Towards a more investment friendly economic incentive regime for offshore infrastructure projects

Offshore infrastructure projects will play a key role in enabling the EU to meet its renewable energy goals. Therefore, effective economic incentives must be in place to ensure adequate investments. • Since the liberalisation of the power sector, the use of ‘incentive regulation’ has become a standard practice among European regulators. This TSO incentive regulation is done in a ‘portfolio’ fashion. • In the countries analysed, different risk/remuneration profiles are set according to the general regulatory regimes. These risk/remuneration profiles have not changed significantly since the previous study conducted by Glachant et al. (2013). 1 • Nevertheless, in recent years, regulators are also providing dedicated incentives for specific strategically important or necessary investments, including offshore projects. • We observe that the trend of providing dedicated incentives appears to modify the risk/remuneration characteristics, leading to a more ‘investment friendly’ environment for TSOs, at least for certain types of assets, such as offshore transmission infrastructures

Charging up India’s electric vehicles

India’s ambitious electric mobility targets are highly dependent on the availability of robust charging infrastructure and readiness of the power system to integrate the additional flexible EV load. Indian policymakers at state and national level are proactively pursuing actions for developing EV charging infrastructure (EV service providers) on supply-side and EV users’ (demand side). Further enhancements for supply-side can come from the role of distribution companies (DISCOMs), tariff design, incentives, permitting processes and data privacy, and on the demand side from payment methods, minimum facilities, charging station user registration and consumer complaints. EV charging business in India is at its early stage, and it has a large scope for business model innovation. As EV penetration increases and market grows, innovations can be expected in the areas of service provision, partnership and pricing. EV load can increase peak demand and distribution grid congestion. Solutions are emerging to avoid more investment in generation and network capacity such as time-varying tariff and flexibility measures taken by the DISCOM to deal with these issues. V2X is still in an early stage but would become relevant as the market matures. The accuracy in predicting the availability of V2X resource and minimising market entry barriers for V2X service provision can be improved through aggregation, allowing smaller minimum bid volumes and contract periods, asymmetric products and shorter lead times. The search for the most appropriate solutions would benefit from regulatory sandboxes both at the national and state level

D7.4 economic framework for a meshed offshore grid

Work Package 7 (WP7) of the Progress on Meshed HVDC Offshore Transmission Networks (PROMOTioN) Horizon 2020 project focuses on various legal, financial and economic aspects of developing an integrated offshore infrastructure. Task 7.2 focuses on the development of an economic framework for the offshore grid in terms of three building blocks, namely: planning, investment, and operation. 1. Offshore grid planning comprises three topics, namely: Cost-Benefit Analysis (CBA) methods, onshoreoffshore coordination, and public participation. 2. Offshore grid investment comprises four topics: cooperation mechanisms for renewable support, transmission tariffs, investment incentives, and Cross-Border Cost Allocation (CBCA) methods. 3. Offshore grid operation focuses on the balancing mechanism in the offshore wind context. This final report extends our intermediate report with the addition of three new topics: incentives, CBCA and the balancing mechanism. The remaining chapters are identical to the intermediate report. In this section, we provide a summary of the research that has been undertaken so far and the main conclusions from our analysis.This result is part of a project that has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement No 691714

Smart grid replication : handbook for India

India has embarked on an ambitious sustainable development pathway by applying a multipronged approach spanning several sectors from developing smart cities to enabling electric vehicles. In the power sector, it is necessary to transform and prepare the grid at both the transmission and distribution levels to ensure the success of India’s sustainability journey. Implementation of innovative smart grid projects will enable India to reach its ambitious sustainability goals. However, a multitude of challenges in rolling out these novel solutions on a nationwide scale continue to persist. The handbook contains insights and tools that will aid implementation and replication of innovative smart grid projects in India. Therefore, this handbook provides its readers with the following: Insights into opportunities and barriers in replicating smart grid projects in India; A framework for selecting use cases based on their relevance to India; The CBA tool to assess the costs and benefits of smart grid use cases in India; The SRA tool to assess the scalability and replicability of smart grid use cases in India; Insights from applying the abovementioned tools to both European and Indian case studies

Identifying impacts of COVID-19 on the Indian power sector

Published online on 2 April 2020This article identifies the early impacts of the COVID-19 to create a basis for future discussion to aid in mitigating adverse effects and better preparing the power sector for such events in the future

Capacity mechanisms in interconnected markets

Strategic reserves and capacity markets can improve the security of supply and contribute positively to consumer benefits if they are carefully conceived and managed. • The presence of an interconnector may negatively affect the effectiveness of a capacity market, depending on the relative size of the interconnection and the degree to which the consumption peaks coincide. The capacity ‘leakage’ benefits the neighbouring market in terms of lower prices and higher reliability, but it may also lead to import dependency. • A capacity market can crowd out generators in an interconnected energy-only zone. Hence, it may put pressure on neighbouring markets to implement a capacity mechanism as well. • In case the neighbouring zone decides not to implement a capacity market, a strategic reserve can also offset this crowding-out effect and thus lower the risk of investment cycles in generation capacity

SECURITY OF SUPPLY DURING THE ENERGY TRANSITION:THE ROLE OF CAPACITY MECHANISMS

The push for clean energy has caused a rapid growth of renewables in the electricity supply mix of the EU. Although one would assume that the impact of these technologies is entirely positive, recent research and experience indicate that there is reason for concern namely regarding the security of supply. In this context, the concern is how renewable energy sources (RES) affect the business case of conventional power generation. In response to this concern, capacity mechanisms are being considered or have already been implemented by various member states of the EU. However, in a highly interconnected electricity system, such as the one in Europe, there appears to be a risk that the uncoordinated implementation of capacity mechanisms may cause unintended cross-border effects. This research explored the performance of various capacity mechanisms in an electricity system with a strong growth in the portfolio share of variable renewable energy sources (RES). The cross-border effects of implementing various capacity mechanisms in an interconnected power system were also analyzed. In this research, two capacity mechanisms, namely a strategic reserve and a capacity market, were modeled as extensions to the EMLab-Generation agent-based model. Furthermore, two variations of a capacity market were analyzed. The first was a yearly capacity market design and the second was a forward capacity market with long term contracts. A survey of experts on the US capacity markets supplemented the modeling work with practical insights.QC 20161006The Doctoral Degrees issued upon completion of the programme are issued by Comillas Pontifical University, Delft University of Technology and KTH Royal Institute of Technology. The invested degrees are official in Spain, the Netherlands and Sweden, respectively.copyright (c) 2016 P. C. Bhagwat</p

Charging up India’s electric vehicles : infrastructure deployment and power system integration

India has embarked on an ambitious path towards more sustainable mobility by promoting the electrification of its transport sector. The push for electric vehicles is driven by the global agenda established under the Paris Climate Agreement to reduce carbon emissions, and by the national agenda, which includes improvement of air quality in its urban areas, reduction of dependence on oil imports, and encouragement of the local EV manufacturing sector. The country has set a target of 30% electric vehicle sales across all vehicle types by 2030. To achieve this, NITI Aayog, with the support of select central ministries, has been serving as the nodal agency to develop the electric mobility plan for India. Although the e-mobility plan is established at central level, the onus is on the state governments, which have to develop policies and regulatory frameworks to enable the adoption of EVs and the deployment of charging infrastructure in their respective states. India has over 250 million vehicles, and this fleet is dominated by 2-wheelers, accounting for 78% of the total vehicles. Currently, EVs represent a minimal share with approximately 750,000 vehicles. Amongst the different vehicle characteristics, public buses, taxi fleets, 2-wheelers and three-wheelers are expected to be the first adopters of EVs. As the country is at an early stage of EV deployment, public charging infrastructure is still limited. In this regard, the Ministry of Power has already identified 9 major cities and 11 intercity routes as pilots to enable EV charging infrastructure. Similarly, a number of states have also started introducing policies to promote EV adoption and charging infrastructure deployment. The rapid growth in EV uptake required to reach India’s policy targets will have to address two major challenges. The first challenge is ensuring the deployment of the charging infrastructure required to serve the needs of the ever-growing number of EVs. This raises two questions: - What policies and regulatory frameworks are required to enable the efficient deployment of charging infrastructure? - What business models can reach the sufficient coverage of charging infrastructure that meets the needs of the EV user? The second challenge is the integration of the EVs into the power system securely and efficiently. This raises two questions: - How can the potential impacts of the additional EV load in the power system be managed? - How can the flexibility potential of Vehicle-to-X (V2X) be unlocked? This study aims to provide a vision for the future of EV charging infrastructure deployment and power system integration via a toolbox consisting of solution choices and recommendations for addressing each of the questions mentioned, by: - assessing the current state and national policies for EV charging infrastructure deployment; - identifying business models being implemented in India and key business innovation trends from practices in countries at the growth stage of EV adoption; - assessing current practices for managing the impacts of the additional EV load in the power system and identifying insights from international practices; and - providing insights on unlocking the flexibility potential of EVs with V2X capability

Reliability options: can they deliver on their promises?

Capacity mechanisms have been controversial in theory as well as practice. Lessons from experience with different capacity mechanisms led to the development of the reliability options. This mechanism promises two advantages over other types of capacity mechanisms. Firstly, it ensures the availability of capacity contracted via the capacity mechanism during scarcity. Secondly, the reliability option mechanism limits any energy market distortion due to its implementation and provides the consumer a hedge from high prices. We assess the ability of reliability options in delivering the two promises by analysing the reliability option designs in Italy and Ireland. We find that they deliver on the first promise but only partly on the second

Expert survey on energy storage systems : regulation and policy from an Indian power sector perspective

A survey of Indian power-sector stakeholders on the subject of Energy Storage System (ESS) policy and regulatory issues is presented. The survey is divided into four sub-themes: the need for ESSs; ESSs in a network context; ESSs in the market; and ESSs in innovation. Respondents support the need for dedicated ESS regulation, including a definition of ESSs. In terms of networks, respondents support unrestricted ownership, and the development of dedicated grid connection standards and the provision of ancillary services for the network by ESSs; this would allow their participation in wholesale energy markets. However, opinions diverge on the level of ESS regulatory oversight needed for grid investment deferral. As far as power markets are concerned, respondents agree on the need for updating bidding formats, special treatment for ESSs regarding grid access charges to eliminate market entry barriers and to incentivise the operational versatility of ESSs. However, opinions diverge on the appropriate compensation mechanism to be applied for services provided by ESSs. There is an agreement on supporting innovative ideas such as P-to-everything (P2X) conversion and the use of regulatory sandboxes for enabling ESS