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

Riccardo.rossi@eon.com

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