Austrian Power Grid: How PICASSO and MARI help to reduce electricity rates and integrate renewables
Short-term possibilities of energy trade help to save millions of Euros and enable APG to even better balance electricity supply and demand. Whether it is your fridge, hair-dryer, washing machine or oven – they all have one thing in common: they need electricity, in fact, electricity which comes out of the socket almost invariably with the same frequency. “The electricity supply and demand have to be balanced at all times. Even a minimal divergence causes fluctuations of the frequency which, in turn, has negative effects on electric appliances and machines”, explains Thomas Karall, Austrian Power Grid’s (APG) CFO.

For all electric devices to function reliably – as we are used to in Austria – APG always has to have a backup to be able to supply the electricity that is needed at any time. The technical term for this backup is ‘control reserve’.

“This means that we buy electricity reserves on the market, which we can resort to in case of short-term divergences between supply and demand. Secure access to control reserves is, for instance, important for the continuing integration of renewables in the European electricity grids – an issue which will increase in importance in the years to come”, says Karall.

Control reserve cooperation projects PICASSO and MARI will revolutionize the electricity market

Until now the purchase of control reserves was not very flexible. The two projects for a Europe-wide exchange of control reserves “PICASSO” and “MARI” are supposed to change this. The difference: with PICASSO and MARI APG can access control reserves all over Europe. “In very technical terms this means that control reserves are being made available and can be traded daily at 15-minute intervals (during the day). Every day there will be 96 tenders of 15 minutes “, explains Karall. APG intends to participate in “PICASSO” and “MARI” from the start of the projects at the end of 2021 and early in 2022, respectively, because: the more short-term trade is possible and the bigger the number of cooperation partners in Europe, the lower the costs. “Since 2014 we have continuously shortened the intervals of the auctions and tested new models. In light of recent events: with the introduction of the balancing energy market on December 1, 2020 the interval of the daily auctions was shortened to 4 hours. Initiatives like that make sure that the costs of control reserves, which totaled 203 million euros in 2014, have been reduced to 40 million euros per year. This means savings of more than 80 percent“, states Karall. With “PICASSO” and “MARI” these costs should plateau at this low level or decrease even more. At the same time more Austrian electricity generators can offer their surplus production transnationally which tends to result in electricity being cheaper for Austrian customers. Another advantage of the short-term trade of control reserves is that also smaller generators with smaller resources can use the results of their prognoses directly for the control reserve markets.

“MARI” and “PICASSO” are Europe-wide cooperation projects to activate short-term control reserves. In Europe every transmission system operator (TSO) is obliged to procure control reserves. These reserves are, for instance, offered by operators of gas-fired power plants, run-of-river hydroelectric or pumped storage power stations, which can alter their production/demand short-term and in a very flexible (in a matter of seconds) way.