European Federation of Energy Traders
1
Electricity Regional Initiative Central-South Europe Region4th Stakeholder Group meeting
The Central South Region and
the European target model
How to ensure consistency
Paris, May 31st, 2010 2The Central South Region and the European target model
Context: the EU target model
unbundling and regulated TPA
self dispatchmarket driven
end-user pricesmarket driven investments
Harmonised balancing rules
New price Zones ?
firm XB trans-mission rights
Day-aheadprice coupling
continuous XBintraday markets
H-1 gate closure
Flow based DA Allocation ?
Forward trans-mission rights
Paris, May 31st, 2010 3The Central South Region and the European target model
Cross border aspects of the EU target model
Firm forward transmission rights allocated by TSOs
Day ahead implicit market coupling (price coupling)
Continuous intraday allocation thanks to one unique SOB,
interim model with OTC capability
Cross border procurement of balancing energy and
reserve capacity
Focus on the Italian electricity market in the CS Region
Paris, May 31st, 2010 4The Central South Region and the European target model
Balancing Balancing Balancing Balancing
Day AheadDay Ahead Day AheadDay Ahead
Main features of the Italian Electricity Market
ForwardForward MarketMarket ForwardForward MarketMarket
IntradayIntraday IntradayIntraday
• “Mandatory” Power Exchange – GME i.e. bilateral deals to be submitted to GME• Market Coupling with Slovenia - explicit allocation of the XB capacity with other neighboring countries• National Market based on Market Splitting – Italian market divided in 6 bidding zones• Nodal bidding i.e. balancing circle=generation unit• Asymmetric price: Selling price= Zonal Prices VS Buy price=Unique National Price (PUN)• Settlement in m+2• Hourly products/No block bids
• financial forward market
• forward PTRs
• Mandatory Power Exchange - GME• Only national market; cross border ID • 4 auctions (“MI”), two in day D-1 and two in day D• Nodal bidding• OTC not possible• Hourly products/No block bids
• Balancing and Redispatch altogether• Market based solution• Price steps constraints• Nodal bidding i.e. each generation unit• “Pay as Bid”• Several sessions, starting already in the D-1
Paris, May 31st, 2010 5The Central South Region and the European target model
Building blocks for the CS Region integrationForward Market
ForwardForwardMarketMarket
ForwardForwardMarketMarket
Current arrangements
PTRs available on all borders
Availability of instruments (CCC) to manage price risk of the
fee for Assignment of Rights of Use of Transmission Capacity
(CCT)
Main measures needed
Integration with CASC started in 2011, but full integration on
rules needed (e.g. firmness and compensation)
Paris, May 31st, 2010 6The Central South Region and the European target model
Building blocks for the CS Region integration Day Ahead
Day Day AheadAheadDay Day
AheadAhead
Main measures needed Ensure a consistent set of traded products and order format
are available to market participants Ensure that the price zones are relevant both for supply and
demand Introduce portfolio bidding (i.e. per bidding area) Remove any mandatory requirements to participate in day-
ahead market Coupling with remaining neighbouring countries, including
shift of gate closures Standardize the payment period
Paris, May 31st, 2010 7The Central South Region and the European target model
Building blocks for the CS Region integration Intraday
IntradayIntradayIntradayIntraday
Main measures needed Introduce continuous intraday trading with a continuous
OTC market for the national market and together with neighboring countries
Progressively move to H-1 gate closure for nominations (i.e. 1 hour neutralisation lead-time)
Introduce portfolio bidding (i.e. per bidding area) Establish SOB platform for intraday orders with explicit
access: develop implicit allocation for intraday markets with progressive pooling of XB liquidity
Paris, May 31st, 2010 8The Central South Region and the European target model
Consultation for ID X-Border capacity allocationEFET main remarks
Auctions possible only as interim solution, need for a roadmap to
fully implement the target model. Need to enable bilateral trading using X-Border capacity (Current nomination
deadline for OTC is at d-2.)
All 24hrs must be covered by X-Border Intraday Auctions “XBIDs”
XBID1 to be held later in the afternoon i.e. > 4pm D-1
More XBID sessions, closer to hour of delivery
Need for UIOSI principle for allocated capacity
Fall back solution needed
Longer bidding window (>15mins)
A solution has to be found also for the Italian and Greek border
Paris, May 31st, 2010 9The Central South Region and the European target model
Building blocks for the CS Region integration Balancing
BalancingBalancingBalancingBalancing
Main measures needed
Purchase of electricity for balancing and redispatch after the gate closure of Intraday market (target: H-1)
Remove price bidding limitations Separate the procurement of electricity for balancing and
redispatch purposes
Paris, May 31st, 2010 10The Central South Region and the European target model
Other desirable features to be harmonised
TSO providing full transparency on its activities in the markets
Increased operational TSOs cooperation on capacity calculation,
system management in real time and before real time
Generation capacity owned only by market participants TSOs
should not be allowed to own generation/storage assets
Solving market distortions that could cause the need for Capacity
Remuneration Mechanisms
All market participants, also RES producers, shall be responsible
of balancing their own position
...
Paris, May 31st, 2010 11The Central South Region and the European target model