Energy purchases
Elia has to buy electricity from generators to maintain the balance of its high-voltage grid and offset grid losses.
Since Elia does not have its own power generation facilities, it buys power generation reserves from generators to ensure the reliability of the high-voltage grid and the quality of the energy supply. The services provided in this way are known as ancillary services.
With the exception of the reserve provided by neighbouring transmission system operators (TSOs), ancillary services are only supplied by generation facilities in Belgium.
Elia also buys electricity to offset some of the losses generated by the transmission of electricity across its grid. Calls for tender for energy to offset grid losses are open to national and international suppliers.
Each month, Elia pays generators a fixed sum for providing a primary reserve. This reserve is activated upwards or downwards whenever this is required by demand on the high-voltage European interconnected system.
The volume of the primary reserve is set by the European Network of Transmission System Operators for Electricity (ENTSO-E). For 2012, Belgium has been allocated a 95‑MW share in the primary control of the interconnected system.
Since the volumes of upward and downward activations of the primary reserve cancel each other out, no payments are made for the actual supply of energy (activation).
Elia also has a secondary reserve it can activate to balance its own grid.
Elia makes two types of payments to the grid users providing it with this service:
- a payment for providing the reserve;
- a payment for activating the reserve.
On average (all hours combined), Elia contracts 140 MW of secondary-reserve capacity. The average activation is around 40 MW upwards or downwards.
Elia reserves 400 MW from Belgian generators for the purposes of the tertiary reserve.
As in the case of the secondary reserve, Elia makes two types of payments to the grid users providing it with this service:
- a payment for providing the reserve;
- a payment for activating the reserve.
Activations of the tertiary reserve vary through the year, depending on incidents and congestion on the grid.
Certain grid users agree to have their supply interrupted if needed, in exchange for the following types of payment:
- a payment for providing the reserve (fixed sum);
- a payment for activating the reserve (variable sum).
Each year, Elia selects the tenders of customers applying for this option in descending economic ‘merit order’ until the required volume is reached.
The Commission for Electricity and Gas Regulation (CREG) approves the volume of the interruptibility reserve each year. It is currently set at 261 MW.
|
2006 |
2007 |
2008 |
2009 |
|
Number of activations
|
2
|
0
|
5
|
11
|
|
Activated volume (MWh)
|
57
|
0
|
1007
|
1386
|
|
Average price of activation (€/MWh)
|
181
|
0
|
137
|
125
|
Under the Federal Grid Code, generators with units exceeding 25 MVA have to contribute to the generation and absorption of reactive power to maintain the voltage level within the required range (automatic control).
To increase flexibility, Elia contracts from generators a positive and negative control band between the technical minimum and technical maximum for each unit (specific control). If the system has a high load, Elia asks for extra MVArs to be generated, whereas when the load is low, it resorts to the absorption of MVArs.
Since reactive power cannot be transmitted over long distances, Elia bases its choice of the units participating in this service on their location.
The contract for this service gives two price rates: one for reservation of the band, and the other for activation outside the band. Elia pays for the whole of its subscription band at the reservation tariff, whether it uses the band in full or in part. For activations outside the bounds of the band, Elia pays for all the MVArs falling outside the band at a separate rate.
Elia contracts some 2,700 MVAr of generation capacity and 100 MVAr of absorption capacity. The contracts are drawn up for a number of years.
In line with its obligations, Elia makes sure it can restore its grid in the event of a blackout. It does this by using generation units that can start up without an external electricity supply.
Black-start contracts are signed for a number of years with Belgian generators that have such facilities. The supplier receives a fixed payment for supplying this service, regardless of whether it is activated.
The participating units have to meet certain technical criteria regarding e.g. power (at least 100 to 200 MW depending on the case) and grid restoration time. The units are selected on the basis of cost (total cost and relative cost vis-à-vis power) and their location.
They must also be able to operate smoothly at any time, and therefore regular tests are carried out. They are paid for and penalties are imposed if they are not passed.
Ancillary services are purchased using a European call for tenders.
Elia publishes all the documents required by the legislation on the relevant European Union site.
At the end of every year, Elia publishes a Periodic Indicative Notice (PIN) which sets out the services that will be bought the following year.
At the start of the year, a Contract Notice is published specifying the required volumes for each service and inviting interested suppliers to apply. The procedure to follow and the list of documents that must be provided are detailed in this Contract Notice.
Candidates are selected on the basis of the following criteria:
- economic criteria (main business activity in recent years, experience of supplying similar services, main contracts, supplied volumes, etc.);
- financial criteria (balance sheets, liquidity ratios, solvency, profitability, etc.);
- technical criteria (quality system, suitably qualified staff, knowledge of languages, etc.).
Then the call for tenders is passed to the selected candidates. The deadline for submitting tenders is generally the end of May.
As a regulated company, Elia has to submit the prices at which it buys ancillary services to the Belgian Minister for Climate and Energy for approval. The Commission for Electricity and Gas Regulation (CREG) approves the volumes.
Elia buys some 500 GWh each year to offset grid losses with voltages of between 26 kV and 70 kV.
The purchases are made using a European call for tenders which is open to all suppliers, regardless of whether they are generators and whether they are Belgian. Holding an ARP contract is the only prerequisite for taking part in the selection procedure.
At the start of the year, Elia publishes a Contract Notice indicating the required volume and inviting interested suppliers to apply. The procedure to follow and the list of documents that must be provided are detailed in this Contract Notice.
Candidates are selected on the basis of the following criteria:
- economic criteria (main business activity in recent years, experience of supplying similar services, main contracts, supplied volumes, etc.);
- financial criteria (balance sheets, liquidity ratios, solvency, profitability, etc.);
- technical criteria (quality system, suitably qualified staff, knowledge of languages, etc.).
Then the call for tenders is passed to the selected candidates. Tenders are submitted in online reverse auctions organised by Elia throughout the year with a view to supplying energy the following year. The selected candidates are given a training course about the online aution tool and in most cases are notified 24 hours before an auction takes place.