Long-term Procurement Process for Grid Losses in APG Control Area

The participating grid operators send the long-term forecast data of their balance groups for grid losses to APG annually. The forecast data cover the period for the next three years. These forecasts are updated by the grid operators as soon as the current forecasts differ from the data sent (e.g. after changes to the grid structure).

The long-term forecast data of the grid operators are cumulated by APG and used as the basis data for portfolio management. As a result of the portfolio management, standardized products are created including those that are traded on electricity exchanges (annually, quarterly and monthly base and peak products) as well as the corresponding outputs (MW) and times at which these products are offered to interested parties via an Internet-based tender platform. The procurement horizon for lost energy by APG is two years (1 year ex ante and 1 year during the year) (e.g. in 2020 products will be tendered for both 2020 (for the remainder of the year) and 2021; procurement for the delivery year 2022 will start in January 2021). This procurement is divided into regular tenders to cover the needed quantities. To participate in these tenders, it is necessary to be registered by APG.


Portfolio management

The portfolio management for the procurement of electricity to cover grid losses is based on the cumulative long-term forecast data for grid losses. The objective of portfolio management is to achieve an optimal breakdown of the given procurement and/or load profile into standard products. Furthermore, a strategy is developed that defines when and which products and quantities are purchased. The starting size for the breakdown into loads is referred to as the load profile, which is derived from the sum of the long-term forecast data. This profile can now be developed based on standard products (base load or peak load products), and residual positions always result which need to be balanced. This residual position represents the energy volume that must be balanced accordingly per time unit (e.g. hourly), as the difference from the long-term forecast data and the breakdown into standard products. Depending on the breakdown selected, these residual positions may vary and therefore can be optimised according to different objective functions.


Load breakdown and Hedge strategy

Long-term forecast data

Derived standard products and residual positions

Once the issue of the load breakdown is clarified, the question remains at which point in time the base and peak products should be procured. The separation of the procurement process into several points in time will minimise the risk of adverse procurement times. Therefore, APG will regularly conduct tenders at the times announced in advance.