and local authorities). Nuclear facilities have specific legislation.
ECONOMIC INCENTIVES attempt to internalize external benefits into the price/cost of certain technologies.
CHP and RENEWABLE ELECTRICITY DEMAND SIDE MANAGEMENT SCHEMES guarantee of supplyINDICATIVE PLANNING to detect
efficient assignment of resourcesLiberalized electricity system authorization procedurePlanning provides information at no cost and detect market ineficiencies.
OTHERS INSTRUMENTS
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ADAPTATION TO THE LIBERALIZED FRAMEWORK.Environmental policies don´t interfere the liberalization, but changes are expected.
SUCCESS OF THE ENVIRONMENTAL POLICY.Command and control legislation and economic incentives have had a significant success in spain, specially renewable electricity promotion.
TRENDS DETECTED IN THE ENVIRONMENTAL IMPACT OF THE LIBERALIZED ELECTRICITY SECTOR
Decrease of atmospheric pollutant from large power plants: SO2: low sulfur fuels, new technologies, desulphuration plants. NOx: different level of annual hydro electricity. CO2: bellow european averages.
The liberalization is recent, changes might be expected from:Market development.Modifications in the environmental policy.
ENVIRONMENTAL POLICY APPLIED FOR THE SPANISH ELECTRICITY SECTOR. Description.
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Air pollutant emissions
Emissions from large combustion plants
404550556065707580859095
100
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
En
erg
y (T
Wh
)
500
750
1,000
1,250
1,500
1,750
2,000
Em
issi
on
s (k
t S
O2
& N
Ox)
SO2 NOx EnergíaEnergy
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ENVIRONMENTAL POLICY APPLIED FOR THE SPANISH ELECTRICITY SECTOR.
NOx emissions in large powers plants in 2000
Refinerías7%Fuel / Gas
6%
Carbón de Importación
14%
Lignito Pardo11% Lignito Negro
10%
Hulla + Antracita50%
Autoproductores (hasta junio 87)
2%
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ENVIRONMENTAL POLICY APPLIED FOR THE SPANISH ELECTRICITY SECTOR.
SO2 emissions in large power plants in 2000
Hulla + Antracita
23%
Lignito Negro23%Lignito Pardo
34%
Carbón de Importación
4%
Fuel / Gas3%
Refinerías11%
Autoproductores (hasta junio 87)
2%