South East Europe Wholesale Market Opening, Feedback on the Final Draft of Pöyry–Nord Pool Consulting Study

8/10/2019 South East Europe Wholesale Market Opening, Feedback on the Final Draft of PyryNord Pool Consulting Study

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South East EuropeWholesale Market Opening

Feedback on the Final Draft ofPyry Nord Pool Consulting Study

Toma Lajovic, General Manager


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BSP SouthPoolAt a Glance

Building power exchange infrastructure in the SEE region

Presently offering trading in Slovenian and Serbian power

Soon to extend to FYR of Macedonia

Slovenian market to be coupled with the Italian (IPEX) in Q3 2010

BSP SouthPool Alliance comprises the BSP SouthPoolcompanies group operating the energy exchange and theinvesting partners

Initial partners are Borzen, Slovenian electricity market operator, andEurex, German-Swiss financial derivatives exchange

Open to admission of further partners

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Pyry Nord Pool Consulting StudyMain Feedback Messages

Price coupling is the key to effective market

integration

Harmonisation of rules and regulations within

SEE is a must

Portfolio bidding is the favoured option

Limiting ownership of power exchanges to TSOs is

not necessarily the best approach

Capacity allocation for the SEE region might

require also longer term capacity allocations

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Market coupling is the key to SEE regionalmarket integration

Implicit capacity allocation by price coupling is the most

effective option for the day-ahead markets

BSP SouthPool committed to market integration by implicit

capacity allocation

Decentralised approach with multiple power exchanges

Market coupling Italy Slovenia to start in 2010

SEE region soon to directly interact with numerous coupling

arrangements

o Slovenia Italy

o Romania Hungary

o Czech Republic Slovakia

o France Belgium Netherlands Germany/Austria

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Harmonisation of rules throughout SEEregion needed to support integration

Basic principles of market functioning need tobe harmonised region-wide

Transparency has to be significantly improved

Transaction based grid fees have to beeliminated in order to enable integration byDAM coupling

Today many grid fees are not justifiable from the

cost incurred by the system perspective Reasonable scheduling fees may remain (or be

introduced) to cover the costs of the schedulingoperations

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Balance responsibility an important featureof the national market model

Providing for portfolio bidding on the DAM

The need for every market participant toensure balance responsibility required

Either participating on the market by themselvesdirectly or procuring the balancing service on themarket

Generators should also be allowed to procure

balance responsibility on the market, but tosecure DAM liquidity, dual balance responsibilityportfolios, supply and generation, might be theright approach without individual plant bidding

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TSOs as exclusive owners of the nationalpower exchanges?

We do not believe that it is crucial for thesecurity of supply that the TSOs are exclusiveowners of the national power exchanges (i.e.national market operators)

TSOs primary competence is operation of thephysical system; however their support iscrucial for successful power exchangeoperation

Partnership securing exchange operation andclearing know-how is beneficial and can forman important regional integration asset

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SEE markets integration will require acoherent approach to capacity allocation

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FINANCIAL TRANSMISSION RIGTHS

PHYSICAL TRANSMISSION RIGTHS + Use It or Sell It

PHYSICAL TRANSMISSION RIGTHS + Use It or Lose It

MARKET COUPLING / MARKET SPLITTING

IMPLICIT CONTINUOUS TRADING ALLOCATION

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8.3

Generally applicable

allocations timeframe

in SEE today

k ll


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8.4

Extension of allocation time to the

day-ahead should be immediately

introduced region-wide in orderto improve day-ahead liquidity

k i i ill i


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8.5

Once day-ahead allocations are in

place, move towards Use It or Sell

It provisions is available.

SEE k i i ill i


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8.6

As soon as day-ahead markets

across a border are deep enough,

PTR+UIoSI can be replaced by FTRs,

but they can coexist in the region

With PXs operating day-aheadauctions on both markets, a move

towards implicit allocation is needed

SEE k i i ill i


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8.7

Liquid and deep enough day-ahead

markets coupled on the regionallevel, with longer term capacity

allocated in the form of FTRs

SEE k t i t ti ill i


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8.8

BSP SouthPools role in the regional

market integration is primarily in

our exchange markets participating

in the day-ahead and intra-dayimplicit capacity allocation


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European Partnership for anEffective Regional Market

[email protected]

Documents

South East Europe Wholesale Market Opening, Feedback on the Final Draft of Pöyry–Nord Pool Consulting Study