Karl Elfstadius, ABB Power Technologies, Zurich, Switzerland
The electricity supply industry of eastern China is restructuring in a test case ahead of restructuring across the whole country. The region is therefore implementing IT systems that will control the power grid and allow wholesale trading to take place for the first time.
The East China Electric Power Group Corporation (ECEPGC) is creating the future of China’s electric power industry. ABB, the global power and automation technology company, is helping to increase the efficiency of the power grid by providing the very first regional trading system for China. The integrated IT systems are scheduled for operation in mid-2005.
The utilities under the jurisdiction of ECEPGC serve 195 million people in the city of Shanghai and the provinces of Anhui, Jiangsu, Fujian and Zhejiang – the eastern region of the country that has enjoyed steady economic growth over the past decade. That growth, however, has brought with it electricity shortages as the region’s capacity in generation and transmission struggles to keep pace with the booming economy.
The pioneering steps in east China are being made against the backdrop of a fundamental reform of China’s power sector. In March 2002, the Chinese cabinet officially approved the ‘Power Industry Reform Program’ with an aim to dismantle the power industry monopoly, to introduce competition, increase efficiency, reduce costs and optimize resource allocation. In addition, the tariff system will be rationalized to stimulate further development in the Chinese power industry, and to promote nation-wide grid interconnection.
The major measures of the reform are the separation of administration from operations, separation of power generation from transmission operations, and orderly opening up of fair and healthy competition among power producers.
The initial goal is to open part of the generation market, and to implement a transparent cost structure in the transmission and distribution business. It will also allow direct sales of electricity to large end users which previously was not possible. A clear legal structure defining the relationship of parent and subsidiary company between regional network company and provincial companies will be established.
As the reform deepens, a consolidated power market in which transmission and distribution access is available will emerge, as will entities for dispatching of power and an exchange as a trading floor is visualized in the second stage. The far-reaching goal is to realise full competition among all market participants, and to establish power financial markets such as power future and power options.
As one of the country’s most economically dynamic areas, east China was chosen to introduce the restructuring process. This ‘pilot test’ for the power industry restructuring ensures that information systems, market mechanisms and regulatory policies can be worked out before extending the experiment to the level of a national grid.
As one of five state-owned groups that oversee provincial power companies, ECEPGC is investing in new nuclear projects as well as coal-fired plants to take advantage of China’s extensive reserves. East China also recently started receiving power from a 500 kV DC transmission line that connects the region to hydropower facilities 800 km to the west, including the Three Gorges project. But east China is doing more than simply boosting generation and transmission capacity to ensure its electricity industry can support future growth.
Early in 2003, ECEPGC signed a contract with ABB to provide the critical IT systems that will control the physical grid and the electricity markets it will support. The company will provide a two-tiered solution: its Network Manager will deliver the SCADA/EMS capability and its Sable Market Manager will provide the framework for the region’s wholesale power market. The project got off to a delayed start due to the SARS outbreak in the spring of 2003, but is now underway, and is expected to be completed on time.
ABB will install Network Manager at ECEPGC’s power network dispatch centre, which will supervise and control the power transmission network, and optimize its operations. When complete, the ECEPGC facility will act as a nerve centre for 64 RTU links, hundreds of substations, and ICCP connections to the EMS systems of five adjacent regions. The various applications will be accessed via 15 operator consoles – with all information displayed in Chinese – and will be run on redundant servers to ensure reliability. These applications can be tuned for real-time control and analysis as well as for optimization and planning purposes.
The Network Manager platform uses a web-based full-graphics interface, a real-time relational database, and a modern process communication system to provide uninterrupted real-time communications with field equipment and neighbouring control centres. Network Manager is part of the IIT concept, which facilitates the integration of systems supplied by ABB and third party vendors alike. It is an open architecture, but allows for maintaining the IT security levels required by such critical systems.
The Network Manager EMS is equipped with a full complement of planning, scheduling, and predictive and control software applications required to ensure system reliability
The Network Manager EMS is equipped with a full complement of planning, scheduling, and predictive and control software applications required to ensure system reliability while minimizing long-term capital expenditure. In addition to the standard Scada functions (e.g., data acquisition, data historian, fault localization, etc.), these include:
- Equipment outage scheduling
- Interchange scheduling
- Load forecasting
- Unit commitment
- Automatic generation control
- Economic dispatch
- Reserve monitoring
- Production costing
- Network analysis: state estimation; security analysis; dispatcher and optimal power flows
- Operator training simulator.
Like Network Manager, Sable Market Manager is built on an Oracle-based platform. It is an open, multi-tiered, web-enabled system that includes a range of applications to manage electricity market operations and related communications. When implemented, east China market participants will enter bids/schedules for the real-time and forward markets via a portal that offers a Web-based or programmatic interface. In turn they will receive awards, market data and other information from the market operator. The software includes:
- Bid validation and verification applications
- Security-constrained economic dispatch application to perform congestion analysis and compute market clearing prices
- Components to provide interfaces for settlement and accounting applications.
The system also includes market participant registration, authentication and related transaction security features.
The Sable Market Manager platform supports energy, ancillary services and congestion management markets in both real-time and forward modes. As an early delivery system, ABB will provide ECEPGC with the necessary components to run the day ahead market to enable the organization to begin preliminary market tests, evaluate proposed market rules on a pilot project basis, and to train its staff and market participants in the process and methods of managing the electricity market.
The system will be fully configured to accommodate changes in market rules as they evolve with the policies instituted by the Chinese government in accordance with its industry restructuring plan. ECEPGC’s goal is to have a fully operational market within 12 to 18 months from the project’s inception.
The early delivery system is scheduled to be implemented in April of 2004, with the complete market-ready system slated to go live in mid-2005. The purpose of getting this system into market trials quickly goes well beyond working out processes and identifying potential bugs. Indeed, the extent to which both the market operators and market participants are comfortable using these new tools will have a tremendous impact on how smooth a transition the east China market will make when it eventually does open its doors for business.
Another user of ABB’s market operation systems, the Ontario IMO, undertook extensive market trials, even extending them beyond the originally scheduled testing period. One of the highest priorities in the project was to ensure that the people running the market and those participating in it had as much confidence in the system as possible before they began to use it for real.
The result was a decidedly uneventful – and therefore highly successful – market opening. The lesson here appears to be that complex market systems must work as well with their human counterparts as they do with their electronic ones for the market itself to function properly.
Flexibility is a virtue
Another benefit of a substantial market trial regimen is it gives policy makers the opportunity to evaluate various market rule adjustments. ECEPGC separated the implementation of the commercial systems – billing, metering, settlements – that will be necessary to support the wholesale market from the Scada/EMS/market systems now being developed. This was by design. The early delivery of Sable Market Manager will provide the organization with a sort of economic laboratory in which to try out various market rules and evaluate their impact in a controlled environment.
Obviously, it is necessary for the market administration software to be able to accommodate a steady flow of changes in order to support this process. However, this level of flexibility is also important after the market opens. Unforeseen events and changes in policy direction are inevitable, and the systems that enable wholesale energy markets must be able to respond to the vagaries inherent to them.
That means changes need to be implemented quickly and without significant amounts of rework. That, in turn, places a requirement on market systems to be flexible, to be able to accommodate market rule changes by being reconfigured rather than rewritten.
Industry pundits may be willing to commit themselves to a particular tack when it comes to the path restructuring will take. When it comes to the IT systems that enable that restructuring, however, pragmatism is the order of the day. By bringing a flexible, integrated solution to bear, ECEPGC has positioned itself well for a sure first step in China’s journey toward a competitive wholesale energy market.