Repower – Kosovo Demand Side Response in Kosovo Power System

REPOWER – KOSOVO DEMAND SIDE RESPONSE IN KOSOVO POWER SYSTEM

DATE: July 2019 This publication was produced for review by the United States Agency for International Development. It was prepared by AECOM.

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REPOWER-KOSOVO DEMAND SIDE RESPONSE IN KOSOVO POWER SYSTEM

Contract Number: AID-OAA-I-13-00012

Task Order: AID-167-TO-14-00007

Submitted to: USAID/Kosovo

Prepared by: AECOM International Development

DISCLAIMER: The authors’ views expressed in this document do not necessarily reflect the views of the United States Agency for International Development or the United States Government.

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Contents

1. GENERAL CONCEPT OF DEMAND SIDE RESPONSE ...... 4 2. OTHER COUNTRIES EXPERIENCE ...... 10 2.1. Austria ...... 13 2.2. Belgium ...... 16 2.3. Bosnia and herzegovina ...... 19 2.4. Croatia ...... 21 2.5. Finland ...... 23 2.6. Great britain ...... 25 2.7. Greece ...... 28 2.8. Sweden ...... 30 3. KOSOVO MARKET POTENTIAL FOR DEMAND SIDE RESPONSE ...... 32 3.1. New co Ferronikeli ...... 36 3.2. Sharrcem ...... 39 3.3. The Trepça mines...... 41 3.4. Mines (kek coal division)...... 43 4. HOW TO ATTRACT CUSTOMERS TO PARTICIPATE ? ...... 47 5. COMPENSATION METHODOLOGY ...... 51 5.1. Baseline consumption ...... 43 6. QUALIFICATION PROCESS FOR DSR PROVIDERS ...... 54 7. DEMAND SIDE RESPONSE CONTRACT TEMPLATE ...... 56 8. NEEDED AMENDMENTS TO GRID CODE AND MARKET RULES IN KOSOVO ... 65 8.1. Law on electricity ...... 65 8.2. Transmission Grid Code ...... 66 8.3. Market Rules ...... 68 9. CONCLUDING REMARKS ...... 70 10. LITERATURE ...... 74 11. LIST OF TABLES ...... 74 12. LIST OF FIGURES ...... 75

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1. GENERAL CONCEPT OF DEMAND SIDE RESPONSE

Enabling more flexible demand is high on the European agenda. In the electricity market of the future, with a high proportion of renewable and variable electricity production, it will be important to utilize all of the available flexible resources in the power system, including flexible production, storage, and flexible Demand Side Response (DSR). Understanding the specifics of Kosovo’s power system and lack of system reserve capacities, in June 2019 the Kosovo Transmission System Operator (KOSTT) initiated analyses of demand side response mechanisms to support tertiary reserves (manual frequency restoration reserve, mFRR) in the Kosovo power system. KOSTT asked the USAID-funded Kosovo REPOWER program to undertake development of this report, with the purpose of proposing measures to facilitate and accelerate development towards greater efficiency on the electricity market through increased demand side flexibility.

This document provides details about other countries’ experiences, Kosovo DSR market potential, compensation methodology, qualification process, DSR contract template and needed amendments to Kosovo’s legislative framework. The report explains the general concept of DSR through twelve basic questions and answers. The report also provides information regarding potential third-party reserve providers (DSR as a source for reserve) in Kosovo’s power system. The last chapter contains set of conclusions and recommendations for KOSTT’s consideration of eventual initiation of DSR mechanism.

1. What is DSR?

When the electricity demand exceeds forecasted levels, transmission system operators (TSO) engage available reserve capacities to compensate for the given difference between forecasted and realized demand in order to balance the system. These reserve capacities can be both on the generation side (to increase its electricity output) and on the consumption side (to decrease its demand level). In order to provide this kind of service, end-customers need to have manageable consumption units that can be reduced, or cut down, to the given level and with ramp-down rate exactly as required by the TSO.

Demand response means the change of electricity load by final customers from their normal or current consumption patterns in response to market signals, including in response to time- variable electricity prices or incentive payments, or in response to the acceptance of the final customer's bid to sell demand reduction or increase at a price in an organized market as defined in point (4) of Article 2 of Commission Implementing Regulation (EU) No 1348/20141, whether alone or through aggregation1.

Demand response can be implemented with two divergent approaches:

1. Implicit Demand Response: Direct consumer reaction to time-varying electricity supply prices that consumers are exposed to in the retail market; 2. Explicit Demand Response: Individual or aggregated flexible demand which is sold on the electricity markets.

1 Definition from the Directive of the European Parliament and of the Council on common rules for the internal market for electricity and amending Directive 2012/27/EU (recast)

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Implicit Demand Response

Implicit demand response means voluntary changes by end-customers in their usual electricity consumption patterns in response to short-term (day-ahead and intraday) market signals. This type of demand side participation in electricity markets will be further developed with the roll-out of smart metering.

Explicit Demand Response

Explicit demand response means that consumers (on their own or through DSR Aggregators) are rewarded for their willingness to change their demand for electricity at a given point in time, usually in response to a specific request of TSO. The explicit demand response can be performed by large consumers themselves or DSR Aggregators - a generic name used with respect to retailers or independent aggregators which act on behalf of a pool of consumers. Explicit demand response has already been developed among larger industrial customers directly participating at the electricity market.

The concept of demand side flexibility can be defined in various ways. In short, in this study the following definition is used [1]:

Demand side response (flexibility) is a voluntary change in the demand for electricity from the grid during shorter or longer periods, caused by of some type of incentive.

This definition differs from other definitions of DSR (flexibility), which start from a customer’s electricity consumption instead of demand from the grid (see for example CEER, 2014). The reason why REPOWER has chosen this slightly different definition is that an electricity customer’s consumption does not have to be the same as the electricity demanded from the grid if the customer has individual storage facilities or their own production facilities.

For this reason, the authors have instead chosen the wording “demand for electricity from the grid.”

This report only deals with voluntary demand side flexibility: when the customer has made an active choice. The analysis focuses on the financial incentives to electricity customers and from the actors that may stimulate, facilitate or buy customer flexibility. Flexible production and storage are not included, nor are net producers who produce more than they consume. When it comes to electricity trading, the DSR focus is on the three markets for physical trading in electricity: the day-ahead market, the intra-day market and the balancing market. This document does not cover the financial market. It uses current market models as the starting point for this new market area of the Kosovo power system.

DSR is a subset of Demand Side Management (“DSM”), which includes all measures to alter normal usage, including permanent changes through energy efficiency measures.

2. Why do we need DSR?

DSR is an important tool to help ensure a secure, sustainable and affordable electricity system. It can help us soften peaks in demand and fill in the troughs, especially at times when power is more abundant, affordable and clean. For business and consumers, DSR is a smart way to make money without jeopardizing their own operations. For the TSO, DSR is smart way of increasing system reserves

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Moreover, flexible demand is desirable for many reasons. If demand is adjusted to available production, the risk of a power deficit reduces and thereby also the need for new investment in power generation units and the electricity grid to safeguard demand during peak loads, which was one of the biggest challenges in Kosovo power system for years. Demand side flexibility can also contribute to less frequent activation of high-price production resources or imports in a deficit situation. Overall, increased demand side flexibility results in more efficient use of resources and contributes to the fulfillment of climate and energy policy goals [6].

There are four reasons to introduce and activate a DSR mechanism [1]:

a) Frequency Regulation

In Europe, power system frequency usually does not diverge too much from the nominal value of 50 Hz. However, since 2018 there have been large frequency deviations in Europe, sometimes decreasing to 49.8 Hz – caused exactly in Kosovo. The core of the problem is the unresolved status of KOSTT full membership in the ENTSO-E (European Network of Transmission System Operators for Electricity) and system balancing issues of the northern part of Kosovo’s system. Each TSO has to keep adequate system reserves, incluingprimary (FCR), secondary (aFRR) and tertiary (mFRR and RR) reserves. Requirements placed on frequency reserves contributing to frequency regulation concern how quickly they can be activated (activation time), how often they can contribute (repeatability), and for how long they can contribute (stamina). The case of Kosovo DSR is interesting with respect to tertiary reserve (mFRR) needs.

b) Power Deficit

When the demand for electricity is greater than the supply, the system is in power deficit. Kosovo’s power system is almost fully based on large thermal power generation units. Consequently, there are two issues related to full reliance on thermal power: 1) power deficit in the case of unavailability of generating unit(s) and 2) generation unit ramp rates (slow response). In the case of power deficit, both electricity consumers and producers can contribute to the strategic reserve by agreeing to reduce consumption or to reserve production. Power deficit situations have historically been quite usual in Kosovo, and the strategic reserve has only been analyzed in preparation of the role of new generating units in Kosovo.

c) Inefficient Use of Resources

From a socio-economic perspective, it would be desirable if flexible electricity customers cut down on their electricity use during scarcity situations with high prices and increased their consumption during low price periods. A fundamental prerequisite for this is that customers who can be flexible are exposed to the price differences on the market, for example through hourly price contracts, and that the flexibility of these customers is factored into the price formation on the day-ahead market. Kosovo’s power system does not yet use such systems, but it should be expected to appear in some form in the future.

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d) Local Network Problems

Local network problems entail the local electricity network having capacity limitations and congestions. Through flexible customers moving parts of their electricity use to another time, costly investments in the network can be avoided or delayed. The network losses and peak loads can also be limited. This aspect is not of primary relevance in Kosovo, especially not at the transmission level, since the transmission network is well developed.

To conclude, DSR in Kosovo is needed primarily for tertiary reserve purposes, i.e. for frequency regulation.

3. Why Participate in DSR?

The principle reason for end-customers to participate in DSR is the financial incentive it presents. By concluding a “DSR contract” with the TSO for the provision of power system reserve, the end- customer directly participates in the balancing mechanism and receives adequate financial compensation.

4. What are controllable units adequate for DSR?

Controllable power units are end-user installation devices whose consumption can be reduced on the TSO’s request, such as furnaces, coolers, pumps, compressors etc.

5. How will the contract on DSR affect the provider’s operations?

It depends on the amount of provided DSR reserve and the feasibility.

6. How often will the contracted reserve be activated? How long does activation last?

The frequency of DSR activation as well as other parameters related to the required change in the consumption of controllable units depends on the TSO’s needs. It is clearly defined in each DSR contract.

7. How to participate?

All interested end-users need to fill in the prequalification form. After submission of the prequalification form, controllable units need to be tested in order to prove its operational ability for declared DSR. If it is successfully tested, DSR contract may be signed.

DSR contracts can be applied through two types of load control:

1) indirect load control and 2) direct load control.

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Indirect load control is the load control that network companies can achieve through tariffs. Through direct load control, network companies can directly impact their customers’ consumption via controllable loads. This can be done through hard disconnection, when pre-selected loads are disconnected over a specific period, or soft disconnection, when the load is reduced over a given period (Nylén, 2011). The load control can be carried out across the entire connection point, or at the component level where an individual device, such as a heat pump, can be directly controlled. Direct load control gives network companies the opportunity to manage capacity limitations in the short term and, in this way, maintain the reliability and quality of their networks (Eurelectric, 2014). In the long term, direct load control can reduce the need for capacity investments. Contracts for direct load control could be entered into directly between a network company and its customer or be procured by network companies from an external actor (energy service company or aggregator), who in turn enters into a contract with the customer. Some types of load control are used by network companies today, via tariffs for interruptible load, such as disconnection of electrical heaters during peak periods in the network. With these tariffs, customers have an agreement to disconnect the heater themselves following a signal from the network company. It is thus the customer and not the network company who is responsible for the disconnection.

8. When is the DSR tender usually launched?

The DSR tender is usually conducted on a weekly basis. For example, bids for the next week are collected until Thursday 12:00 of the current week.

9. Who can participate in the DSR?

A basic prerequisite for a well-functioning DSR mechanism and market is that the technical potential exists for DSR, and that it is correctly priced on the electricity market and paid by the network company. Further factors of importance for the prerequisites for DSR are:

a) Introduction of smart meters and hourly electricity metering b) Feedback of hourly values and metering data for controlling electricity use c) Introduction of technology and solutions for flexible use and power reduction within DSR providers’ property, housing and industry d) Introduction of electricity market-linked usage/automation/devices for energy flexibility at users and energy storage. In addition, clear information is important to enable customers to make well-informed decisions. The survey and interview study carried out [1] shows that the various customer segments largely lack knowledge about demand side flexibility. Finally, all pre-qualified DSR providers with concluded a DSR contract with the TSO can participate in demand side response mechanism.

10. What is usual bid selection procedure?

Bids are usually selected according to the minimum price criterion. However, TSOs generally keep the right to reject bids with unit prices higher than the prices in the ancillary service methodologies, if any.

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11. How is DSR activated?

TSOs usually activate the DSR by a phone call. The end-user engages its DSR capacity in given time intervals, usually not later than 15 minutes after the TSO call. As given above, the activations are prioritized on the minimum cost principle. All activations are recorded and filed.

In general, there are three types of technologies needed for DSR mechanism: 1) advanced meter reading (AMR), 2) information and communication technologies (ICT) and 3) load management and automatic load/plant control technologies, as shown on the following figure.

Figure 1 Three main technologies needed in DSR mechanism [3]

12. What are usual barriers that prevent customers participating in DSR?

Based on the other countries’ practical experiences, there are four main barriers that prevent customers from participating in DSR:

1. Small interest in DSR among customers; 2. Customers are not aware of their DSR potential of flexibility; 3. Practical obstacles to activate DSR; 4. Limited access to hourly values for their electricity use; and 5. Difficulties for customers to understand and compare offers.

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2. OTHER COUNTRIES EXPERIENCE

The main purpose of the ENTSO-E as an association of TSOs of Europe is to pursue the reliable and efficient operation of the Europe Synchronous Area. This includes, inter alia, the management of all operational issues (among others those related to frequency regulation, scheduling and accounting, and coordination services). The ENTSO-E prepares Network Codes which after certain public procedures become regulations. The Commission Regulation (EU) 2017/1485 from 2 August 2017 establishes a guideline on electricity transmission system operation and this document provides detailed guidelines for the purpose of safeguarding operational security, frequency quality and the efficient use of the interconnected system and resources across Europe. The document defines that “Each TSO of each EuropeLFC area shall implement an automatic frequency restoration process (‘aFRP’) and a manual frequency restoration process (‘mFRP’)” [7].

With the aim to present approaches of some European TSOs to this issue and to show how some TSOs use DSR in the process, approaches of different countries are presented below. Regulatory framework for DSR across various markets (day-ahead, intraday, balancing, capacity mechanisms) has been introduced in 21 European countries [7].

Iceland

Finland Sweden

Norway Russia

Estonia

Latvia Denmark Lithuania United Kingdom Belarus Ireland

Netherlands Poland Germany Belgium Czech Republic Luxembourg Ukraine Slovakia

Austria Hungary Moldova Switzerland France Slovenia Romania Croatia

BiH Serbia Italy MontenegroKosovo Bulgaria N.Macedonia Albania Portugal Spain Greece Turkey

Cyprus Figure 2 Existing DSR regulatory framework across Europe [3]

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The following figure shows DSR potential in EU countries in terms of total DSR capacity and percentage of the peak load. Clearly, for most of the countries the DSR potential is estimated to be in the range between 7 – 10 % of the country peak load. In Kosovo, these numbers would assume DSR potential in the range between 80 – 110 MW. However, this is strongly related to the consumption structure and abilities, DSR mechanisms, and incentives that need to be analyzed in detailes before expected DSR range is defined for each country.

Figure 3 DSR potential in EU countries [source: Sia partners]

For better understanding, a general description of the Frequency Restoration Reserves (FRR) is given at the beginning of this Chapter.

According to the Article 3. Definitions of the Network Code on System Operation2, the frequency restoration reserves (FRR) “means the active power reserves available to restore system frequency to the nominal frequency and, for a synchronous area consisting of more than one LFC area, to restore power balance to the scheduled value”. The Frequency Restoration Reserves (FRR) are supplied by reserve providers (generators, storage, DSR) and are used by the TSO after a sudden system imbalance occurs (e.g. the outage of a power plant, unplanned change in consumption, etc.). FRR includes operating reserves with an activation time typically from 30 seconds up to 15 minutes (depending on the specific requirements of the synchronous area). FRR can be distinguished between:

a) reserves with automatic activation (aFRR), and b) reserves with manual activation (mFRR).

An aFRR is activated automatically and in a continuous manner, and is by its nature more deeply integrated into TSO systems. An mFRR is activated manually in a discrete and “close to” continuous manner by TSOs.

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Figure 4 Active power reserve types and time domains [14]

Bearing in mind the growing share of RES (Renewable Energy Sources) generation and upcoming requirements of the Clean Energy Package for All Europeans, new electricity market design and a more active participation of all market participants are necessary. Integration into the European electricity market is one of the continuous activities and the Guideline on Electricity Balancing (GLEB), approved by the Electricity Cross-Border Committee on 16th of March 2017, defines tasks and a timeline for the implementation of a European platform for the exchange of balancing energy from frequency restoration reserves with manual activation (mFRR). An overview of the general features related to the provision of tertiary reserve and demand side participation in the balancing market in some European countries is given below.

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2.1. Austria

Since 2012, the control power required in the APG (Austrian Power Grid – Austrian TSO) control area is procured uniformly by APG through regular tenders. Any market participant that meets specific technical and contractual conditions can participate in these tenders.

a) Types of ancillary services and participation Frequency control services and market participants that are allowed to participate in Austria are shown in the following Table.

Table 1 Frequency control services and referring market participants in Austria [9]

b) What are the basic features of the mFRR on the Austrian electricity market?

The main mFRR characteristics and products available to DSR3 service in Austria are given in the following Table.

Table 2 The main mFRR features in Austria (source APG web site)

Min First Volume 1 MW (for the first bid) Min Volume 5 MW

Max Bid Volume 50 MW

Min Volume Step 1 MW

Min Bid price 0,00 EUR/MWh

Max Bid price There is no max price

Min Energy Price There is no min price (negative price allowed)

Max Energy Price There is no max price

Notification time >15 min

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Activation Manual (on APG request)

APG performs prequalification process for the potential bidder for each service.

Prequalification Prequalification is valid for 3 years. After successful completion of the prequalification process, providers can enter into a framework agreement with the TSO which allows them to participate in the bidding process for the respective programs.

Tendered on a weekly and daily basis, with separate tenders for weekdays and weekends, both Procurement split into 6 four-hour windows.

c) Can the Demand Side take part in providing this service? The balancing market is open to the DSR service and every market participant which meets specific technical and contractual conditions can provide that service. The framework conditions are laid down in the Operation Handbook of ENTSO-E. Of course, all potential providers of ancillary services must be a part of Balancing Group with relevant Balancing Responsible Party or, in the case of an Aggregator, fulfill all necessary obligations related to balance responsibility.

d) How does the TSO procure these services? According to the APG website [19] tertiary control is tendered by APG on a weekly and daily basis, with separate tenders for weekdays and weekends, both split into six four-hour windows. The bidding period for the weekly market maker tender is normally every Thursday, from 9:00 to 13:00. Suppliers who have been accepted can adjust their energy prices up to the end of the day-ahead tender. On weekdays (except Saturday) the market participants have the possibility from 11:00 to 13:00 to adjust the energy prices for the accepted bids through daily or weekly Power Control tenders. In addition, there is a short-term tender where no power price is paid for the reserved mFRR (“day- ahead tender”). Through this tender, different energy prices can be bid for the 6 product time slots for every individual day. These products are identical to the products on the market maker tender, i.e. the bids are ranked and the ranking list is the basis for a potential subsequent call. The tender takes place exclusively through an electronic tendering platform and the balancing and ancillary services pricing are on the “pay as bid” principle. Generally, TSO pays to suppliers of ancillary services prices for:

 Availability (availability of capacity during the time in €/MW/h)  Utilization (energy in €/MWh )

e) How does TSO activate, measure and penalize the service? mFRR is only provided when called by APG. The requested volume must be deployed within 15 minutes. All callable bids for the provision of mFRR are ranked according to energy price and entered in the merit order list. In case that it is necessary to increase or reduce the generation capacity in the APG control area, the next offer in the list will be called. In the case of positive mFRR (supplier delivers to the grid), the offers with the lowest energy price will be called first. In the case of negative mFRR (supplier takes energy from the grid), the offers with the highest energy price will be called first.

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If the energy prices are identical, preference is given to the offer with the largest volume. If the volume is also identical, the bid that was submitted first will be called [19]. In case of under fulfillment according to the prequalification requirements, market participants are subject to a suspension of capacity and energy payment. Any future unavailability under contract, could also potentially lead to temporary (or even permanent) exclusion from the tendering process.4 For the Demand Response penalties include a time-limited exclusion from the participation in the balancing markets and monetary penalties (amount not specified; it is within the discretion of the TSO).

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2.2. Belgium

The Belgium TSO, Elia, works with its fellow European TSOs to maintain grid balance by means of a regulation procedure involving three types of control reserve.

a) Types of ancillary services and participation

Primary reserve for frequency control (R1 or FCR): Participating system actors react to frequency deviations automatically and very quickly, within 0 to 30 seconds [8].

Secondary reserve for automatic frequency restoration (R2 or aFRR): This reserve is activated on the basis of a signal sent automatically and continually. System actors who participate in R2 must react within 30 seconds to 15 minutes to release the primary reserve and restore the grid frequency to 50 Hz [8].

Tertiary reserve for manual frequency restoration (R3 or mFRR): This reserve enables Elia to cope with a significant or systematic imbalance in the control area and/or resolve major congestion problems. It is activated on the basis of a manual signal by Elia and must be fully available within 15 minutes [8].

Additionally, the tertiary reserve (mFRR) has two components:  the tertiary production reserve: injection of extra capacity by producers who have signed a contract for tertiary reserve;  the tertiary off-take reserve: reduction in off-take by grid users who have signed an interruptibility contract.

b) What are the basic features of the mFRR in the Belgian electricity market? Unlike the primary and secondary reserves, the tertiary reserve is activated manually at Elia's request. Any grid user whose facilities comply with certain technical requirements can sign a contract with Elia to take part in the tertiary reserve. Elia as a TSO uses two general products of the tertiary reserve:  Reserved volumes where availability must be guaranteed throughout the contract, monthly or weekly), and  Non-reserved volumes where no availability requirement outside of the energy offer made to Elia

Table 3 Differences between two tertiary reserve products in Belgium

Tertiary reserve (mFRR)

Tertiary reserve - Reserved volumes Tertiary reserve - Non-Reserved volumes Activated manually at Elia’s request. Activated manually at Elia’s request. The volume must be deployed in full within 15 minutes, i.e. The volume must be deployed within a maximum of 15 the target capacity must be reached within 15 minutes. minutes.

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Minimum Volume A minimum of 1 MW (can be spread across multiple sites A minimum of 1 MW (can be spread across multiple sites or offered with a partner). or offered with a partner).

Types of services (subproducts) Two different products:  R3 Standard: activation of up to 8 hours per day, with Offers of MW/h flexibility on a 15-minute basis at times that an unlimited number of activations. suit provider and at a price that the provider sets itself.

 R3 Flex: activation of up to 2 hours every 12 hours, with a maximum of 8 activations per month. Availability

The service offered must be 100% available during the As it is not a reserved product, the service only has to be supply period. available at the time of activation. Remuneration

Elia will pay a reservation fee for the service, based on the If offer is activated, Elia will pay a fee based on the offered volume it activates. price.

c) Can the Demand Side take part in providing this service? Sites off-taking or injecting energy into the transmission grid (or even the distribution grid for some products) can offer their services to Elia directly or via an aggregator as long as they can meet some basic requirements for each of Elia’s products. There are small differences regarding different types of tertiary reserve and those are the following:

 Reserved volumes can be offered by consumers and holders of decentralized generation capacity connected to the transmission or distribution system or aggregators who can react within 15 minutes and for a period of 2 or 8 hours, depending on the product chosen.

 Non-reserved volumes can be offered by consumers and holders of decentralized generation connected to the transmission system who are able to react to a signal from Elia within a maximum of 15 minutes for a period of at least 15 minutes.

d) How does the TSO procure these services? Tertiary reserve procurement principles for two types of tertiary reserve in Belgium are given in the table below.

Table 4 Tertiary reserve procurement principle in Belgium

Tertiary reserve - reserved volumes Tertiary reserve - non-reserved volumes

Elia purchases this service through a monthly auctions open Offers submitted via portal for each quarter-hour of the 24- to all participants connected to the Elia grid, the distribution hour day. Elia activates the required volume up to the systems or a closed distribution system. maximum offer.

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e) How does the TSO activate, measure and penalize the service? Products are activated manually at Elia’s request. The volume must be deployed in full within 15 minutes, i.e. the target capacity must be reached within 15 minutes. In the framework of the R3 Non-reserved service, the Balance Service Provider (BSP) must designate a Balance Responsible Party (BRP) who takes the financial responsibility of any divergence between the requested and delivered energy. It accepts to include the requested and delivered volumes in its perimeter [8].

There is no direct financial penalization for failure to deliver the requested volumes. In case of delivery failure, the non-delivered volumes will be considered as being an imbalance on the BSP’s BRP perimeter for which the BRP will have to pay the Imbalance Price applicable for the concerned quarter-hour. Also, in case of repeated failures Elia will apply a temporary exclusion of the BSP from the bidding platform which may lead to a contract suspension after a certain failure frequency [8].

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2.3. Bosnia and Herzegovina

NOSBiH (Independent System Operator in Bosnia and Herzegovina) is responsible for functioning of the daily balancing energy market including ancillary services. NOSBIH follows general concepts of the ENTSO-E regarding the ancillary services. NOSBiH uses two “tools” to maintain the balance in BiH Control Area: ancillary services and daily balancing energy market.

a) Types of ancillary services and participation The ancillary services on the electricity market of Bosnia and Herzegovina and market participants allowed to participate in service providing are shown in the table below.

Table 5 Frequency control services and referring market participants in BiH

ENTSO-E NOS BiH Aggregated Generation Load terminology terminology Generation FCR Primary Regulation    aFRR Secondary Regulation    mFRR Tertiary Regulation   

The precondition for providing ancillary services is to fulfill the technical preconditions for providing regulation service, or to be registered in the “Registry of regulation service providers.”

b) What are the basic features of the mFRR in the Bosnia and Herzegovina electricity market? NOSBIH selects Ancillary Service Providers (public tender procedures) and concludes contracts to provide capacity for tertiary regulation in a defined time framework (year, month). The main FRR characteristics in BiH are shown in the following Table.

Table 6 The main FRR features in BiH [10][11]

Min Volume 10 MW

Max Bid Volume Requested Volume

Min Volume Step 1 MW

Min Capacity Bid price There is no min price (KM/MW/h)

Price cap for tertiary control capacity is determined by the State Max Capacity Bid price Regulatory Authority’s decision.

The price cap of energy for upward tertiary regulation is Min/Max Energy Bid price on Daily determined by the State Regulatory Authority’s decision. Balancing Market The price of energy for downward tertiary regulation is market based.

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Notification time 15 min

Activation Manual (on NOSBIH request)  Minimum 1 hour Duration of engagement  Maximum 8 hours  Pause between two activations must be minimum 2 hours

NOSBiH uses the daily balancing energy market in order to maintain balance in the Control Area. Contracted providers for ancillary services are obliged to submit bids for balancing energy for tertiary control for each contracted period. The minimal value of a bid cannot be below contracted capacity as specified for each provider. Additionally, all registered providers may submit their voluntary bids in the daily balancing energy market notwithstanding the contracted capacities.

c) Can the Demand Side take part in providing this service? Yes, the Demand Side can also provide the tertiary regulation and participate on the daily balancing market if it meets technical preconditions.

d) How does the TSO procure these services? The ancillary service of tertiary regulation is procured through the public purchase procedure in two steps.

1st step: Selection of the qualified Ancillary Service Providers with units capable to provide tertiary reserve, and 2nd step: Selection of the qualified Ancillary Service Providers which shall provide tertiary regulation in a specific period of time.

The public purchase procedures are organized separately for upward tertiary regulation reserve and for downward tertiary regulation reserve. Prices for contracted upward and downward tertiary reserve are based on a "pay-as-bid" approach. The procedure to purchase tertiary reserve capacity is carried out on an annual level and, if necessary, on a monthly level for purchasing the missing values of reserve (up to requested level). The procedure to purchase balancing energy carry out on a daily basis and for each hour there is a merit order list which is the base for activation [11].

e) How does the TSO activate, measure and penalize the mFRR service? Products are activated manually upon NOSBIH’s request. The volume must be deployed in full within 15 minutes. In case that contracted capacity has not been nominated, the balancing market provider will pay a penalty for every MW contracted, but not nominated. All delivered/undelivered quantities of tertiary balancing energy shall become deviations of the Balance Responsible Party to which the Balance Service Providers belong. Additionally, NOSBiH analyzes activation of tertiary regulation by comparing actual and planned generation/withdrawing of the registered providers that are at a given moment nominated to provide tertiary regulation service. If this indicates that the Balance Service Provider has engaged less than 80% of required tertiary regulation power within any hour in a day, it shall be considered that the service has not been adequately provided, and the BSP shall pay a penalty.

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2.4. Croatia

The ancillary service of frequency containment in the electric power system is implemented by FCR, aFRR and mFRR services. The FCR service is served only for frequency control and it is not paid, while the aFRR and mFRR are used to regulate the frequency and power of exchange and are provided through ancillary service contracts. HOPS (the Croatian TSO) contracts ancillary services that are provided by the network users (generators or demand side).

a) Types of ancillary services for frequency restoration The aFRR and mFRR services can be provided by network users with whom HOPS concluded an ancillary service contract. One of the prerequisites for signing the ancillary service contract is to possess a certificate of technical ability to provide a particular service. The basic characteristics necessary for the services are shown in the Table.

Table 7 The main mFRR features in Croatia [13]

Minimal Which network Service Availability Reponses Time capacity users aFRR 100% during the offer time 100% capacity within 5min 1 MW TSO & DSO mFRR 100% during the offer time 100% capacity within 15min 1 MW TSO & DSO

b) What are the basic features of the mFRR service on the electricity market of Croatia? The general requirements of HOPS for the mFRR product are listed in Table below.

Table 8 The main requirements for mFRR in Croatia

Response time up to 15 minutes requested capacity Activation On the request of HOPS (by phone) Min Capacity 1 MW Availability 100% during the contracted period Provider has the ability to formulate a bid based on any combination of sources within Aggregation its portfolio (eg generators, loads, distributed production, etc.). Maximal offer must be lower than the qualified capacity of registered provider of Energy ancillary service.

Contracted providers are obliged to submit the balancing energy bid for every contracted period (minimal volume is the contracted capacity). All registered providers may submit their voluntary bids in the daily balancing energy market.

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a) Can the Demand Side take part in providing this service? Yes, the Demand Side can provide the tertiary regulation and participate in the daily balancing market if satisfies technical preconditions. It can offer a service for one site or an aggregated offer. [12]

b) How does TSO procure these services? The ancillary service of tertiary regulation is procured through tenders. Tenders are conducted on a weekly basis. Bids are collected until 12:00 of the previous working day in the current week for the next week. All prequalified providers who have entered into a contract with the HOPS to secure power regulation from Tertiary Controls are eligible to participate.

c) How does TSO activate, measure and penalize the mFRR service? Products are activated manually, by phone, at HOPS request. The volume must be deployed in full within 15 minutes from the phone call. In cases where the contracted capacity has not been nominated, the contacted provider will pay a penalty for the every MW contracted but not nominated. If the amount of activated reserve is less than 75% of the required amount, the accounted reserve for the day on which the order is issued will be zero. Additionally, the provider will pay a penalty for the failure to fulfill its contract obligations.

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2.5. Finland During the last few years, Finland has completed several steps to allow Demand Response participation. In fact, active market participation of Demand Response and aggregation are possible in all types of the markets. In Finland, loads from large-scale industry have the right to participate as reserves used for maintaining the power balance. The Demand Side management is treated as an opportunity to increase supply on both regulating power and reserve markets. Fingrid (the Finnish TSO) procures different kinds of reserves from reserve markets. Reserves are power plants and consumption resources, which either increase or decrease their electric power according to the need of the power system. Fingrid maintains a balancing energy market together with the other Nordic TSOs. In the balancing energy market, production and load owners can give balancing energy bids for their adjustable capacity. In order to participate on the market, a balancing energy market contract with Fingrid is required.

a) Types of ancillary services and participation

Figure 5 Reserve market places in Finland – both consumption and generation participants [14]

b) What are the basic features of the mFRR on the Finland electricity market? Fingrid maintains a balancing energy market together with the other Nordic TSOs. In the balancing energy market, the production and the load owners can give balancing energy bids for their adjustable capacity. The Nordic TSOs activate bids on the balancing energy market whenever necessary during normal operations or disturbances. Fingrid's Grid Control Center is responsible for activation, which is manual. The balancing capacity market was introduced in the spring of 2016. A capacity provider whose capacity bid is accepted on the balancing capacity market, is obliged to submit balancing energy bids to the balancing energy market. The balancing capacity market is used to ensure that Fingrid has a sufficient amount of mFRR to cover the dimensioning fault and/or during the maintenance of Fingrid's own power plants and leasing reserve power plants.

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Table 9 The main types of services on the balancing market in Finland (based on [14])

Balancing energy market Balancing capacity market Fast Disturbance Reserve

- Fingrid's balancing energy markets - By balancing capacity markets, Fingrid - Nordic TSOs have agreed that every are a part of Nordic balancing energy secures that it has enough available country must have Fast Disturbance markets, where bids are activated in up-regulation capacity also during Reserve available with the amount price order, taking into account unavailability of reserve power plants. adequate for their own dimensioning technical conditions. fault in each part of the system. - Balancing service provider whose bid - Bids can be delivered and updated 45 is accepted in the bidding - Fingrid's need of Fast Disturbance minutes before each operating hour. competition is obliged to submit up- Reserve varies typically at a span of regulation bids to balancing energy 880 – 1100 MW depending on - Marginal pricing, i.e. payment is market the previous day at 13:00. dimensioning fault. calculated by ordered energy and most expensive bid used in each hour - Balancing capacity bids are used after - Fingrid covers Fast Disturbance (as an exception, a special regulation volunteer balancing energy bids on Reserve with own reserve power is priced by "pay as bid" principle). the balancing energy market. plants and reserve power plants procured with long-term contracts. - Contrary to balancing energy market, Reserve power plants are not in use balancing service provider gets on electricity markets. availability payment based on the balancing capacity bids. Availability payment is affected by possible activation payments.

- Fingrid implemented balancing capacity markets to replace earlier long-term contracts with big industry for disconnectable loads.

c) Can the Demand Side take part in providing this service? Finnish production and consumption resources participate on all reserve markets. Operating on the day ahead market and intraday market requires an agreement with Power eXchange (Nord Pool), as well as an agreement with an open electricity provider, which also covers balance responsibility. The number of activation, reimbursement levels and technical requirements vary between different type of markets and they are defined by contracts.

d) How does TSO procure these services? Procuring is market-based and participation is voluntary. Balancing energy bids may be given for all resources that can carry out a 10 MW change of power in 15 minutes (5 MW if using electronic activation). The bids are given to Fingrid no later than 45 minutes before the hour of use in accordance with the balancing power bid instructions. Fingrid procures capacity through the weekly auctions.

e) How does TSO activate service? Bids are activated at Fingrid’s request (by phone, or electronically by message).

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2.6. Great Britain

Great Britain was the first European country to open several of its markets to consumer participation. Today, the Demand Side has many opportunities to participate on the electricity market and offer its services. The ESO (Electricity System Operator) became a legally separate entity in 2019 within the National Grid Group and the ESO procures services to balance demand and supply and to ensure the security and quality of electricity supply across Britain's transmission system. There are many ancillary services related to the frequency response in Great Britain as given in the following Table.

Table 10 Ancillary services related to frequency response in Great Britain

DSR is an important tool to help ESO to ensure a secure, sustainable and affordable electricity Demand side response system. DSR helps to soften peaks in demand and fills in the troughs, especially at times when (DSR) power is more abundant, affordable and clean. Developed to allow demand side providers to increase demand as an economic solution to Demand Turn Up managing excess renewable generation when demand is low. Enhanced frequency EFR is a service, open to both BM (Balancing Mechanism) and non-BM providers, to provide response (EFR) frequency response in one second or less. Fast reserve provides rapid and reliable delivery of active power through increasing output Fast reserve from generation or reducing consumption from demand sources Firm frequency Firm Frequency Response (FFR) is the firm provision of dynamic or non-dynamic response response (FFR) to changes in frequency. Mandatory response Mandatory Frequency Response is an automatic change in active power output in response services to a frequency change and is a Grid Code requirement. Short term operating Short term operating reserve (STOR) is a service that provides additional active power from reserve (STOR) generation or demand reduction

a) Types of selected ancillary services and participation

Demand Turn Up5 The Demand Turn Up (DTU) service encourages large energy users and generators to either increase demand or reduce generation at times of high renewable output and low national demand. This typically occurs overnight and during weekend afternoons in the summer. The service is open to any technology that has the flexibility to increase demand or reduce generation during times of low demand and high renewable output. The entry threshold for participation is 1 MW. This can be aggregated from sites 0.1 MW and larger. Fractions of megawatts are acceptable, e.g. 4.2 MW, providing they meet the entry threshold. There are particular times of the day or week when the service is more likely to be required. These are defined as ‘availability windows’ and cover the following periods:

5 https://www.nationalgrideso.com/balancing-services/reserve-services/demand-turn ______REPOWER – KOSOVO 25/77

Table 11 The main timeframes for DSR services in UK

Overnight window Weekends and bank holidays afternoon window  23:30 – 08:30 for May, September, October (base  3:00 – 16:00 from May to October months)  23:30 – 09:00 for June, July, August (peak months) Instructions for activation are issued via email, with a supporting SMS sent to the provider. Email contains the details of the megawatt response and the timeframes during which it is required. Providers need to confirm receipt of an email instruction within 30 minutes of it being issued.

Fast Reserve6 Fast Reserve provides the rapid delivery of power through either an increased output from a generator or a reduction in consumption from demand sources, following receipt of an electronic dispatch instruction. Fast Reserve is used, in addition to other energy balancing services, to control frequency changes that might arise from sudden, and sometimes unpredictable, changes in generation or demand. The fast reserve service is open to both Balancing Mechanism (BM) and non-BM providers who can meet the technical requirements. This might include generators connected to the transmission and distribution networks, storage providers and aggregated demand side response. The fast reserve service is dispatched electronically. Units providing fast reserve must be ready to receive instructions at the start of each fast reserve window to allow them to be automatically dispatched must be able to deliver minimum of 25MW.

Firm Frequency Response (FFR)7 FFR can provide both dynamic and non-dynamic response to changes in frequency. Dynamic frequency response is a continuously provided service used to manage the normal second-by-second changes on the system. Non-dynamic frequency response is typically a discrete service triggered at a defined frequency deviation. FFR providers must:  have suitable operational metering;  pass the FFR pre-qualification assessment;  deliver minimum 1 MW response energy;  operate at their tendered level of demand/generation when instructed;  have the capability to operate (when instructed) in a frequency sensitive mode for dynamic response, or change their MW level via automatic relay for non-dynamic response;  communicate via an automatic logging device; and  be able to instruct and receive via a single point of contact and control where a single FFR unit comprises of two or more sites located at the same premises.

6 https://www.nationalgrideso.com/balancing-services/reserve-services/fast-reserve 7 https://www.nationalgrideso.com/balancing-services/frequency-response-services/firm-frequency-response- ffr

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Short term operating reserve (STOR)8 Short term operating reserve (STOR) provides the TSO with additional power when actual demand on the National Electricity Transmission Network is greater than forecast and/or there is unforeseen generation unavailability. A STOR provider:  Must be able to offer a minimum of 3 MW of generation or steady demand reduction. This can be aggregated from more than one site.  Should be able to respond to an instruction within a maximum of 240 minutes, although response times within 20 minutes are preferable.  Must be able to sustain the response for a minimum of 2 hours and have a recovery period of not more than 1200 minutes.

b) Can the Demand Side take part in providing this service? Yes, the Demand Side can participate in providing ancillary services if satisfies technical preconditions. Aggregation is possible in ancillary services and it is especially needed in those products with high minimum bid sizes.

c) How does TSO procure these services? Procuring is market-based and providers' participation is on the voluntary base.

d) How does TSO activate service? Bids are activated by phone or by e-message, or automatically.

8 https://www.nationalgrideso.com/balancing-services/reserve-services/short-term-operating-reserve-stor ______REPOWER – KOSOVO 27/77

2.7. Greece

The Greek wholesale electricity market is based on a mandatory “pool” mechanism. Each day, all sellers of electricity (i.e. generators, auto-producers and importers) must state an offer price for each hour of the following day for their available capacity to supply electricity to the system.

ADMIE (the Greek TSO) runs at day-ahead and in real time the Dispatch Schedule, i.e. an algorithm which co-optimizes energy provision and ancillary services and runs taking into consideration the technical characteristics of the units such as ramping. The TSO also procures ancillary services defined by the Grid Code. During some periods designated ancillary services flexibility is different than the system real needs (due to the duration and technical requirements of the service as well as the different time granularity). Consequentially, the Greek electricity market introduced interruptibility scheme. ADMIE performs Greek interruptibility scheme [15].

a) What are the basic features of the interruptibility scheme?

The interruptible scheme enables the Greek TSO to enter into contracts with electricity consumers, which receive financial compensation for their commitment to reduce their consumption in accordance with instructions of the TSO.

The TSO can instruct the contracted customers to reduce their loads whenever an emergency occurs and jeopardize security of electricity supply. The precise triggering events are defined in detail in the Ministerial Decision. According to the Ministerial Decision, the TSO can issue power reduction orders, when one or more of the following occur [15]:  When the ratio of estimated available generation power to the interconnected System and estimated system load is less than the factor 1.1.  When there are exceptional circumstances, like a natural gas crisis, or interruption or drastic restriction of imports of electricity due to the declaration of “force majeure” by neighboring System Operators.  When the operational safety and stability of the system are at risk.  When there is a risk for the system stability due to local system problems.  When there is a sudden change in the generation or demand for electricity in the Interconnected System.  When it is estimated that the system load coverage is not ensured by the Distributed Units, Contributed Supplementary System Energy Units and Emergency Import Capacity.

Generally, the Greek TSO can contract up to 1.600 MW of “interruptible loads”, i.e. demand response from medium-sized and large energy users with a stable load profile. The 1.600 MW are split in two separate segments:  1.000 MW of capacity that will be able to reduce their consumption within 5 minutes and remain available for 48 hours and for a maximum of 288 hours per year (“Type 1” service).  600 MW of capacity that will also be able to reduce their consumption within 5 minutes but which can remain available for just 1 hour and a maximum of 24 hours per year (“Type 2” service).

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In order to be eligible for participation in the interruptibility scheme, the minimum threshold is a capacity of 3 MW. The customers’ installations must be connected to the transmission grid, or the medium voltage network. The aggregation of loads is not allowed.

The detailed product requirements are shown in the following table: Table 12 Different types of interruptible services offered by the TSO depending on the notice time, duration of each load shedding and maximum duration of the load shedding per year in Greece [15]

b) How does TSO procure these services?

In exchange for being available to be disconnected, the loads are remunerated with a fixed payment. Price is determined on the three-monthly auctions. The maximum price (cap) at which the auction can clear is EUR 70.000/MW for “Type 1” and EUR 50.000/MW for “Type 2” [15].

Before loads can take part in the auction, they must have registered in the Interruptible Load Registry by the TSO. This registration ensures their general eligibility and technical ability to deliver the product requirements.

The above mentioned interruptibility scheme requested by the Greek TSO as an exemption from market principles have temporary validity (two years) and approved by EU Commission.

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2.8. Sweden

Svenska kraftnät (Sweden TSO) purchases reserves from balancing service providers in order to be able to fulfill the commission concerning maintaining a balance in the electricity system. Reserves may consist of production units (generators) or units that can adapt their electricity consumption. Svenska kraftnät wants to increase the competition in the reserve markets and new kinds of resources are thereby welcome, such as demand response. The concept demand response includes many different kinds of resources, where the consumption of electricity changes and/or is transferred over time, due to some kind of external signal. This may refer to the (individual or aggregated) electricity consumption in households or industries.

a) Types of ancillary services for frequency restoration There are different kinds of reserves with various requirements on for instance endurance and speed. The automatic reserves are the ones with the most rapid response and are therefore the ones first activated in the event of a frequency deviation. The manual reserves are used in order to restore the automatic reserves, so that these are always ready for re-activation. The basic characteristics necessary for services are shown in the table:

Table 13 The main characteristics of frequency restoration and control services in Sweden [16]

b) What are the basic features of the mFRR service on the Sweden electricity market? In order to become a provider of reserves, the requirements stipulated in the Balance Responsibility Agreement must be met. Also, in order to gain permission to participate in the respective markets, the provider of FCR and FRR must be able to demonstrate that the technical requirements on the reserve are met, by completing a prequalification with approved results. General requirements of Svenska kraftnät for mFRR product are listed in the following Table.

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Table 14 The General requirements of Svenska kraftnät for mFRR product in Sweden [18]

Within 15 minutes Units or groups divided into two different categories based on their activation time. Activation time: Category A: units or group with an activation time of less than or equal to 15 min Category B: units or group with the activation time is more than 15 min Activation: Manually at the request of Svenska kraftnät 10 MW for the bidding zone 1,2,3 Min Bid Size: 5MW in the bidding zone 4 There are min bid sizes, but increasing step for the bids is 1 MW Prequalification: Approved prequalification Communication: Electronic communication Metering Real-time measurement Aggregation Allowed. Energy remuneration In accordance with the price of upward or downward regulation (NordPool).

d) Can the Demand Side take part in providing this service? Yes, the Demand Side can provide the tertiary regulation and participate on the daily balancing market. A regulating object can include facilities of the same power type (generation or consumption).

e) How does TSO procure these services? The ancillary service of tertiary regulation are procured on the market base and all prequalified providers are able to participate. Timeline for bidding is presented on the picture below.

Figure 6 Active power reserve procurement in Sweden [17]

f) How does TSO activate and measure the mFRR service? The mFRR products are activated manually upon Svenska kraftnät request.

The providers must have the installation of an electronic reporting system connected to the exchange platform (Ediel). Ediel is an electronic communication system developed for the exchange of, for instance, planning and settlement information between companies within the power industry in the all Nordic countries [18]. Energy remuneration is performed in line with Balance Agreement and in accordance with the price of upward or downward regulation in the Nord Pool for the specific bidding zone.

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3. KOSOVO MARKET POTENTIAL FOR DEMAND SIDE RESPONSE

It is expected that KOSTT will sign a Connection Agreement with the ENTSO-e soon. Among other things, it requires KOSTT to prepare system balancing options including a demand response mechanism. After years of constant struggling with regular power supply, ERO decided that classic load shedding will no longer be applied in the Kosovo power system. Instead, if there is a need for load shedding, it should be adequately compensated, including through a DSR mechanism. The last resort option will be to disconnect households with an adequate financial compensation for every MWh undelivered.

In addition to the generating unit, DSR in Kosovo has a potential as an additional tool to help the TSO to control the power system and to reduce control zone imbalance. Also, DSR can introduce additional competition on the balancing market and reduce both short and long term power system operational costs. By changing the profile of demand, and increasing the flexibility of the demand side, DSR in Kosovo can reduce the need for investment in generation and network capacity and increase the utilization of more efficient generating plants. Also, by reducing their demand in specific moment(s) they can reduce the regulation costs of the electric power system.

DSR is an “old story” but it has become very important lately due to the strategic direction of developed countries towards renewable sources, competition, energy efficiency, distributed generation and the increasing role of customers in the electricity market. The European Commission has published proposals for pulling all flexible distributed resources concerning generation, demand and storage into the market.9 There is no doubt that in the period ahead, DSR will become more and more applicable, and that the number of customers who will be involved in this system will grow. However, it is necessary to fulfill certain preconditions, including technical (metering, ICT, control units), organizational (rules, knowledge) and market (market signals, marketing, trust between participants).

Due to all of the above, it is necessary to start with realistic goals and define the stages of development and introduction of different categories in the DSR system. This is especially important for emerging markets (beginning of implementation of market principles), where the customers are still not sufficiently educated about market potentials (and risks) and use their opportunities to generate additional profits.

For emerging electricity markets, it is easiest to go ahead with the customers who a) consume significant volume of electricity, b) who consume energy at one place/point, c) whose technology and core-business processes allow a relatively fast reduction in consumption. By this approach, the whole process will be under control, the safety of equipment and personnel will be kept at the required level, customers will receive clear feedback effects (revenue) for their consumption changes (DSR), and an interactive relationship between the TSO and customers will be created. All of that will result in the necessary knowledge base and experiences to create a good foundation for the next DSR phase – introducing a new group of customers into the DSR system.

Understanding the current reality of Kosovo’s electricity market, technical capacity (IT, communication, metering, control), state of development of the retail market, level of customers

9 An assessment of the economic value of demand-side participation in the Balancing Mechanism and an evaluation of options to improve access, CRA - Charles River Associates, 2017 ______REPOWER – KOSOVO 32/77 knowledge about electricity markets, and the need for quick, implementable and efficient solutions, this report only analyzes customers directly connected to the transmission network and the products related to frequency restoration reserves, especially manual Frequency Restoration Reserves (mFRR).

For the Kosovo electricity market, customers who take electricity from the transmission network can be the simplest first step for the introduction of the DSR system, given the relatively quick implementation, lower costs, simpler organization, and potentially significant DSR capability. Of course, all of this mentioned requires the verification of the capabilities of customers (technical, process, knowledge), but also their interest to participate in the DSR system. The key role of this should be played by the TSO, which should make additional efforts in educating customers, eliminating uncertainness, and presenting opportunities for profit.

In order to make the basic assumptions, this report analyzed currently available data (2018) of the consumption of different customer categories. The table below shows the data of the consumption of electricity by different categories for each month in 2018.

Table 15 Kosovo electricity consumption in 2018

MWh Jan Feb Mar Apr Maj Jun Jul Aug Sep Okt Nov Dec Total Distribution from 517.149 462.116 470.844 344.512 322.285 310.524 334.162 346.857 317.835 369.059 425.414 570.724 4.791.481 transmition Consumption for North part of 36.293 32.830 32.900 18.475 14.050 11.713 10.988 10.848 12.951 21.347 28.785 39.249 270.428 Kosova Mines 10.686 9.257 10.052 8.069 8.573 7.524 6.996 7.854 8.202 9.966 9.605 10.715 107.500 Consumption from transmition 7.636 8.644 12.087 8.323 7.291 9.358 9.876 13.653 14.283 11.141 9.836 12.638 124.767 for generation Total industrial 42.483 28.149 17.148 14.992 10.018 11.743 12.061 25.676 42.404 44.882 40.010 41.741 331.307 consumprion New Co 34.779 21.088 8.374 6.308 2.681 2.894 2.992 16.643 33.722 35.832 32.920 35.872 234.106 Ferronikeli 5.505 5.060 6.530 6.936 5.580 7.245 7.454 7.339 6.907 7.149 5.123 3.449 74.277 SharrCemi sh.a. Trepça 2.198 2.001 2.243 1.748 1.757 1.603 1.616 1.694 1.775 1.902 1.966 2.421 22.924 Total 614.247 540.996 543.030 394.371 362.217 350.862 374.083 404.889 395.674 456.395 513.650 675.067 5.625.482 Consumption

Table 16 Kosovo average monthly load in 2018

MWh/h Jan Feb Mar Apr Maj Jun Jul Aug Sep Okt Nov Dec

New Co Ferronikeli 46,7 31,4 11,3 8,8 3,6 4,0 4,0 22,4 46,8 48,2 45,7 48,2

SharrCemi 7,4 7,5 8,8 9,6 7,5 10,1 10,0 9,9 9,6 9,6 7,1 4,6

Trepça 3,0 3,0 3,0 2,4 2,4 2,2 2,2 2,3 2,5 2,6 2,7 3,3

Mines 14,4 13,8 13,5 11,2 11,5 10,5 9,4 10,6 11,4 13,4 13,3 14,4

Table 17 Forecasted large customers load in 2017 [20]

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KOSTT submitted data covering two months sample: January and May 2019. REPOWER’s analysis focuses solely on this data and based its general conclusions on it. In order to obtain the specific technical capabilities of a customer who could be considered as a potential DSR provider, much more detailed research is necessary, including 15-min consumption data for a longer period of time, detailed interview with the customer about the technical capabilities of the plant, production process, and metering and control equipment. Based on available data about hourly consumption of the electric power system in Kosovo, hourly consumption for January and May 2019 is shown on the chart below, as well as two characteristic weeks (one from January 2019, and the other one from May 2019). A typical pattern of consumption can be noticed, which is caused by difference in consumption for the winter period and the mid-spring period when there is no need for heating. Maximal load is 1.125 MWh/h, and minimum load is 302 MWh/h.

Hourly Consumption (MWh/h) Trepça Sharri 1.300 North part of Kosova 1.200 Mine Ferronikel 1.100 Distribution

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0 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 01.jan 04.jan 07.jan 10.jan 13.jan 16.jan 19.jan 22.jan 25.jan 28.jan 31.jan 03.maj 06.maj 09.maj 12.maj 15.maj 18.maj 21.maj 24.maj 27.maj 30.maj jan

Figure 7 Kosovo power system hourly consumption in January and May 2019 (source: KOSTT)

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Hourly Consumption (MWh/h) Trepça Sharri 1.200 North part of Kosova Mine Ferronikel 1.000 Distribution

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0 00 00 00 00 00 00 00 00 00 00 00 00 00 00 07.jan 08.jan 09.jan 10.jan 11.jan 12.jan 13.jan 20.maj 21.maj 22.maj 23.maj 24.maj 25.maj 26.maj jan maj

Figure 8 Kosovo power system hourly consumption in two characteristic weeks in January and May 2019 (source: KOSTT)

Potential Initial DSR Providers According to [4] projections on DSR for the next decade assume that it will be provided primarily by industrial and commercial consumers. The extension of smart metering in the residential sector and introduction of smart appliances may increase the ability to exploit flexibility in residential customers, but currently, there are too many necessary preconditions (ICT, aggregators framework...) to allow for a significant participation in DSR by the residential sector. It is more realistic to imagine that in the short term, suppliers that have existing mass-market operations with supporting customer management and billing systems (the costs of which are already recovered through their supply contracts) could start providing DSR service. Acknowledging the focus of this report and the current state of play of Kosovo’s electricity market, our opinion is that the focus should be on industrial (first phase) and commercial customers (second phase). Based on the data provided in the Kosovo Consumption Report for 2018 and Transmission Development Plan for 2018-2027, the potential candidates to be considered for the DSR mechanism in Kosovo are the following industrial customers:

 New Co Ferronikeli (a nickel production plant)  Sharrcem (cement factory)  The Trepça Mines  Mines (KEK coal division)

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3.1. New Co Ferronikeli

New Co Ferronikeli is a nickel production plant and the largest industrial consumer on the Kosovo electricity market. Summarized available data for the monthly consumption during the 2018 is shown in the table below. The consumption in January and May 2019 is 34.03 GWh and 35.56 GWh respectively.

Table 18 Monthly consumption of New Co Ferronikeli in 2018

Jan Feb Mar Apr Maj Jun Jul Aug Sep Okt Nov Dec Total New Co Ferronikeli 34,779 21,088 8,374 6,308 2,681 2,894 2,992 16,643 33,722 35,832 32,920 35,872 234,106 (MWh) Average hourly 46.7 31.4 11.3 8.8 3.6 4.0 4.0 22.4 46.8 48.2 45.7 48.2 load (MWh/h)

The chart below presents hourly consumption diagram for January and May 2019, and represents consumption of a classical base load customer which continuously has the same load (cca 47 MWh/h). The assumption (based on daily diagrams and monthly average load in 2018) is that the technical minimum load level for this factory is around 10 MW. The chart (Figure 10) for a week of May shows a very smooth consumption. The next chart (Figure 11) presents the period from January 21 until the end of January, during which the customer experienced drops of 40 MW for an hour (January 22nd 2019), and back to usual consumption level for a few hours. It is assumed that this drop is due to core business production reasons. If the customer has a technical ability to change its consumption in this or similar scope, in a controllable manner, it could be a great potential for the TSO to benefit from it. It is an industry fact that ferro-silicium production plants often use their ability to change load and provide DSR service. KOSTT, as the TSO of Kosovo’s electricity market, should investigate possibilities of developing DSR services with New Co Ferronikeli and their expectations. If KOSTT and New Co Ferronikeli succeed in finding a win-win situation, estimates show KOSTT could reasonably get around 30 MW of controllable load, which would be a significant contribution for Kosovo’s power system.

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Hourly Consumption (MWh/h) Ferronikel

Figure 9 Hourly consumption of Ferronikel in January and May 2019 (source: KOSTT)

Hourly Consumption (MWh/h) Ferronikel

0 00 00 00 00 00 00 00 20.maj 21.maj 22.maj 23.maj 24.maj 25.maj 26.maj maj

Figure 10 Hourly consumption of Ferronikel in a characteristic week in May 2019 (source: KOSTT)

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Hourly Consumption (MWh/h) Ferronikel

0 00 00 00 00 00 00 00 00 00 00 00 21.jan 22.jan 23.jan 24.jan 25.jan 26.jan 27.jan 28.jan 29.jan 30.jan 31.jan jan

Figure 11 Hourly consumption of Ferronikel in characteristic week in January 2019 (source: KOSTT)

Hourly Consumption (MWh/h) Ferronikel

0 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 22.jan 23.jan jan

Figure 12 Hourly consumption of Ferronikel in characteristic days in January 2019 (source: KOSTT)

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3.2. Sharrcem

Sharrcem is a cement production plant and one of the largest industrial consumers in the Kosovo electricity market. The available data for their monthly consumption during 2018 is summarized in the table below, whereas the consumption in January and May 2019 was 4.20 GWh and 7.60 GWh respectively.

Table 19 Monthly consumption of SharCem in 2018

Jan Feb Mar Apr Maj Jun Jul Aug Sep Okt Nov Dec Total SharrCem sh.a. 5,505 5,060 6,530 6,936 5,580 7,245 7,454 7,339 6,907 7,149 5,123 3,449 74,277 (MWh) Average hourly 7.4 7.5 8.8 9.6 7.5 10.1 10.0 9.9 9.6 9.6 7.1 4.6 load (MWh/h)

Based on available hourly data consumption, the chart below shows hourly consumption for January and May 2019. The other two charts are characteristic charts - the first chart of the first two weeks of January 2019, when load growing occurred after holidays, and the second chart which shows the last two weeks of May 2019. From the first one it can be seen that load for the minimal operation of factory is 2.0 MWh/h and that the factory is capable of decreasing its load by around 3 MW for a duration of one hour. On the second chart, one can recognize a typical pattern where load varies between 7 and 12 MW, depending on working shift time and possibly on high and low tariff periods. Maximal load during these two months is 12.9 MWh/h, and minimum load is 2.0 MWh/h.

Hourly Consumption (MWh/h) Sharri

Figure 13 Hourly consumption of Sharrcem in January and May 2019 (source: KOSTT)

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Hourly Consumption (MWh/h) Sharri

0 00 00 00 00 00 00 00 00 00 00 00 00 20.maj 21.maj 22.maj 23.maj 24.maj 25.maj 26.maj 27.maj 28.maj 29.maj 30.maj 31.maj maj

Figure 14 Hourly consumption of Sharrcem in May 2019 (source: KOSTT)

Hourly Consumption (MWh/h) Sharri

0 00 00 00 00 00 00 00 00 00 00 00 00 00 01.jan 02.jan 03.jan 04.jan 05.jan 06.jan 07.jan 08.jan 09.jan 10.jan 11.jan 12.jan 13.jan jan

Figure 15 Hourly consumption of Sharrcem in characteristic weeks in January 2019 (source: KOSTT)

Based only on data from the daily consumption diagram and without analyzing the technical readiness of the customer's plant and the core business processes, the estimate is that this customer could provide around 4-5 MW of controllable load for DSR service.

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3.3. The Trepça Mines

The Trepça Mines is a huge industrial complex in Kosovo consisting of lead, zinc and silver mines. According to data provided by KOSTT, their monthly consumption during 2018 is shown in the table below and consumption in January and May 2019 are 1.8 GWh and 1.7 GWh respectively.

Table 20 Monthly consumption of Trepça Mines in 2018

Jan Feb Mar Apr Maj Jun Jul Aug Sep Okt Nov Dec Total Trepça Mines 2,198 2,001 2,243 1,748 1,757 1,603 1,616 1,694 1,775 1,902 1,966 2,421 22,924 (MWh) Average hourly 3.0 3.0 3.0 2.4 2.4 2.2 2.2 2.3 2.5 2.6 2.7 3.3 load (MWh/h)

According to available data of the hourly consumption for January and May 2019, characteristic weeks are presented below. The chart of the first two weeks in January 2019 clearly shows that mines also work during the holidays. On the chart showing week 21, it seems that a standard characteristic load pattern does not exist, or we cannot recognize it due to the limited number of data. During the winter, the load of the minimal operation is about 2 MWh/h and maximal load is approximately 4-5 MWh/h. In the May the load of the minimal operation is about 1.5 MWh/h and daily maximal loads are around 4-5 MWh/h.

Hourly Consumption (MWh/h) Trepça

Figure 16 Hourly consumption of Trepça Mines in January and May 2019 (source: KOSTT)

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Hourly Consumption (MWh/h) Trepça

0 00 00 00 00 00 01.jan 04.jan 07.jan 10.jan 13.jan jan

Figure 17 Hourly consumption of Trepça Mines in characteristic weeks (1st and 2nd) in January 2019 (source: KOSTT)

Hourly Consumption (MWh/h) Trepça

0 00 00 00 00 00 00 00 20.maj 21.maj 22.maj 23.maj 24.maj 25.maj 26.maj maj

Figure 18 Hourly consumption of Trepça Mines in characteristic weeks (21st) in May 2019 (source: KOSTT)

Based on the daily consumption diagram data and without analyzing technical readiness of the customer's devices and their core business processes, it is difficult to estimate the amount of controllable load that could be provided to the DSR mechanism. It is obvious that the mine still does not work at full capacity, with only occasional peaks. After beginning continuous production of the core business it will be possible to evaluate its DSR potential.

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3.4. Mines (KEK coal division)

The coal division of KEK, a generation company, uses significant quantities of electricity. The data provided by KOSTT representing its monthly consumption during 2018 is shown in the table below, whereas the consumption in January and May 2019 was 12.9 GWh and 10.1 GWh respectively. Data for KEK coal mines are presented as an illustration for its potential for DSR. However, it should be kept in mind that these are coal mines and that security of business processes and the security of employees – particularly miners – must take first priority. Additional obstacles that coal mines in the Western Balkans face are outdated technical levels of equipment and historically difficult business backgrounds. Those factors aside, coal mines, especially those with surface/strip mining, could have great potential for DSR. For these reasons, additional attention, analysis and consultation should be given to the mines if they show interest in providing DSR services. Their expressed interest would indicate the industry’s readiness to implement new business models to achieve additional revenue.

Table 21 Monthly consumption of KEK Mines in 2018

Jan Feb Mar Apr Maj Jun Jul Aug Sep Okt Nov Dec Total

Mines (MWh) 10,686 9,257 10,052 8,069 8,573 7,524 6,996 7,854 8,202 9,966 9,605 10,715 107,500 Average hourly 14.4 13.8 13.5 11.2 11.5 10.5 9.4 10.6 11.4 13.4 13.3 14.4 load (MWh/h)

Based on the available data, the charts below shows hourly consumption for January and May 2019, and characteristic weeks for various periods. The chart of the first two weeks of January 2019 clearly shows that the mines worked continuously during the holiday. From the charts for weeks 21 and 22, the last two weeks of May 2019, there is no standard characteristic load pattern, or it cannot be recognized due to limited data. During the winter, the load of the minimal operation was about 10 MWh/h and maximal load was around 26 MWh/h. The load of the minimal operation in May was about 5 MWh/h and the daily maximal loads averaged 20-26 MWh/h.

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Hourly Consumption (MWh/h) Mine

Figure 19 Hourly consumption of KEK Mines in January and May 2019 (source: KOSTT)

Hourly Consumption (MWh/h) Mine

0 00 00 00 00 00 00 00 00 00 00 00 00 00 01.jan 02.jan 03.jan 04.jan 05.jan 06.jan 07.jan 08.jan 09.jan 10.jan 11.jan 12.jan 13.jan jan

Figure 20 Hourly consumption of KEK Mines in characteristic weeks in January 2019 (source: KOSTT)

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Hourly Consumption (MWh/h) Mine

0 00 00 00 00 00 00 00 20.maj 21.maj 22.maj 23.maj 24.maj 25.maj 26.maj maj

Figure 21 Hourly consumption of KEK Mines in characteristic week in May 2019 (source: KOSTT)

Hourly Consumption (MWh/h) Mine

0 00 00 00 00 00 27.maj 28.maj 29.maj 30.maj 31.maj maj

Figure 22 Hourly consumption of KEK Mines in characteristic week in May 2019 (source: KOSTT)

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Based only on data from the daily consumption diagram and without analyzing the technical readiness of the customer's devices and core business process, the estimate is that the customer could provide around 5-7 MW of controllable load for DSR service. According to all above mentioned, it can be assumed that there is a potential for large customers to participate in DSR service or to provide tertiary reserve on the Kosovo electricity market. Based on limited input data set and preliminary analysis of available daily consumption diagrams, without analyzing technical readiness of the customer's factories/devices and their core business process, it is estimated that the large consumers in Kosovo could be able to provide roughly 30-40 MW of controllable load for DSR service. Exact volumes on the customers' side, their technical limitations and concrete implementation should be subject of further investigations. The first step should be attracting customers towards use of this opportunity while , removing uncertainness, increasing customer knowledge and demonstrating the various opportunities they may have. Attractive prices for DSR in the future and the transparent relationship between the TSO and DSR providers will be clear market signal which will attract customers to participate in DSR system. Also, transparent and attractive price will be clear signal for investment in equipment which will enable customers to participate in DSR system.

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4. HOW TO ATTRACT CUSTOMER PARTICIPATION

Production of electricity and its use must continuously match in order to keep the system in balance. Historically, system balance has been ensured by increasing or decreasing generation at a few large power stations. With DSR, however, customers can reduce their demand on the system or use different kinds of on-site generation to keep the electricity system in balance. DSR depends entirely on the actions of an energy user, whether that is an industrial manufacturer, a museum, a commercial building, or a retail store. Through DSR, these users become active participants in the electric power system (market participant), rather than passive bill payers. They can be paid to change their demand by:

 Reducing use or turning down the use of electricity-consuming devices, such as turning off refrigeration units for a period of time, using the fridge’s insulation to maintain low temperatures (Figure 4. (b));  Moving use or changing time when they use electricity, such as a ferronickel factory pausing its coal-crushing unit if it has sufficient, stored coal supply available (Figure 4. (a)); or,  Turning on or increasing production from on-site generation, such as highly efficient combined heat and power (CHP), or local back-up aggregate or by using energy storage (Figure 4. (c)).

In general, there are at least six different types of demand side responses, as shown in the following figure.

Power (MW) Power (MW) Power (MW)

Time Time Time Peak clipping Conservation Load building

Power (MW) Power (MW) Power (MW)

Time Time Time

Valley filling Flexible load shape Load shifting

Figure 23 Other types of the demand side response

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However, three of them are considered as most important and commonly used ones:

Load shifting Peak clipping Valley filling Figure 24 Three main types of the demand side response

The first DSR type shows a customer who moves parts of their electricity use from high price hours to low price hours as illustrated on the left side of the figure above. This is known as load shifting. Typically, this relates to electricity use for heating, charging an electrical device (an electric car, for example) or using household appliances (including activities that cannot be avoided, but could be carried out at another point in time). The second DSR type shows a customer who can reduce electricity consumption temporarily during high price hours without needing to compensate for this later, as illustrated in the middle of the figure above. This is known as peak clipping. Typically, these are customers within electricity-intensive industries who choose to decrease production when the electricity price is too high. In addition, household customers with electric heating who also use alternative types of heating can also be part of this DSR system. The third DSR type shows a customer who can increase the demand for electricity during low price hours, without reducing electricity use later. This is illustrated on the right side of the figure above and is known as valley filling. Typically, these are customers who change their type of heating from one fuel to another. Every single system is specific in its DSR needs. In early stage of DSR mechanism development in Kosovo it is likely that electricity use reduction (2nd main type) will be the main required DSR service. DSR is the action to change electricity usage in response to incentives that reflect the real-time needs of the electricity system.

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Figure 25 DSR as a percentage of total capacity market contracted capacity in order of delivery year in UK (source: CRA Analysis of Capacity Market results published by the EMR Delivery Body) DSR is not envisaged to operate as an isolated piece of the market. It is rather part of a wider story or idea and a small block on the path to a new and improved electricity market as imaged by the EU. The long term objective is to enable demand-side response to compete with all other solutions, with general aim to improve the efficiency of the electricity system for the benefit of all customers.

Why is demand-side response important? There are many advantages to introducing DSR, including those for society, the entire customer base, and finally for the individual consumer. The potential economic and environmental benefits resulting from increased uptake of demand side response measures are the following, which benefit all customers[5]:

 The potential to reduce generation margin. Using DSR, especially at scale, reduces the need for new production capacities;  Improved transmission grid investment and operation efficiency;  Improving distribution network investment efficiency;  Managing demand-supply balance in systems with intermittent renewables;  Reduced costs of electricity generation and supply;  Increased uptake of energy efficiency measures; and  Reduced GHG emissions from the power sector.

Why should customers participate in DSR? The picture bellow provides an overview of barriers cited from the phone interviews during market investigations in the UK [7]. It is assumed that the answers would be similar in all SEE countries.

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Figure 26 The main barriers for participation in DSR [7]

Educational campaigns would address the first two barriers cited (“Cultural/institutional” and “Negative perception issues”). Knowing the overall benefit that DSR provides, regulators and ministries should pay due attention to this and work on raising the level of knowledge, trust and awareness among all market participants. Great Britain and its institutions provide an excellent example to follow. Regardless of the general, social and global goals and overall benefits for customers, single customers’ decisions to participate in DSR are made exclusively in regard to how it affects the profitability (lower costs, higher income, or both) of the particular customer. The key driver for potential DSR providers is a profit. If the profit that a customer makes on DSR service is higher than the profit the customer makes with its regular operation (core business), then he would be attracted to and interested in participating in the DSR mechanism. For some customers energy cost is relatively small and they do not want to participate in DSR. Even for customers with significant energy bills, the scale of the potential revenue from DSR is often insufficient to justify action. Some customers carefully track their energy costs and are becoming increasingly concerned about the rising cost of energy, and will explore all possibilities to reduce their costs. However, for all these customers, there is a certain level of profit that will drive their attention and force them to additional analyzes and actions. For some customers, this level of profit is lower, and for some it is higher, but all necessary preconditions need to be created by TSOs and regulators so that when customers show readiness, everything else is ready (organizational framework, standard forms, measurements, etc.). However, the extra profit difference is not the only driver for this opportunity. If the DSR mechanism is too complex and risky for normal operation targets or the DSR provider’s responsibility is too high, then its interest in the DSR mechanism will decrease. Accordingly, DSR mechanisms need to be clear, simple and financially attractive with low risks for DSR providers to attract more participants. This is particularly important for small systems such as in Kosovo, where the number of potential DSR providers is very limited. Potential DSR providers should have all necessary information, while the TSO should explain and demonstrate prequalification, activation and payment details. In addition, it will be a welcome initiative if they were to develop a trial or dry-run training to be offered at no cost. Since electricity is not their core business, outside encouragement is required to help them make the first step.

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5. COMPENSATION METHODOLOGY

There have been numerous analyses on compensation methodologies in the DSR mechanism, however, these should always be linked to the transmission tariff design and electricity tariffs in general. Nordic countries are among the most developed in this sense, so their experience is analyzed here [1]. To realize the DSR potential, the electricity tariffs can be used as a tool. Hourly metering and more advanced metering and control systems enable time-differentiated tariffs, electricity tariffs, and direct load control. Based on the previous inquiries and opinions from various authors, there is a need for a transition to tariffs that better reflect the costs of the network and stimulate demand side response and flexibility. Today’s tariffs, which are primarily based on energy for smaller customers and contracted power for larger customers, do not always reflect the costs that consumption or feed-in give rise to in the network. As the network operation consists of large fixed costs, the tariff often consists of a large fixed proportion, and this does not stimulate demand side flexibility. The network tariff has the potential to impact directly on customers’ consumption patterns by sending various price signals (Ei, 2012; CEER, 2015; NEPP, 2014). Depending on how the tariffs are designed, the signals can vary and stimulate various behaviors. As this report focuses on demand side response, the analysis is limited to consumption tariffs. Network tariffs can be fixed or variable and based on consumed energy (kWh) or power (kW), or by combinations of these two. The tariff can also be based on contracted power, or fuse size. The design of a network tariff can vary, depending on the definition of the parameters for the fixed and variable parts, the time profile across 24-hour periods and seasons in the event of time differentiation, and any deductions for interruptible load. In order to stimulate demand side flexibility and changed behavior, the variable component of the tariff is crucial. The following table [1] shows how different versions of the variable part of the network tariff can stimulate customer behavior. The tariff elements in the table can be combined in various constellations. To avoid a mix-up of tariffs based on contracted and consumed power, tariffs based on contracted power are also included, despite being considered as fixed.

Table 22 Options for the variable part of the network tariff and the behavior they might stimulate (Source: Ei)

Time-independent Time-dependent Reduced consumption at specific Based on energy Reduced consumption times consumption Increased energy efficiency Load shifting Reduced power consumption during Reduced power consumption during Based on power the customer’s own power peaks the customer’s own power peaks consumption Load shifting Load shifting during peak loads Reduced contract Reduced contract during peak load Based on Permanently reduced power times contracted power consumption during the customer’s Permanently reduced power own power peaks consumption during specific times

By giving customers clear information on the design of the tariff and how they can affect their own costs, network companies should make it easier for customers to be flexible. For more complex tariffs, the need for information increases for customers to respond to the price signals that stimulate demand side flexibility. A high proportion of fixed costs in the tariff and a lack of information about tariff design and customers’ opportunities to impact costs lead to both increased customer dissatisfaction and limited opportunities for customers to be flexible (Ei, 2016). A survey carried out by Ei shows that customers are dissatisfied with the network companies’ information on tariffs, despite the investigated companies fulfilling the formal requirements for publishing tariffs on their websites (Ei, 2016). ______REPOWER – KOSOVO 51/77

The importance of network tariffs that reflect the costs are also highlighted at European level, starting with CEER (CEER, 2015). The EU Commission’s Smart Grids Task Force emphasizes the importance of innovative network tariffs with clear price signals to stimulate demand side flexibility. (Smart Grid Task Force, 2015b). Eurelectric also highlights the need for tariffs that stimulate both load shifting and reducing peak loads, and advocate more power-based tariffs (Eurelectric, 2013). The research consortium S3C has analyzed pilot and demonstration projects within DSR for household customers and small and medium-sized companies and highlight the opportunities of dynamic tariffs to stimulate flexibility (S3C, 2015).

Other important aspects are a long-term view and transparency in the design of tariffs, and several actors have emphasized the need for stepwise introduction of new tariffs to facilitate the transition for both customers and network companies. Finally, it is crucial that the design of the tariffs is clear and comprehensible to customers, if the tariffs are to change customer behavior.

5.1. Baseline consumption

Based on successful verification tests, TSOs and the network user (DSR Provider) conclude the DSR contract. In addition to the technical details, the DSR contract specifies the method of activation, calculation, billing and payment of the contracted service. The biggest challenge in contract definition is to define so called "baseline consumption”, i.e. the consumption that the network user would have had if there was no TSO activation of the DSR. This variable is crucial to determine the level of provided DSR service. There are three principles to determine "baseline consumption”: 1. Consumption measurement before & after TSO activation - electricity consumption immediately before DSR activation as compared to the electricity consumption during DSR application period, 2. Load schedule - DSR service provider delivers day-ahead consumption plans that is later compared to the actual consumption during DSR activation period, 3. Reference Base Load – based on historical consumption data registered by the measurement data system. Prior to the conclusion of the contract, the DSR service providers and the TSO should agree and select the calculation method for the “baseline consumption” that fits the best to both sides. First methodology (consumption measurement before & after TSO activation of the DSR) is based on the measurement data and it assumes that the electricity consumption immediately prior to the DSR activation would remain unchanged during DSR activation period, as shown on the following Figure, where is:

Wref - referent value of DSR provider consumption. It is calculated as average realized DSR provider’s consumption (Wreal) in four 15-min time intervals prior to the DSR activation.

Wter - tertiary reserve contribution by the DSR provider. If the difference between referent (Wref) and realized (Wreal) DSR provider’s consumption is positive, then this unit was participating in the DSR. Otherwise, there is no contribution to the tertiary reserve.

Wter,i-partial – if tertiary reserve contribution by the DSR provider was not realized in whole 15-min period of time, but in shorter time frame of X min, then this contribution is calculated as x/15 of Wref.

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푖=푛−4 1 푊 = ∑ 푊 푟푒푓 4 푟푒푎푙,푖 푖=푛−1

푊푟푒푓 − 푊푟푒푎푙, 푊푡푒푟,푖 ≥ 0 푊푡푒푟,푖 = { 0, 푊푡푒푟,푖 < 0

푚푖푛푢푡푒푠 표푓 푒푛푔푎푔푒푚푒푛푡 푖푛 푖푛푡푒푟푣푎푙 푖 푊 = ∗ 푊 푡푒푟,푖−푝푎푟푡푖푎푙 15 푡푒푟,푖

Figure 27 Example of the consumption measurement before & after TSO activation of the DSR [2] This methodology is suitable for DSR providers that have constant consumption or their own production so they can self-regulate electricity consumption. The basic steps of this methodology are:

1. Calculate the reference consumption of the DSR control unit (Wref) as the average of the electricity consumption in the four calculation intervals immediately before the DSR activation requirement. 2. Realized reduction of the consumption of the DSR unit participating in the tertiary regulation (Wter, i) in a given "i" calculation interval is calculated as the difference between the reference consumption of the DSR unit and the realized consumption in the "i" billing interval. In the case when consumption reduction is negative in "i" interval, i.e. there was no consumption reduction, it will be considered that a reduction of consumption is equal to 0 for given interval. 3. The total realized consumption reduction of the DSR unit participating in tertiary regulation (Wukp) is calculated as the sum of the achievement of all consumption reductions of individual intervals "i" during total duration of the DSR activation requirement, and must be greater than or equal to 75% of the required consumption reduction. In the case when total consumption reduction is lower than 75% of the consumption reduction required by the TSO, the DSR request will be treated as “not-fulfilled”. Regarding compensation methodology, it is of utmost importance to define the roles and responsibilities of DSR provider (consumer) and its Supplier in balancing mechanism. For example, if the Supplier is short and DSR provider is long, each time the TSO sends a DSR request, it should be clearly noted in the scheduling system that this request (load change) goes on relevant DSR provider instead of Supplier’s balancing responsibility. In this way, the DSR mechanism is not affecting balancing mechanism and the Supplier’s role in it.

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6. QUALIFICATION PROCESS FOR DSR PROVIDERS

The main features of manageable consumption and their relationship with the transmission system operator are shown on the following Figure. The user is expected to respond similar to the curve on the left-hand graph. The activation process itself is led by the TSO (usually National Dispatching Center) based on the need for balancing the system in real-time frame. In reality, the network user at the request of the TSO reduces the consumption in accordance to the agreed scope and thus gives the TSO part of the insured energy that it would consume if there were no power reserve activation orders.

Activation time DSR unit

Delivery time

Figure 28 Basic Product Characteristics and Roles in the Energy Management Process [2]

The first step in the process is to invite potential service providers (interested network users) to participate in the project. There are 4 basic formal steps in the DSR process: 1. Call for service providers 2. Expression of interest by the network user 3. Implementation of the pre-qualification procedure (if the potential service provider has not completed pre-qualification procedure) 4. Contractual relationship between TSO - network user Upon the conclusion of contractual relations, weekly or monthly tenders for the provision of the reserve of resources will be executed according to the minimum cost criterion with the price limitation on the unit price amount defined by the pricing methodology for the provision of ancillary services. In accordance with the call for DSR service the Service Provider submits a completed Prequalification Form. It usually contains: 1. General data on Service Provider (type of demand, number of network usage contracts, contact details etc.) 2. Place of delivery and basic description of the DSR unit 3. Technical limitations of DSR unit 4. Approval for testing After completion of the prequalification form, it is necessary to carry out prequalification test. It is used to demonstrate the service provider’s ability to provide declared ancillary service in accordance with the principles given on the following figure. ______REPOWER – KOSOVO 54/77

DSR DSR DSR DSR activation deactivation activation deactivation min min

min min Declared DSR reserve DSR capacity Declared

Pause DSR between two DSR DSR requested request consecutive request DSR requests min DSR realized

DSR activation request DSR activation request

Figure 29 Basic principles to demonstrate the DSR provider’s ability to provide declared ancillary service

There are two main requirements during prequalification test: 1. DSR provider is supposed to demonstrate that its DSR units are able to provide power reserve activations and deactivations in a timeframe shorter or equal to 15 minutes from the moment of the TSO activation requirement. TSO activation requirements should be clearly defined in advance in the call for DSR service providers. It should be noted that the time period of 15 minutes includes the time needed for the necessary communication between the TSO contact point and the DSR units.

2. The DSR provider should also demonstrate that its DSR units are able to provide the declared level of reserve power during two successive activation requests. The first activation request usually lasts for 30 minutes, while the second activation request usually lasts for 60 minutes. The time gap between the activation requirements is arbitrarily determined by the TSO during the test. The minimum period between two activation requests is usually 15 minutes, taking into account the deactivation time of the previous activation requirement. The maximum time between the activation requirements is usually 300 minutes. Each potential DSR provider needs to pass this simple pre-qualification test in order to demonstrate the DSR provider’s ability to provide declared auxiliary service (in our case mFRR). The TSO agrees with the DSR provider exact timing and scope of the testing. All testing activities, including requests and responses, need to be clearly written in the Pre-qualification Test Report signed by both sides. If the pre-qualification test results are in line with TSO’s requirements, the DSR service provider is capable for providing of requested DSR service. This statement should be clearly stated in the Pre- qualification Test Report. Accordingly, based on this Pre-qualification Test Report and positive TSO statement on fulfillment of its requirements, the DSR contract can be signed between two sides.

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7. DEMAND SIDE RESPONSE CONTRACT TEMPLATE

CONTRACT TEMPLATE ON PROVIDING TERTIARY RESERVE CAPACITY AND RESERVE ENERGY THROUGH DEMAND SIDE RESPONSE MECHANISM

Provider (hereinafter referred to as: Provider)

And

KOSTT, (hereinafter referred to as Client),

(hereinafter jointly referred to as: Contracting Parties)

I. SUBJECT OF THE AGREEMENT Article 1 (1) Subject of this Contract is: a) providing of tertiary reserve capacity with demand side response mechanism, b) purchasing of tertiary reserve electricity from tertiary reserve capacity according to the Client’s order, in the period from mm-dd-yyyy to mm-dd-yyyy.

II. DEFINITIONS Article 2 (1) All physical amounts in this Contract relate to the network user interface (point of common coupling) between the Provider and the Client in accordance with the applicable Network Usage Agreement number: ______, and the associated EIC (Energy Identification Codes) number: ______. (2) Terms used in this Contract shall have the meanings specified in the laws that govern the energy sector, electricity market and in the regulations that apply to energy activities as well as regulations passed on the basis of these laws in Kosovo. The terms used in this Contract have the following meaning Tertiary regulation for system security - ancillary service determined by the amount of the reserve capacity, the time and duration of the reserve capacity activation (hereinafter: tertiary regulation), Reserve unit of manageable consumption - a stand-alone unit of the Provider that has manageable electricity consumption (hereinafter referred to as the reserve Unit), Active power reserve of tertiary regulation – active power reserve of the regulated units in tertiary

______REPOWER – KOSOVO 56/77 regulation that are available for activation on the Client’s order (hereinafter: reserve power), Reserve electricity - Electricity that, based on the Client's order, is activated by the Provider to balance the system in terms of lowering consumption and that is defined as purchased electricity by the Client (hereinafter referred to as: reserve energy), Activation - change of the active power of a reserve Unit of the Provider at the order of the Client, Accounting period - the period for which the calculation is made and is defined as one month, Calculation interval - time for calculation and agreement on realized quantities and is defined as 15 minutes.

III. CONTRACTING OBLIGATIONS - TERTIARY RESERVE Article 3 (1) By submitting an order for activation of certain amount of reserve of tertiary regulation the Client requires that the Provider reduces the active power of its reserve units within the defined and guaranteed reserve capacity that is defined by this Contract. (2) Upon receipt of the order referred to in paragraph (1) of this Article, the Provider shall proceed in accordance with the order of the Client. Upon execution of the order, or activation of the reserve capacity by the Provider, the reserve electricity from the reserve capacity is purchased. Article 4 (1) The Provider shall provide the amount of reserve capacity in accordance with Table 1 (Note: Values given in the Table are illustrative. Real values will be defined after pre-qualification process and clear definition of Kosovo DSR mechanism potential capacity and system needs). Table 1. Characteristics of the reserve capacity

Tertiary regulation Maximum Reserve Capacity (MW) X MW Minimum reserve capacity activation (MW) X MW Required activation time ≤ 15 minutes Minimum activation time 30 minutes Maximum activation time 2 hours Time between two activations 24 hours Maximum number of activations 4 per month

Article 5 (1) Reserve units shall be tested to operate in tertiary regulation in order to ensure the contracted amount of reserve capacity and the required activation time. Proofs of the abilities of the reserve units for tertiary regulation mechanism will be issued by the Client upon pre-qualification process. (2) During each activation, the Client checks the response of the reserve unit at the Client's request in accordance with Article 8 of this Contract. Article 6 (1) The Provider shall deliver to the Client no later than (time: hh:mm) on the last working day of the week by electronic mail or through the IT application of the Client, and by exception through fax machine, his offered reserve capacity, the unit price of reserve capacity and the unit price of reserve energy for the next week in accordance with Annex 1 of this Contract. (2) The Client shall submit to the Provider no later than 15:00 of the last working day of the week by electronic mail or through the IT application of the Client, and by exception through fax machine, a confirmation of acceptance of the offer of paragraph 1 of this Article, in accordance with Annex 1 of

______REPOWER – KOSOVO 57/77 this Contract. (3) The Provider shall ensure that the contracted reserve capacity of the available reserve units referred to in paragraph 2 shall be provided of this article at any time available for activation. (4) In the event of unavailability of the reserve unit, the Provider shall, as soon as possible inform the Client, who in that case acknowledges the reserve capacity referred to in Article 8 only until the moment of unavailability. For the duration of unavailability, no guaranteed reserve capacity from the Provider will be recognized. Also, the Provider is obliged to notify the Client about the availability of the reserve unit as soon as possible. (5) An activation order shall be sent by the Client to the Provider first by phone, and later a confirmation will be sent by electronic mail. Reserve capacity activation as a reduction of its consumption is done by the Provider within 15 minutes after reception of the order by phone.

IV. MEASURING APPLICATIONS ON THE INTERFACE Article 7 (1) For the purposes of calculating the secured reserve capacity and reserve energy of tertiary regulation metering devices are used on the interface of the Provider with the transmission grid. (2) In order to ensure the redundancy and the ability to validate the measured values referred to in paragraph 1 of this Article the following instruments are used: 1. Metering points, 2. SCADA metering points. (3) The calculation shall be made on the basis of the metering points. If necessary, the Client can check the measuring data of the metering points with the data from the SCADA metering points. In case of unavailability of metering data from the metering points, available data from the SCADA points of the Provider are used. It is not possible to change calculation metrics after Client’s validation. (4) The measuring data from the metering points shall be recorded in the Provider’s system in intervals. Measuring data from SCADA metering points are recorded for billing control purposes and for power system control in the time resolution of seconds.

V. CALCULATION OF THE RESERVE CAPACITY Article 8

(1) Contracted reserve capacity (Rcon) for each reserve unit is used for reserve capacity clearing. It is used for every single time interval in accordance to the values defined in the Article 6 of this Contract. 푚 1 푅 = ∗ ∑ 푅 푐표푛,푡표푡푎푙 푚 푐표푛,푖 푖=1 where:

Rcon,total - sum of contracted reserve capacities in contract duration period (MW)

Rcon,i - contracted reserve capacity in time interval „i“ (MW) m - number of time intervals in contract duration period i - ordinal number of the time interval. It lasts 15 min.

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(2) If the amount of activated reserve capacity is lower than 75% of the Client requested reserve capacity activation, then this Client’s request will not be treated as fulfilled. Total unavailable reserve capacity (RN/A,con) is calculated by the Client as follows:

푛 1 푅 = ∗ ∑ 푅 푁/퐴,푡표푡푎푙 푛 푐표푛,푖 푖=1

Where:

RN/A,total - total unavailable reserve capacity in contract duration period (MW)

Rcon,i - reserve capacity in the time interval when the Provider didn’t not fulfilled the Client request (MW). This is calculated as a difference between requested and activated reserve capacity

n - number of time intervals in which the Provider didn’t not fulfilled the Client request

(3) Total reserve capacity with fulfilled Client’s requests in the Contract duration period (Rful) is calculated as the difference between contracted reserve capacity (Rcon, total) and total unavailable reserve capacity (RN/A,total):

푅푓푢푙 = 푅푐표푛,푡표푡푎푙 − 푅푁/퐴,푡표푡푎푙

(4) The Client and the Provider preliminary agree on the total unavailable reserve capacity and total reserve capacity with fulfilled Client’s requests. This agreement needs to be done at latest the third working day after each reserve capacity request. Calculated and agreed total reserve capacity with fulfilled Client’s requests is then multiplied with unit price in accordance to the Article 11 (1) of this Contract.

VI. RESERVE ENERGY CALCULATION FROM THE RESERVE CAPACITY VALUES Article 9

(1) Measuring data from each reserve unit is used for reserve energy calculation for each accounting interval. (2) Reserve energy is defined as a sum of realized consumption reduction of the reserve units that participate in tertiary reserve (Wter, total) in all accounting intervals “i”. It is calculated in accordance to the following methodology:

푛 1 푊 = ∑ 푊 푡푒푟,푡표푡푎푙 1000 푡푒푟,푖 푖=1

Where:

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Wter,total - total reserve energy (MWh) (rounded on three decimals)

Wter,i - reserve energy (kWh) in interval “i”

(Note: Calculation principle is given in the Chapter 5 of this report).

(3) Maximal value of reserve energy (Wter,total) in each accounting interval “i” is limited with the activation request from the Article 6, paragraph 5 of this Contract, as well as reserve capacity with fulfilled Client’s requests (Rful) defined in the Article 8 of this Contract. (4) Both contracting parties preliminary agree on total reserve energy at latest 3 (three) working days upon its activation. (5) After delivery of metering data verified by the Client at attest 5 (five) calendar days in the month following reserve activation, the Provider and the Client check values of the reserve energy and values of the reserve capacity with fulfilled Client’s requests. Upon this checking the contracting parties verify realization of the accounting interval in written form. (6) Calculated and verified value of the reserve energy, in accordance to the paragraph 5 of this Article, is then multiplied by unit price on hourly level as defined in the Article 11 of this Contract. (7) Total cost for reserve energy in the accounting interval is equal to the sum of hourly reserve energy costs in given time interval.

VII. CONTRACTUAL PENALTIES Article 10 (1) In the case of unavailable reserve capacity the Provider is obliged to pay contractual penalty. It is based on the unavailable reserve capacity (RN/A,con) in accordance to the Article 8, paragraph 2 of this Contract. (2) Contractual penalty for the Provider is defined for each accounting period and it is calculated as follows:

푃퐸푁푡푒푟 = 푅푁/퐴,푡표푡푎푙 ∗ max (퐶푝,푢) ∗ 푘

Where:

PENter - contractual penalty for unavailable reserve capacity in accounting period (EUR) max (Cp.u) - maximal unit price of the reserve capacity for tertiary reserve in the system (EUR/MW) as defined in the Article 11 of this Contract k - contractual penalty factor. It is equal to 0,05 (5%)

VIII. PRICE Article 11 (1) The unit price of the reserve capacity of tertiary regulation within this Contract is determined by the procedure described in Article 6, paragraph 2 of this Contract. (2) Unit prices of the reserve energy for tertiary regulation within this Contract is determined by the procedure described in Article 6, paragraph 2 of this Agreement.

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Article 12 (1) The agreed prices are expressed in euro, rounded up to two decimal places, excluding VAT.

IX. INVOICING AND PAYMENT Article 13 (1) The amounts of contracted reserve capacity and activated reserve energy will be adjusted and confirmed by the Provider and the Client. This will be done no later than the 6th (sixth) calendar day of the current month for the previous month. (2) Based on the calculation referred to in paragraph 1 of this Article, the Provider shall issue an invoice for the provision of a reserve capacity (Rful) until the 7th (seventh) calendar day in the current month for the previous month. (3) Based on the calculation referred to in paragraph 1 of this Article, the Provider issues an invoice for reserve energy for tertiary regulation (Wter) until the 7th (seventh) calendar day in the current month for the previous month. (4) On the basis of the calculation referred to in paragraph 1 of this Article, the Client shall issue a contractual penalty invoice in accordance with Article 10 of this Contract, until the 7th (seventh) calendar day in the current month for the previous month. (5) The payment timeframe of the invoices referred to in paragraphs 2, 3 and 4 of this Article shall be 30 (thirty) days from the date of issue of the invoice. The date of receipt of an invoice is considered to be the date on which the invoice was received by the Provider / Client. In case the invoice is due on a non-working day, the payment will be made the first next working day. For late payments, an interest rates of 6% (six percent) per annum will be charged. (6) The Client shall submit invoices and calculations by ordinary mail to the address of the head office and by electronic mail or any other address provided by the Provider to the Client. Invoices and calculations shall be deemed to have been delivered 3 (three) working days from the day the invoice was sent to the Provider by electronic mail. (7) The Provider shall deliver the invoices and calculations to the Client by ordinary mail to the address of the head office and by electronic mail or any other address that the Client provided to the Provider. Invoices and calculations shall be deemed to have been delivered 3 (three) working days from the day the invoice was sent to the Client by electronic mail. (8) Interest because of late payments shall be payable within 8 (eight) days from the day of delivery of the calculation. Article 14 (1) If, due to objective circumstances, it is not possible to coordinate all the data necessary for the calculation of reserve energy and reserve capacity, the parties to this Contract shall carry out a correction calculation on a quarterly basis. (2) The parties to this Contract agree that a creditor cannot transfer, assign, or sell the claim and rights deriving thereof to a third party (new creditor) without prior written consent of the other party to this Contract.

X. FORCE MAJEURE Article 15 (1) Force Majeure describes all events and circumstances are understood, which, even if it could be foreseen, could not be prevented and which could not be affected, diminished, eliminated or abolished,

______REPOWER – KOSOVO 61/77 as well as other events and circumstances in accordance with the Energy Law. (2) In the event of termination supply by the Provider due to Force Majeure, the obligation of the Client to accept will also be terminated. In case the Provider terminates acceptation due to Force Majeure, the Obligation of the Client to supply will also be terminated. (3) In the event of Force Majeure, the Provider and the Client shall be obliged to inform the other party on all information regarding the restrictions of implementing this Agreement, first orally and then in writing or by electronic mail.

XI. APPLICABLE LAW AND DISPUTE RESOLUTION Article 16 (1) The Contracting Parties shall endeavour to reach agreement on possible disputes arising out, or in connection with this Agreement. (2) All disputes arising out, or in connection with this Contract, including disputes relating to affairs of breach or termination, as well as the legal effects resulting therefrom, shall be referred to Chamber of Commerce, Kosovo (3) If such disputes are not resolved within 60 (sixty) days after the commencement of proceedings conciliation or any other agreement that the parties agree on, the same shall be settled before the competent court in Prishtina.

XII. BREACH OF THE CONTRACT Article 17 (1) In the event that one of the parties to this Contract fails to fulfil a contractual obligation, the other party may terminate the Contract by delivering to the other party, by registered mail, a written Declaration of Termination. The termination period is 30 (thirty) days. (2) Failure to meet the contractual obligation of the Provider shall be considered if the Provider does not provide two consecutive activations of the agreed power reserve in one period (calendar month). (3) Failure to meet the contractual obligation of the Provider shall be considered if the Provider does not pay the two consecutive invoices of the Client, in accordance with Article 13 of this Agreement. (4) Failure to meet the contractual obligations of the Client shall be considered if the Client does not pay two invoices to the Provider for provided services, in accordance with Article 13 of this Agreement. (5) In case of termination of the Contract, in accordance with paragraph 1 of this Article, the party to this Contract that caused by its actions or negligence the termination of the Contract is required to compensate the other party for the damage sustained due to the termination of the Contract.

XIII. CONFIDENTIALITY Article 18 (1) The parties to this Contract undertake to maintain confidentiality of data in relation to third parties regarding all aspects of this Contract and any other agreements relating to it. This obligation of confidentiality does not apply to: - Information that becomes available to the public, and is not disclosed due to breach of this confidentiality obligation, - Disclosure of data based on the law in accordance with a request of a competent authority. The party to this Contract that discloses the data shall limit their submission to the extent which is required to

______REPOWER – KOSOVO 62/77 comply with legal obligations and will notify the other party as early as possible to give her the opportunity to deny giving credible information.

XIV. FINAL PROVISIONS Article 19 (1) The contact details for the communication of the parties to this Contract are set out in Annex 2 of this Contract. Article 20 (1) This Contract shall enter into force upon signature of the authorized representatives of the parties to this Contract and shall apply from mm.dd.yyyy until mm.dd.yyyy.

Article 21 (1) The authorized persons for the implementation of this Contract are ______for the Client and ______for the Provider.

Article 22 (1) Annexes 1 to 2 are an integral part of this Contract. (2) All amendments to this Contract, except as otherwise provided in this Contract, must be in writing, drawn up and concluded between the parties to this Contract in the form of an Annex to this Contract. (3) If certain provisions of this Contract are or become legally invalid, the validity of the other provisions of this Contract will not be affected by this. The parties to this Contract shall replace the invalid provisions with valid provisions that are as similar as possible by concluding as Annex to this Contract. (4) The parties to this Contract agree that any change in the data set out in Annexes 1 to 2 shall be announced, coordinated and confirmed in writing by authorized persons for the implementation of this Contract. Article 23 (1) In the event of the establishment of a market power supply mechanism, the Provider shall be entitled to submit the offered energy prices to the Client's IT platform.

Article 24 (1) This Contract is drawn up in 5 (five) identical copies, of which the Provider retains 2 (two), and the Client 3 (three) copies.

In Prishtina, mm.dd.yyyy

Client: Provider:

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LIST OF ANNEXES 1. Form of weekly unit price offer for reserve capacity and reserve energy of tertiary reserve for the following week (provided by the Provider) and confirmation of acceptance (provided by the Client).

Weekly unit prices for tertiary reserve capacity and energy using DSR for the period dd.mm.yyyy to dd.mm.yyyy

{ DSR service provider name }

{ dd.mm.yyyy hh:mm - time of DSR bid submission }

Mon Tues Wed Thu Fri Sat Sun

Reserve capacity [MW]

x x x x x x x

Reserve capacity unit price [€/MW]

x x x x x x x

Reserve energy unit price [€/MWh]

x x x x x x x

8. Communication contacts

DSR Provider Client Company name KOSTT Address Contact persons E-mail addresses Phone numbers Fax numbers

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9. REQUIRED AMENDMENTS TO THE GRID CODE AND MARKET RULES IN KOSOVO

The DSR framework contracts will be concluded with all potential and qualified DSR providers (currently just a few in Kosovo), including an annex with weekly prices as defined. A simplified DSR procedure should be considered as much as possible having in mind the early stage of development of this mechanism in Kosovo. Also, it should be noted that counterparties for the TSO in this activity will be end customers which lack sufficient experiences of both process and terminology of the electricity market, and the skills necessary for regular market activities (day-ahead, intra-day, balancing, settlement). Therefore, the adequate procedures required for potential providers of this service should be developed.

Regarding the legal and regulatory framework, it is obvious that implementation of the DSR may require certain amendments (or adjustments) of the following acts:  Law on Electricity  Transmission Grid Code  Market Rules

8.1. Law on Electricity

Demand Side Management (Energy efficiency) in the Law is defined as “a global or integrated approach aimed at influencing the amount and timing of electricity consumption in order to reduce primary energy consumption and peak loads by giving precedence to investments in energy efficiency measures, or other measures, such as interruptible supply contracts, over investments to increase generation capacity, if the former are the most effective and economical option, taking into account the positive environmental impact of reduced energy consumption and the security of supply and distribution cost aspects related to it”.

In The Law interruptible contracts are defined as “The contract of supply with interruptions - a supply contract, which entitles Transmission System Operator or Distribution System Operator to temporarily discontinue the supply of electricity to end-user, in accordance with the terms of service, as defined in Grid Code and other regulatory acts”.

Article 16 of the Law, “Tasks and responsibilities of the Transmission System Operator” among other tasks and responsibilities of the TSOs specifies also “ensuring the availability of all necessary ancillary services including demand side management process”.

The Article 18 of the Metering Code defines that “properties of the measuring equipment or standards to be met by measuring equipment to enable demand management and time interval metering of electricity consumption”.

It is clear that the lawmaker envisaged the DSM (and the DSR as subset of the DSM) service and defined further development of this service in the secondary legislation.

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8.2. Transmission Grid Code

In the Grid Code-General provision, the demand side respond is defined and treated as follows:

Procedures that can be used to reduce or exceptionally increase demand Demand Control when there is a serious mismatch between generation and demand on all or part of the total system. The section of the operations code covering the rights and obligations of the Demand Control various parties with regard to the measures to be taken to control system Code demand. Demand Demand within a demand facility that is available for modulation by the response active relevant system operator or TSO, which results in an active power power control modification. Demand Demand within a demand facility that is available for reduction or response system increase in response to frequency fluctuations, made by an autonomous frequency control response from the demand facility to diminish these fluctuations. Demand response very Demand within a demand facility or closed distribution system that can be fast active power modulated very fast in response to a frequency deviation, which results control in a very fast active power modification. A document, issued either by the demand facility owner or the closed DSO Demand (CDSO) to the relevant system operator for demand units with demand response unit response and connected at a voltage level above 1 000 V, which confirms the document compliance of the demand unit with the technical requirements set out in this (DRUD) Regulation and provides the necessary data and statements, including a statement of compliance.

Dispatch Unit A generating unit or demand customer that is subject to dispatch instructions from the TSO.

Balancing Unit A generating unit or any other physical participant able to post bids and offers in the balancing mechanism.

The Dispatch Code (sub-code of Balancing Code) sets the procedure for the TSO to dispatch end customers that participate in the balancing mechanism and/or provide ancillary services. In Chapter 4. Frequency Control Code of Balancing Code the requirements and criteria with respect to the provision of frequency control in the Kosovo power system are described. In 4.4.1.4 it is stated that frequency and active power control shall be provided, among others, by the “Demand control using the ABC rota load shedding for normal day to day operation and other demand control means as detailed in the demand control code for emergency situations”. Additional, definitions of various types of tertiary reserves are in Grid Code: “Fast tertiary control reserve should be fully available within 15 minutes from the moment it is activated and enables the primary reserve and secondary reserve to be released. Fast tertiary control should be provided as part of an ancillary services agreement. The activation of fast tertiary control reserve should be available at any time and reserve must be sustainable for a minimum of eight hours.” (Balancing Code 4.4.4.3) “Slow tertiary control is designed to release fast tertiary control and stabilize power balance and frequency in the long run. It must be fully deployed after a maximum of eight hours from the moment of its activation

______REPOWER – KOSOVO 66/77 and must be sustainable for a minimum of 48 hours. Slow tertiary control should be provided as part of an ancillary services agreement.” (Balancing Code 4.4.4.5) Of course, it is anticipated that both types (fast and slow) of a tertiary control may be obtained from “dispatchable loads”. Unlike the Balancing Code, the Demand Control Code (sub-code of Operations Code) gives very strong authorizations to the TSO in relation to reduction of load of demand customers directly connected to the transmission system in the event of insufficient generation being available to meet total demand. The Demand Control Code specifies following: “Demand customers can make their load available, under the terms of an ancillary services agreement to provide frequency control response or reserve. The agreement will state the amount of demand available to be disconnected, the amount of time for which the demand can be reduced and the length of notice to be given.” (6.4.1) “If a demand customer connected at 110 kV and above would like to offer the TSO the ability to use demand customer load management for emergency load control purposes, it will notify the TSO in accordance with this demand control code. This will be a voluntary service for which there will be no payment.” (6.4.2) Having in mind above mentioned provisions from the Grid Code, the process of establishment of the DSR system should take into account following elements: Provisions of the Grid Code generally recognize the Demand side control (DSR) potential and their role in the electricity system. Definition of types of Tertiary reserve (technical characteristic of the Fast and the Slow tertiary reserve) are more directed to generators. However, it would be good, based on technical characteristics of end customers, in order to create a larger portfolio of reserves and increase competition, to introduce more types of reserve that will be appropriate for demand side as well. The Demand Control Code gives additional authorizations to the TSO to operate the system in the event of breakdowns and/or operating problems, such as with system frequency, voltage or overloading, on any part of the electricity system. These additional authorizations include load reduction (disconnection of customers). Taking into account those additional authorizations, there should be clear delineation of cases when a load reduction can be activated (Disconnectable Loads, “Voluntary Agreement” and any other event defined in Demand Control Code) and when those reserves are utilized. According to current arrangements, the TSO is in a position to choose between a) Tertiary reserve that costs, and b) “free of charge” options (possibilities based on the Demand Control Code provisions). If no changes are made to these provisions from the Demand Control Code, the introduction of the DSR services raises some questions. Why would the Customer make a voluntary contract on consumption reduction, if he can charge it? Why does the TSO engage a DSR that is paid if the TSO can reduce off-take according to Demand Control Code? This report recommends clearly defining requirements for the DSR unit (similar like the Generating Unit requirements in 4.5) and also generally, in the whole document relating to tertiary reserve, treating the DSR unit in the same (or appropriate) way as the Generating unit.

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8.3. Market Rules

In the Market Rules definitions, the role of the Demand Side Response is prescribed by following definitions:

for the purposes of the Market Rules, is a bilateral contract made in accordance with provisions of the Grid Code between the TSO and a Trading Party for the provision of ancillary services for: Ancillary Service (a)Transmission Losses; Contract (b) Compensation Program; (c) Frequency Containment Reserve; or (d) Replacement Reserve. is the process in which Trading Parties submit Bids and Offers to buy energy Balancing from or sell energy to the TSO in order for the TSO to carry out the real time Mechanism Balancing of the Transmission System; (BSP) is a Trading Party with reserve-providing Balancing Units or reserve- Balancing Service providing groups able to provide balancing services to the TSO who has pre- Provider qualified in accordance with the relevant Market Rules Procedure; is an ancillary service for capacity procured by the TSO to cover contingencies Reserve in accordance with the Grid Code and may include both Frequency Containment Reserve and Replacement Reserve as appropriate; Frequency is an ancillary service for the provision of Frequency Containment Reserve, Containment which is an ancillary service defined in the Grid Code; Reserve is a Generator, Supplier, Interconnector Trader, Wholesale Customer or other Trading Party Party that has Acceded to the Market Rules in order to trade electricity;

Taking into consideration above listed definitions, from the aspect of DSR service there is no provision that creates obstacles to DSR participation on balancing markets. However, there are few general considerations in the Market Rules that create unclear situations or conflicts between different market roles. The particular attention should be paid to the following: Customers are not specified as “Parties” in the Market Rules. A DSR unit should be a Balancing Service Provider (BSP), where BSP is a Trading Party with reserve-providing Balancing Units or reserve- providing groups able to provide balancing services to the TSO and who is pre-qualified to provide that service. It is necessary also to define Customers as Party in 2.1 “Parties to the Market Rules”. In the Market rules the DSR should be precisely defined and including its place and role in overall system (balancing market, reserve). It is necessary to make clear distinctions between the DSR as a voluntary market activity of customers and other procedures allowed for the TSO to maintain the balance between production and consumption.

Example: In the Market Rules it is defined that any Trading Party may be assumed to obtain a role of a Significant Party. Significant Parties under specific conditions in the system may have special obligations. They are obliged to submit Bids and Offers for all Balancing Units capable of independent control (11.6.8).

Further, the Load Disconnection Compensation Price approved by ERO and used for the estimated quantities of energy that the TSO disconnects should be precisely defined from the aspect of the DSR.

______REPOWER – KOSOVO 68/77

Additionally, a “Customer – Supplier” relationship needs to be elaborated in detail. A Customer (DSR service provider or Balancing Unit) voluntarily provides a DSR service according to its arrangement with the TSO, but in the same time the Customer is a part of a balancing group with his Supplier and its actions may cause imbalance in the Balancing Group. It is necessary to also clearly define the steps and obligations of the parties (DSR Unit, TSO, BRP, Supplier) in engaging the DSR service in order to accurately account positions of each of the involved parties.

All relevant documents recognize load as one of possible sources to provide balancing service to the TSO and generally, there are no obstacles to introducing a DSR service. Having in mind the complexity of Kosovo’s electricity system and all its specifics, there could be significant level of probability of collision between regulated (regulated load shedding) and unregulated services (DSR). The TSO as a subject that has the authority over both services (regulated and non-regulated) would continuously be in a potential conflict. It is necessary to make clear distinctions between these services and precisely define way of their engagement. On this way the TSO will have two tools, the DSR as market based and the load shedding as regulated tool. Also, it will be also precisely defined when and which tool will be utilized.

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10. CONCLUDING REMARKS

Demand side response (DSR) mechanisms have been rapidly developing in Europe, and there are currently 21 countries in Europe with DSR legislative frameworks in place. In 2014, less than 4% of available peak load in the ENTSO-e countries was utilized10 in a DSR mechanism. The level of DSR utilization is constantly growing, and it is estimated that DSR capacity potential in EU today is around 50 GW, which is almost 10% of the peak load (~550 GW). This development is the result of the growing need for additional flexibility in the power system across Europe due to large integration of variable renewable energy sources, and the rapid development and integration of electricity markets. The level of DSR mechanism implementation varies across European countries. Some of the countries started with DSR 10 years ago and have been continuously upgrading and expanding their DSR mechanisms ever since. In Southeast Europe, most of the region’s countries are still at the beginning of this process. Clearly, there have been many local specifics and challenges that need to be addressed to allow DSR to fully contribute to the local power system. There still remain many uncertainties and challenges creating divergent views amongst stakeholders and experts but, in general, DSR is clearly becoming more crucial in power system design and operation. To unlock the full potential of DSR, it is necessary for the main stakeholders (ministries, regulators, system operators, service providers) to undertake a number of steps and activities with the aim of establishing technical preconditions (metering, smart grid), regulatory framework (rules, contracts, etc.) and appropriate level of knowledge to educate and attract all interested parties to participate in the DSR mechanism. All of this takes time and resources, and the most appropriate approach to DSR implementation is gradual approach, step by step. In the face of these efforts, many industrial customers across Europe still remain reluctant to offer their demand flexibility. The largest barriers for wider DSR implementation are:

 high implementation costs;  mechanism complexity;  inability to adjust internal processes and schedules to DSR needs; and  lack of perceived benefits of DSR.

To remove these barriers, TSOs, with the support of regulatory agencies, should offer education and technical expertise in order to increase transparency, decrease complexity, and to offer adjustable ability to potential DSR providers. As a first step in establishing a DSR mechanism in Kosovo, it is recommended that KOSTT and ERO jointly launch a campaign to bring the DSR mechanism closer to targeted end-users and potential DSR service providers. Understanding the lack of power system reserve capacity in Kosovo, a DSR mechanism should be more than welcome. By introduction of the DSR in Kosovo, KOSTT will get new regulatory tool that would improve system operation and fulfill ENTSO-E requests. For the first step of DSR introduction in Kosovo, TSOs should target the largest customers first – industrial consumers directly connected to the transmission network. First potential candidates for the DSR mechanism in Kosovo are:

 New Co Ferronikeli (nickel production plant)

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 Sharrcem (cement factory)  Trepça Mines  Mines (KEK coal division)

Taking into account the current status of Kosovo’s electricity market, its technical level (IT, communication, metering, control), and lack of required reserve capacity for upward control, it is recommended that end customers connected to the transmission network participate in the balancing mechanism with their bids for a manual Frequency Restoration Reserves (mFRR). On the basis of limited available input data and preliminary analysis of available daily consumption diagrams, and without analyzing technical readiness of the customer's factories/devices and their core business process, it is estimated that these four large customers in Kosovo could be able to provide roughly 30-40 MW of controllable load for DSR service (mFRR). However, this strongly depends on the DSR mechanism specifics, its complexity, prices, obligations and responsibilities. Existing definitions of tertiary reserve types are more directed to the generators. Therefore, it is necessary initially to discuss technical possibilities of the consumer’s facilities to provide DSR service. Depending on the technical characteristics of end customers, it is also recommended to introduce more types of system reserve that will be appropriate for DSR as well. For the large customers and potential DSR providers, KOSTT should prepare business cases and frequently asked questions/answers, similar to those given in the first Chapter of this report. All large consumers have their core business and, in engaging in DSR, they are entering into new risk zone they are not familiar with. Therefore, KOSTT needs to prepare and clarify all options to give potential DSR providers full picture of system needs and their potential participation. “New Co Ferronikeli” with the load level in the range of 10 – 47 MW is the largest consumer in Kosovo and therefore plays a very important role on the Kosovo electricity market. Therefore, it is the largest potential DSR provider in the country, with overall DSR potential estimated to 30 MW. Accordingly, during this initial period of pre-introduction of DSR services, it is recommended to start with intensive and interactive communication with “New Co Ferronikeli” about their DSR capabilities, consumption specifics with respect to the system needs. New Co Ferronikeli is the key player whose commitment “in favor” or “against” DSR can significantly determine future development of DSR mechanism in Kosovo. After initial discussion about technical possibilities of the largest end users it is recommended to follow the following basic 4 steps in the DSR mechanism: 1. Call for DSR service providers 2. Expression of interest by the network users 3. Pre-qualification procedure 4. Contract conclusion between the TSO and the network user.

In accordance with the call for DSR service the applicant submits a completed Prequalification Form. It usually contains: 1. General data on Service Provider (type of demand, number of network usage contracts, contact details etc.) 2. Place of delivery and basic description of the DSR unit 3. Technical limitations of DSR unit 4. Approval for testing.

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After submission of the prequalification form, the provider must pass the KOSTT prequalification test. It is used to demonstrate the service provider’s ability to provide declared auxiliary service. If the prequalification test is successful, DSR contract can be concluded. Upon the conclusion of the contract, weekly or monthly tenders/calls for the reserve provision should be launched according to the minimum cost criterion with eventual price cap defined in the pricing methodology for the provision of auxiliary services. DSR compensation methodology is usually based on one of the following principles to determine "baseline consumption”: 1. Consumption measurement before & after TSO activation - electricity consumption immediately before DSR activation is compared to the electricity consumption during DSR application period, 2. Load schedule - DSR service provider delivers day-ahead consumption plans that is later compared to the actual consumption during DSR activation period, 3. Reference Base Load – it is based on historical consumption data registered by the measurement data system.

Having in mind early stage and limited experience with DSR development, as well as electricity market possibilities (day-ahead, intra-day, scheduling, balancing, settlement), it is strongly recommended establishing the simplest possible DSR mechanism at this stage. KOSTT should decide which of the above mentioned baseline principles is the most appropriate for Kosovo system operation practice. In parallel with the introduction of DSR services for the customers on transmission network, KOSTT must analyze possibilities for expanding it to the larger number of customers on the distribution network level, and look to activities and best practices in the EU countries to create a benchmark against which necessary preconditions for implementation in Kosovo (smart metering, communication, education of all customers, aggregators...) are determined. Another very important aspect of DSR introduction in Kosovo is determining who pays imbalance costs when the Supplier is short and DSR provider is long. Every time TSO sends DSR request, it should be clearly noted in the scheduling system and that this request (load change) goes on the relevant DSR provider instead of Supplier’s balancing responsibility. Ideally, a DSR mechanism should maintain market prices without any regulated pricing. However, it should be harmonized with existing ancillary services legal provisions. If a price cap is set to other ancillary service providers, then it should be implemented in the DSR mechanism as well. Price caps are usually discussed with the regulator, depending on the DSR providers responses and their market power. Finally, in analyzing existing legal framework in Kosovo with respect to DSR, we recommend load as one of the possible sources for providing balancing services to the TSO. Generally, there are no legal obstacles to introduce DSR service in operation in Kosovo. Having in mind complexity of Kosovo power system and all historical specifics (such as load shedding), there could be a collision between regulated load control (load shedding) and non-regulated load flexibility (DSR). System operators have the responsibility over both of these services (regulated and non-regulated load flexibility). Therefore, it would be very important to clarify this distinction. After this initial DSR document in Kosovo it is recommended to follow up with the following topics:

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- Detailed analysis of DSR potential in Kosovo transmission network, including larger set of load input data (few year time frame on hourly basis); - Preparing financial simulations and analyses of DSR mechanism on both sides (provider and KOSTT); - Preparing and analyzing pre-qualification tests of potential DSR providers (document templates, measurements, response analyses); - Analysis of DSR potential on the distribution network and support to establishment of TSO – DSO cooperation in a DSR mechanism.

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11. LITERATURE

1. Measures to increase demand side flexibility in the Swedish electricity, Swedish Energy Market Inspectorate, 2017 2. Demand Side Response Mechanism Principles in Croatia, HOPS 3. Smart grid: Part 3: Automatic Demand Control, MEPSO, 2018 4. Assessment of the economic value of demand-side participation in the Balancing Mechanism 25th April 2017 Charles River Associates 5. Demand side response in the non-domestic sector, Element Energy Limited, 2012 6. https://www.nationalgrideso.com/balancing-services/demand-side-response-dsr 7. https://www.entsoe.eu/ 8. https://www.elia.be/~/media/files/Elia/Products-and- services/ancillary%20services/purchase%20of%20ancillary%20services/Booklet%20R3%20non- reserved%20volumes_20171123_spreads_ENG_HR.pdf 9. Explicit Demand Response in Europe - Mapping the Market 2017, Smart Energy Demand Coalition, 2017 10. https://www.nosbih.ba/files/dokumenti/Trziste/Dokumenti/ENG/Rules%20on%20Daily%20Balanc ing%20Energy%20Market%20Operations.pdf 11. https://www.nosbih.ba/files/dokumenti/Trziste/Dokumenti/ENG/Ancillary%20Services%20Proced ures.pdf 12. http://hops.hr/wps/portal/hr/web/usluge/pomusluge/DSR 13. http://hops.hr/wps/portal/hr/web/usluge/pomusluge 14. Reserve products and reserve market places, FINGRID, Public presentation material 4.7.2018 15. http://ec.europa.eu/competition/state_aid/cases/275343/275343_2009943_90_2.pdf 16. Guidance On The Provision Of Reserves, Svenska Kraftnät, 2018 17. https://www.svk.se/siteassets/aktorsportalen/elmarknad/information-om-reserver/trade-and- pricing.pdf 18. https://www.svk.se/siteassets/aktorsportalen/elmarknad/information-om-reserver/questions-- answers-on-reserves.pdf 19. https://www.apg.at/en/markt/netzregelung/tertiaerregelung/ausschreibungen 20. Transmission Development Plan 2018-2027 ver. 0.3, KOSTT, 2018

12. LIST OF TABLES

Figure 1 Three main technologies needed in DSR mechanism [3] ...... 9 Figure 2 DSR regulatory framework across Europe [3] ...... 10 Figure 3 DSR potential in EU countries [source: Sia partners] ...... 11 Figure 4 Active power reserve types and time domains ...... 12 Figure 5 Reserve market places in Finland – both consumption and generation participate ...... 23 Figure 6 Active power reserve procurement in Sweden ...... 31 Figure 7 Kosovo power system hourly consumption in January and May 2019 (source: KOSTT) ...... 34 Figure 8 Kosovo power system hourly consumption in two characteristic weeks in January and May 2019 (source: KOSTT) ...... 35 Figure 9 Hourly consumption of Ferronikel in January and May 2019 (source: KOSTT) ...... 37 Figure 10 Hourly consumption of Ferronikel in characteristic week in May 2019 (source: KOSTT) . 37 Figure 11 Hourly consumption of Ferronikel in characteristic week in January 2019 (source: KOSTT) ...... 38

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Figure 11 Hourly consumption of Ferronikel in characteristic days in January 2019 (source: KOSTT) ...... 38 Figure 13 Hourly consumption of Sharrcem in January and May 2019 (source: KOSTT) ...... 39 Figure 13 Hourly consumption of Sharrcem in May 2019 (source: KOSTT) ...... 40 Figure 13 Hourly consumption of Sharrcem in characteristic weeks in January 2019 (source: KOSTT) ...... 40 Figure 16 Hourly consumption of KEK Mines in January and May 2019 (source: KOSTT) ...... 44 Figure 17 Hourly consumption of KEK Mines in characteristic weeks in January 2019 (source: KOSTT) ...... 44 Figure 18 Hourly consumption of Sharrcem in characteristic week in May 2019 (source: KOSTT)... 45 Figure 19 Hourly consumption of Sharrcem in characteristic week in May 2019 (source: KOSTT)... 45 Figure 20 Other types of the demand side response ...... 47 Figure 21 Three main types of the demand side response ...... 48 Figure 22 DSR as a percentage of total capacity market contracted capacity in order of delivery year in UK (source: CRA Analysis of Capacity Market results published by the EMR Delivery Body) ...... 49 Figure 23 The main barriers for participation in DSR ...... 50 Figure 24 Example of the consumption measurement before & after TSO activation of the DSR [2] 53 Figure 25 Basic Product Characteristics and Roles in the Energy Management Process [2] ...... 54 Figure 26 Basic principles to demonstrate the DSR provider’s ability to provide declared auxiliary service...... 55

13. LIST OF FIGURES

Table 1 Frequency control services and referring market participants in Austria ...... 13 Table 2 The main mFRR features in Austria ...... 13 Table 3 Differences between two tertiary reserve products in Belgium ...... 16 Table 4 Tertiary reserve procurement principle in Belgium ...... 17 Table 5 Frequency control services and referring market participants in BiH ...... 19 Table 6 The main FRR features in BiH ...... 19 Table 7 The main mFRR features in Croatia ...... 21 Table 8 The main requirements for mFRR in Croatia ...... 21 Table 9 The main types of services in balancing market in Finland ...... 24 Table 10 Ancillary services related to frequency response in Great Britain...... 25 Table 11 The main timeframes for DSR services in UK ...... 26 Table 12 Different types of interruptible services offered by the TSO depending on the notice time, duration of each load shedding and maximum duration of the load shedding per year in Greece ...... 29 Table 13 The main characteristics of frequency restoration and control services in Sweden ...... 30 Table 14 The General requirements of Svenska kraftnät for mFRR product in Sweden ...... 31 Table 15 Kosovo electricity consumption in 2018 ...... 33 Table 16 Kosovo electricity hourly load by months in 2018 ...... 33 Table 17 Kosovo distribution substations load in 2017 (forecasted values) ...... 33 Table 18 Monthly consumption of New Co Ferronikeli in 2018 ...... 36 Table 19 Monthly consumption of SharCem in 2018 ...... 39 Table 20 Monthly consumption of KEK Mines in 2018 ...... 43 Table 21 Options for the variable part of the network tariff and the behavior they might stimulate (Source: Ei) ...... 51

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U.S. Agency for International Development www.usaid.gov

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