Procurement concept for grid loss energy

The process for jointly procuring energy supplies to offset grid losses in the APG control area generally happens as follows: 

• Participating grid operators provide APG with both long-range and short-range forecast data for grid loss volumes up to three years in advance. 

• APG, taking into account an ordering pathway agreed with E-Control Austria, cumulates the volumes and splits them across several tenders for standard products on the futures market (long-term procurement process) using an internal optimisation model. 

• Any remaining volume discrepancies are balanced by APG on a daily basis in the spot market (short-term procurement process, no tendering). 

Long-term procurement process for grid loss energy in the APG control area

Each year, participating grid operators supply APG with long-range forecast data on grid losses for their balancing group. The forecast data covers the period of the next three years. These forecasts are updated by the grid operators as soon as the current forecast data varies significantly from the information that was submitted (e.g. following changes to the grid structure). 

The long-range forecast data provided by the grid operators is cumulated by APG and used as the underlying data for portfolio management. The portfolio management system generates suggestions of standard products as they might be traded on the electricity exchanges (annual, quarterly and monthly base and peak products), as well as corresponding capacities (MW) and times at which these products will be offered to interested providers using an internet-based tendering platform. The scope of APG’s grid loss procurement is two years (one year ex ante and one year during the period). This means that, in the year 2020, products are tendered for the 2020 period and for the year 2021. Procurement for the 2022 supply year begins in January 2021. Procurement is divided into regular tenders designed to cover the necessary volumes. Participation in these tenders requires prior registration by APG. 

Portfolio management 

Portfolio management for the procurement of grid loss energy is based on the cumulated long-range forecast data for grid losses. The aim of portfolio management is to map the profile of the required grid loss energy as closely as possible and at the lowest achievable cost. The amount of energy that needs to be purchased at a particular time is determined by the ordering pathway (notified to E-Control Austria each year) which spreads the risk of procuring energy at an unfavourable moment by splitting the purchase across several different points in time. For this reason, APG puts out tenders on a regular basis at times that are announced in advance. 

A two-stage optimisation model is used for the procurement itself. The first stage minimises the conditional value at risk (CVaR), or expected shortfall, and the outcome of this then influences the quantity-oriented approach in the second stage, taking into account the ordering pathway. This results in the generation of standard product suggestions (annual, quarterly, monthly base or peak products). These are always accompanied by remaining positions that need to be settled. This residual position represents the energy volume that needs to be settled appropriately according to unit of time (e.g. hourly) due to the difference between the long-range forecast data and the division into standard products. These remaining positions may vary depending on the division chosen.  

Short-term procurement process for grid loss energy in the APG control area

Participating grid operators supply APG with short-range forecast data on grid losses for their balancing group by 9:30 a.m. every weekday (Monday to Friday). The data, provided in ESS format, applies to the following day or the following Sunday and/or public holidays. This is exactly the same schedule that also needs to be sent to the balancing group coordinator (by 2:30 p.m.). APG cumulates these schedules and uses them to calculate a delta schedule from the short-range forecast data, less the volumes already procured. If the required short-range forecast data is not provided to APG on time, substitution strategies are used to replace the missing data as best as possible. 

Short-term purchases or sales are then carried out in line with the delta schedule for the following day (or for several days if the next day is the weekend or a public holiday). This currently occurs by means of market orders on the EXAA and EPEX electricity exchanges. 

Once this balancing procurement process has been completed, the schedules for the following day or days are then created.