Could Europe's New Grid Algorithm Black-out Belgium?

Photo: Peter Fairley
Elia's 4cast app alerts Belgians to blackout threats

Two of the big European power grid stories from 2014 were the software-enabled enlargement of the European Union's common electricity market and a spate of nuclear reactor shutdowns that left Belgium bracing for blackouts. Those developments have now collided with revelations that the optimization algorithm that integrates Europe's power markets could potentially trigger blackouts.

The flaw resides, ironically, in a long-anticipated upgrade to Europe's market algorithm. This promises to boost cross-border electricity flows across Europe, expanding supplies available to ailing systems such as Belgium’s. Earlier this month market news site ICIS reported that the upgrade, in the works since the launch of market coupling in 2010, has been delayed once again by European transmission system operators (TSOs).

Europe’s market integration relies on software called the Pan-European Hybrid Electricity Market Integration Algorithm, or Euphemia, which crunches every buy and sell bid submitted to participating national and regional day-ahead power markets. (The number of which will grow to 19 when the Italian and Slovenian markets join in at the end of this month.) Euphemia matches up buy and sell bids that make optimal use of available transmission capacity and meet total power demand at the lowest overall cost.

Euphemia’s troubled upgrade would change the way that the transmission available between the markets is determined. Currently TSOs tell Euphemia how much trading will be possible over each border on the following day, based on their best guess of what grid flows will look like. Under “Euphemia 2.0” the algorithm itself calculates the cross-border capacities as it optimizes the following days’ power trades. 

In theory, such so-called flow-based coupling of the markets should boost security of supply across Europe. Since Euphemia can more precisely predict how power will flow across the network (it is, after all, aligning the next day's buy/sell orders) it allocates transmission capacity more agressively than the national TSOs.

Less-conservative capacity allocations means a greater potential for imports to tight markets such as Belgium’s. The enhanced liquidity should also reduce power costs. Shadow runs of daily power trades using flow-based optimization suggest the daily savings to European consumers could be as high as 900,000 euros (US $1 million).

However, flow-based optimization has a glitch: it occasionally leads to what economists call non-intuitive trading. For example, a state with the market’s most expensive power supplies might nevertheless be approved to export power, or vice versa. 

In early 2014 Europe’s TSOs approved a simple work-around that was to go live last November. Euphemia’s software engineers programmed in a patch that would check the trades approved by its optimization and drop any that were non-intuitive.

Then Belgium saw three reactors go unexpectedly out of service in rapid succession, knocking out one-third of the nation’s firm domestic power capacity. The context for the automated market system changed almost overnight.

Belgium’s reactor shutdowns left it extremely dependent on power imports, and nervous about the flow-based upgrade and its work-around. Amidst tightened supplies, such as Belgium foresaw during its winter demand peak, Belgian officials feared that Euphemia’s flow-based optimization could leave them short of power. 

In September 2014 TSOs decided to defer the flow-based upgrade to this March. Their announcement suggested the delay was about not further stressing out the Belgians, allowing that, “the implementation of a fundamentally new capacity allocation methodology generally contains a risk, even if thoroughly prepared and tested.”

The Belgians continued to be stressed however, and earlier this month, the TSOs deferred Euphemia’s upgrade once more. Belgium’s power regulator is now making it clear that they want further improvements to the software.

“Scenarios considered to be highly improbable when the project started 5 to 7 years ago have now become realistic. We felt that it was necessary to reevaluate the algorithm. They will have to develop a new patch,” says Annemarie De Vreese, spokesperson for Belgium's energy regulator, the Commission de Régulation de l'Électricité et du Gaz (CREG).

To sense how worried Belgium has been about electrical shortages this winter, consider the mobile app and website that Brussels-based TSO Elia created to keep consumers informed about blackout risk. They provide 7-day color-coded forecasts of blackout threat levels, providing advanced warning if pre-planned rolling blackouts might be required.

No blackouts have occured so far because mild weather has enabled Belgium to meet demand with imports from the Netherlands and France, and because one of its three troubled reactors came back online in December. There would have already had 25 days of blackouts if this winter had been as cold as the 2010-2011 winter, according to a spokesperson for Belgium’s energy ministry quoted by, the news site for Flemish public broadcaster VRT.

According to De Vreese, the tweaks required to make flow-based optimization safe for tight markets could be fairly straightforward. She expects a proposed fix to be available for review next month. The TSOs issued an official statement last week foreseeing sign-off by national regulators by late April. 

De Vreese says the fix is about more than just reassuring Belgium. She says that other regulators, including those in Germany and France, recognize that their states also face a future with less firm domestic power generation. Germany is phasing out nuclear reactors and also seeing conventional power plants shut down as rising solar generation depresses wholesale power prices. And France plans to increase reliance on renewable generation while reducing reliance on nuclear reactors

In other words Belgium’s misfortune this winter may be a glimpse of a generally less secure electrical future. “Belgium is a sort of forerunner,” says De Vreese. 

If Euphemia’s designers can get its non-intuitive trading glitch sorted out, flow-based optimization of the European power market may yet be part of the solution.


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