Download Background and Principles for the System Security Forecast

Appendix A: System Operator paper
Background and Principles for the System Security Forecast
1. PURPOSE
This document sets out the rationale and supporting information in regard to a
proposed rule change to:
•
change the System Security Forecast (SSF) forecast period in rule 15.1,
Section II, Part C from 10 years to 3 years; and
•
formalise the purpose and content of for the SSF in the form of a guideline
supplied by the System Operator outside the rules, or in the Policy statement.
The principles are set out in a manner similar to the SOO and Grid Reliability
Report requirements in Part F.
2. BACKGROUND
The EGRs require the System Operator to publish a System Security Forecast (SSF)
every two years and to review the need to update the most recent SSF every six
months. The System Security Forecast is a forecast of the System Operator’s ability
to meet the principal performance obligations over the next 10 years assuming that
no new investment in generation and transmission (other than what is already
committed) proceeds.
The 10 year forecast period for SSFs in the EGRs is a historical artefact from SSFs
prepared prior to the drafting of the EGRs and at a time when SSFs were the sole
public document providing information on the capacity of the grid to potential
investors in generation and industry participants. The continuing need for a 10 year
forecast period is being reviewed as other publications such as the Annual Planning
Report (APR) and the Statement of Opportunities (SOO) already cover the latter part
of the 10 year period. Unlike the SSF these publications allow for generation and
transmission yet to be committed in their analysis.
The purpose of the SSF is different to that of the SOO and APR. The SSF describes
how the System Operator intends to manage power system issues (using operational
measures) prior to significant new investment in generation and transmission. By
contrast the SOO and APR support the processes within Part F with regard to
identifying the need for transmission investment.
Consideration is being given to reducing the SSF forecast period from the current ten
years to a three year period.
The System Security Forecast already includes sections (Upper North Island and
Upper South Island) where three year demand forecasts are used. These sections
are more detailed than the sections using a 10 year forecast and describe in detail
the power system issues requiring operational management over the next three
years and generic contingency plans.
It is proposed that the EGRs are changed such that the SSF forecast period is
reduced from 10 years to three years. The purpose of this change is to align the
different time horizons in the SSF, SOO and APR to reflect the operational nature of
the SSF as different to the planning nature of the SOO and APR. The rule change
will also provide an opportunity to formalise the operational nature of the SSF by
setting out purpose and content for the SSF within the rules in a manner similar to
the SOO and Grid Reliability Report.
3. SSF FORECAST PERIOD
It is desirable for the forecast period to be as short as possible to minimise
inaccuracies around the uncertainties of the nature and timing of future investment in
transmission and generation. It is also desirable that the forecast period is sufficiently
long to enable participants to make appropriate operational decisions with regard to
their own assets and operations.
The construction and commissioning of significant generation and transmission
upgrades (once committed) will typically take between two and five years. The
forecast period for the SSF should be close to the lower end of this bound to
minimise inaccuracies in assumptions around investment timing and nature.
The System Operator can procure voltage support ancillary services under Part C of
the EGRs. Such contracts are typically around three years in duration. It is
reasonable to make the SSF forecast period comparable to this duration noting that it
is not certain whether such contracts will be renewed in the future.
The choice of three years for the forecast period for future SSFs is the most
appropriate choice.
The EGRs require the SSF to be published every two years and the most recent SSF
to be reviewed at six monthly intervals. With a three year forecast period, even on the
eve of the publication of a new SSF (as per two yearly requirement), the previous
SSF and its six monthly updates will still be valid for the year ahead.
Setting the SSF forecast period to three years in the EGRs does not preclude the
System Operator from using (where deemed appropriate) a longer forecast period in
an SSF. As long as the forecast period is greater than or equal to three years then
the requirements of rule 15, section II, Part C (if changed) will be met.
4. PURPOSE AND CONTENT OF SSF
The System Operator purposes that the text below is used to describe the purpose
and content of the SSF. This could take the form of a guideline outside the rules or
as a section of the Policy Statement.
System Security Forecast
1. Purpose and content of System Security Forecasts
1.1
The System Security Forecasts are a forecast of the System Operator’s
ability to meet the principal performance obligations over the ensuing
three year period. The forecast will take into account the capabilities of the
grid and connected assets based on information known to, and able to be
disclosed by, the System Operator.
1.2
The purpose of the System Security Forecasts is to enable identification
and description of potential power system issues which may require
operational management over the next three years for the System
Operator to meet the principal performance obligations prior to investment
in upgrades and investment in transmission alternatives.
2. Principles for System Security Forecasts
2.1
In preparing System Security Forecasts, the System Operator must have
regard to the following principles:
2.1.1 System Security Forecasts should aim to meet the reasonable
requirements of industry participants to understand how potential
operational issues will be managed;
2.1.2 System Security Forecasts should identify power system issues
requiring operational management;
2.1.3 System Security Forecasts should reflect the current principal
performance obligations and Policy Statement;
3. Assumptions for System Security Forecast
3.1
The System Operator will make the following assumptions in preparing
System Security Forecasts:
3.1.1 committed projects for additional generation, transmission, and
demand side management are included;
3.1.2 utilise credible demand forecasts by region or grid exit point (e.g.
prudent and expected forecasts);
3.1.3 include operational management measures currently available to the
System Operator;
3.1.4 a range of power system conditions will be considered for the
purpose of determining:
3.1.4.1 the ability of the power system to meet the PPOs at times of
peak and light demand with all assets in service;
3.1.4.2 the ability of the power system to meet the PPOs during
planned maintenance outage activities.
4. Assessment in System Security Forecast
4.1
The assessment of the System Operator’s ability to the meet the PPOs
will be carried out as follows in 4.2 to 4.4.
4.2
Assessment for Part C, Section II, rule 2.1 – Avoid Cascade Failure. The
System Operator manages the dispatch of assets made available to avoid
cascade failure by applying power system capability limits to the operation
of the power system. In cases where demand exceeds power system
capability, the System Operator can still ensure the operation of the power
system remains within power system capability by demand shedding prior
to any event occurring. SSFs will identify situations where demand
shedding or other operational measures are required to meet the Avoid
cascade failure PPO.
4.3
Assessment for Part C, Section II, rule 2.2 – Frequency. The System
Operator meets the frequency PPO through the procurement of the
frequency keeping, instantaneous reserves and over frequency reserves
ancillary services. The assessment of the ability to meet the frequency
PPO is based on whether there is sufficient ancillary reserves contracted
to be able to meet system peak requirements (frequency keeping,
reserves and energy) over the forecast period.
4.4
Assessment for Part C, Section II, rule 2.3 - Maintain Other Standards.
This PPO requires the System Operator to identify, upon the reasonable
request of a participant, the cause of a problem where harmonic, voltage
flicker or voltage imbalance standards are not being met and, where
requested, take actions available under the rules to resolve the problem.
The SSF will contain a statement describing the extent to which the
System Operator expects to be able to meet this PPO.