Spain and Portugal Strengthen Ties

Spanish and Portuguese transmission system operators Red Eléctrica de España and Rede Eléctrica Nacional, respectively, have been considering increasing the number of cross-border interconnections for several years. The creation of a single Iberian electricity market (MIBEL) in 2005 has made doing so even more challenging. More teamwork is required to build, in a coordinated way, new interconnections and the correlated internal grid reinforcements in each country. Hence, Red Eléctrica de España (REE) and Rede Eléctrica Nacional (REN) have been working together to increase the size of power exchanges between Spain and Portugal, which was a prerequisite for MIBEL to begin operation.

The Iberian Electricity Market

MIBEL started operating on July 1, 2006, with the objective to provide access to a common electricity market for all agents (utilities and consumers) operating within the Iberian Peninsula. The market for energy is managed by the operator for the Iberian market, which started with two bodies: OMEL, situated in Madrid, Spain, which is in charge of the day-to-day operations to deal with the daily and intra-daily spot markets, and OMIP, located in Lisbon, Portugal, which is responsible for short- and medium-term future contracts for physical trading of standardized packages of power quantities for a maximum of one year. Put another way, MIBEL is organized into two markets: the futures market, which includes transactions of energy blocks to be delivered at a future date, settled both by physical delivery and by differentials; and the daily market, which encompasses transactions for blocks of energy and delivery the day after trading, settled necessarily by physical delivery.

The non-organized markets are comprised of bilateral contracts among the market participants, and these energy transactions may be settled through physical delivery or price differences.

Management of the interconnection has been based on market splitting. An explicit auction mechanism also was implemented at the border that includes the allocation of physical transmission rights for different programming periods of more than one day. Explicit auctions generally take place for annual, quarterly and monthly programming periods. In order to maximize the use of exchange capacity, in accordance with the coordinated explicit auction system, a “use-it-or-get-paid-for-it” rule applies. The implementation of the market splitting mechanism began in July 2007.

Use of Existing Interconnectors

The exchange capacity between Spain and Portugal from 2002 to 2009, considering the transmission system capacities with full availability (no line outages for maintenance or uprating), has increased from between 550 MW and 1050 MW to over 1500 MW. With a new 400-kV transmission line currently being constructed over the River Duero, scheduled to be in operation in 2010, the exchange capacity will reach 2000 MW. These values do not consider the limitations that can occur when there are restrictions on the generation capacity available for export in each country (with low hydro or low wind farm energy production).

The use of the available system capacity for energy exchanges increased dramatically between 2001 (2083 MWh) and 2006 (10,710 GWh). For example, in 2006, the interconnection capacity was used at full capacity 30% of the year. Additionally, during the period of July 1, 2007, to June 30, 2008, the interconnection capacity between Spain and Portugal was congested 71% of the time. Therefore, the long-term energy transaction forecasts for MIBEL will require a transfer capability of some 3000 MW.

The strong trend of commercial load flows from Spain to Portugal is derived, in part, from some delay in the Portuguese program for construction of new CCGT power plants, which were schedule to be commissioned from 2007 on, and only start the operation in mid-2009. This program construction, conducted by private companies, will lead to a more efficient set of Portuguese power plants to operate on market and the progressive decommissioning of old ones.

In 2006, the two governments established a common objective of providing a minimum exchange capacity of around 3000 MW. To fulfill this objective, an important investment programme is needed to reinforce the Spain-Portugal interconnection and the internal system structures. In addition to creating new possibilities for increasing the energy exchanges, new interconnections would provide some key benefits:

• Improve system reliability, mainly in the border areas

• Obtain synergies from the complementary generation technologies of renewable resources (wind and solar)

• Realize financial benefits from the diversity of conditions between countries (hydro, climate, peak load hours and working day differences)

• Obtain financial and environmental benefits arising from reduced transmission losses, reduced reserve generating capacity, improved system stability and reduced investment to provide generation capacity to supply peak demands.
  

Standards and Constraints

As part of a technical and economic study by REE and REN, 10 scenarios were considered to determine the interconnections required to provide a 3000-MW two-way load-transfer capacity between Spain and Portugal. The scenarios included winter, summer, peak and off-peak demands, wind generation (high and low) and hydro generation (wet and dry).

Technically, the interconnections were designed to comply with the N-1 and N-2 reliability criteria. The contingency N-1 criteria are applicable to a single outage of a generation facility, transmission line or transformer. On the other hand, N-2 is applied to a simultaneous outage of two circuits on the same tower of a single transmission line corridor with more than 30 km (19 miles) of either side of the border. Each transmission system operator accepted responsibility to examine, reinforce and reconfigure their existing systems in order to fulfill the requirements of the mutually agreed system development plan.

To rectify the constraints on 400-kV interconnectors or those applicable to the internal transmission systems in each country, REE and REN planned the following system reinforcements and operational measures:

• Uprating the 220-kV transmission lines in the Orense and River Duero area

• Real-time disconnection of the 400/220-kV transformer at Oriol substation in the event of faults on the Oriol Center Spain 400-kV transmission line

• Installation of new transformers of 400/220 kV in Porto and 400/60 kV at Paraimo

• Erection of two more circuits to supply the 220-kV Mourisca substation

• Uprating of the 220-kV Rio Maior-Carregado transmission line

• Installation of series reactors for the150-kV Sines-Palmela transmission line

• Installation of additional capacitors in Porto and Lisbon areas.

At present, an outage of the two existing interconnectors, Cartelle-Lindoso and Brovales-Alqueva circuits, is causing a phase angle difference above 30 degrees between the busbars in the two countries. This adversely affects system reliability because a phase angle difference of less than 30 degrees is required to successfully re-energize the interconnectors.

The Planned New Interconnections

REE and REN have established that to resolve the existing interconnection constraints and provide the 3000-MW interconnection load-transfer capacity, two new transmission lines are required, one located on the north border (Galicia, Spain-Minho, Portugal) and the other on the south border (Andalucia, Spain-Algarve, Portugal).

Studies confirmed the transfer capacity required could not be met with a single new interconnector because of, among other reasons, the excessive phase-angle differences between Spain and Portugal, which can occur under certain circuit outage conditions.

Furthermore, the northern interconnection takes into consideration the need to supply the planned high-speed train between Vigo, Spain, and Porto, Portugal, by recommending the transmission line be erected in close proximity to the rail track, as this transport facility will require a 400-kV supply. The new 400-kV line between Vigo and Porto has been planned for 2014.

In relation to the southern interconnection, the synergies obtained are based on the requirement to provide a new line to evacuate the new wind generation park installed in Puebla de Guzman, Spain, and the need to provide a new 400-kV meshed network in the Algarve District of southern Portugal. Therefore, a new 400-kV connection between Selvilla, Puebla de Guzman on the Spanish side and the Portuguese substations of Tavira and Portimão on the Algarve has been planned for 2011.

Economic Benefit

The joint economic benefit attributable to the increase in interconnection load-transfer capacity between the two countries can be assessed by considering two factors. First is the increased availability of the interconnection network, which denotes 71% of congestion on the year 2007 (the study was finalized in 2008). Second, during congested periods, the average difference in the energy market price for Portugal-Spain was 8.24 euros/MWh in 2007-2008

Following the commissioning of the two 400-kV transmission lines, an increase in the commercial exchanges is foreseen that will allow effective market functioning, almost eliminating the price difference between the two countries. For example, using a simplified scenario that the present market conditions will remain constant, it can be assumed an average power exchange capacity increase from Spain to Portugal from about 500 MW to 750 MW will produce a price equilibrium.

In this particular circumstance (prices in Spain cheaper than in Portugal) and considering the simplified hypothesis that the marginal price will not change in the cheaper market (which is a reasonable hypothesis because Spanish electrical demand represents five times the Portuguese one), the overall Iberian customer benefit, as a result of the new interconnection capacity improvement will be in the range of 29 million euros/year to 38.50 million euros/year (for example, 750 MW × 6220 hours/year × 8.24 euros/MWh equals 38.50 million euros/year).

In addition to this benefit, the advantages of the new interconnectors in terms of the Iberian system security of supply must be emphasized:

• Guarantee supplies to the Algarve region as a result of establishing the N-1 reliability criteria

• Create an effective solution to supply the high-speed train in the northwest region

• Ease the interconnection of distributed generation from renewable energy facilities in both Spain and Portugal.

A Successful Undertaking

MIBEL is considered a successful step in the path towards a single European electricity market. This market inside the Iberian Peninsula has already created conditions for the significant growth of the current power exchanges between the two countries' improved the reliability functioning of the interconnected systems, profits from the complementary generation technologies and reduced the level of regulation reserves.

REE and REN have completed their joint technical and financial study designed to overcome the existing limitations on the interconnection capacity, which was used to produce a long-term solution to establish a firm 3000-MW two-way load-transfer capacity between Spain and Portugal.

General MIBEL Data for 2007

	MIBEL	Spain	Percent	Portugal	Percent
Population (millions)	52.2	41.6	79.7	10.6	20.3
Installed capacity (GW)	88.7	78.3	88.3	10.4	11.7
Peak load (GW)	51.0	42.2	82.7	9.1	17.3
Demand (TWh)	302.1	252.9	83.7	50.1	16.3
220-kV and 400-kV lines (km)	38,373	33,786	88.0	4,765	12.0
EHV/VHV transformer capacity (MVA)	69,473	56,209	80.9	8,571	19.1

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Rafael de Dios (rdios@ree.es) is a senior engineer for Red Eléctrica de España, Spain's transmission system operator. He is responsible for the development of Spain's transmission grid.

Fernando Soto is a senior engineer for Red Eléctrica de España, Spain's transmission system operator. He is responsible for the development of Spain's transmission grid.

Luis Imaz is a senior engineer for Red Eléctrica de España, Spain's transmission system operator. He is responsible for the development of Spain's transmission grid.

José Medeiros Pinto (medeiros.pinto@ren.pt) is a senior engineer for Rede Eléctrica Nacional, Portugal's transmission system operator. He is responsible for the development of Portugal's transmission grid.

Tiago Rodrigues (tiago.rodrigues@ren.pt) is a senior engineer in Rede Eléctrica Nacional, Portugal's transmission system operator. He is responsible for the development of Portugal's transmission grid.