products-and-

CWE ATC Market Couplingand

CWE-Nordic ITVC

Info session forBelgian market participants

Friday 8th of October 2010

08/10/2010 2

Agenda

1. Introduction

2. Overall design of the solution and operational impacts

~~ Lunch ~~

3. Contractual impacts

4. Negative prices at Belpex

5. Transparency and Member Testing

6. CWE flow based Market Coupling

7. Conclusion

08/10/2010 3

Agenda

1. IntroductionJames Matthys-Donnadieu


~~ Lunch ~~





7. Conclusion

08/10/2010 4

Agenda

1. Introduction

2. Overall design of the solution and operational impactsMartine Verelst and Joris Houben

~~ Lunch ~~





7. Conclusion

08/10/2010 5

Where do we come from at CWE side?

• Original scope of CWE MC based onMemorandum of Understanding inJune 2007

• Signatories agreed on the design andimplementation of the flow basedmarket coupling in the CWE region

• Project Parties propose to startmarket coupling with an ATC basedsolution as a first step in the marketcoupling

• CWE Market Coupling will replace thecurrently applied Trilateral Coupling(TLC) and will also be a price coupling

• Dependencies between Nordic andCWE were recognized early on anddealt with accordingly

08/10/2010 6

Where do we come from at the Nordicside?

• On the 9th November 2009 the volumecoupling of the Nordic and the Germanspot market was launched

• The market coupling is governedthrough EMCC – European MarketCoupling Company GmbH

• The results of market coupling are inline with expectations and producedpositive results in the past months

• On 10th May 2010, market coupling wasintroduced on Baltic Cable

• With the introduction of market couplingon Baltic Cable, EMCC’s market couplingis now covering all interconnectorsbetween the Nordic market andGermany

08/10/2010 7

Price <> Volume Coupling

Volume coupling• Sequential calculations• Common central calculation of the import/export flows• Local calculation of prices. PXs only receive the volume to

import/export

Price coupling• Common central calculation of the import/export flows

and of prices• Local PX receive both the volume to import/export and

the price at which they have to clear• Preferred “European Target Model” (Florence Forum, June

2009)

08/10/2010 8

CWE – Nordic ITVC

• TSOs and PXs of the combined CWE/Nordicregion are committed to implement a pricecoupling model. However an interim solution isneeded to deliver robust market results

• Interim Tight Volume Coupling (ITVC), based onEMCC’s Nordic-German coupling, will provideimplicit allocation of available capacities betweenthe CWE and the Nordic region

• The project was initiated in January, monitoredby joint regulators, and will be launched in twosteps:

– Step 1 covering both interconnectors betweenGermany and Denmark and Baltic Cable betweenGermany and SwedenExpected launch date: 9 November 2010

– Step 2 including NorNed cableExpected launch date: 14 December 2010

08/10/2010 9

CWE – Nordic regional electricitymarkets: Global picture

2. Status of CWE-Nordic interregional coupling;The current solutions will be replaced by an interim solution

Current day-ahead market

Current solutions1. Market splitting Nordic and Estonia (one PX)2. Price coupling in the Netherlands, Belgium and

France (TLC – 3 PXs)3. Tight volume couplingbetween Denmark

Swedenand Germany through EMCC4. Explicit auctions on other borders

Interim day-ahead market

Intermediate solution1. Interim tight volume coupling on all

connections between the CWE and Nordicregions

2. Market splitting in the Nordic (NPS)3. Price coupling in CWE

CWETLC

08/10/2010 10

CWE MC: Role Model

Pre-Coupling

Post-Coupling

Congestion Revenue Distribution

Capacitycalculation

Capacityallocation

Back-Office

Coupling

Settlement of Cross Border Shipment

Cross Border Shipment

ATCs

Net Positions Prices

Flows

Cross Border Nominations

08/10/2010 11

Coordinated ATC Calculation

Today:• Bilateral coordination process where Net Transmission Capacities (NTCs) are shared

between neighbouring TSOs• Partly ‘multi-border coordination’ (e.g. Export DE-NL/FR/CH)

For CWE MC:• A new methodology for a regional coordinated process, based on a common grid model• NTCs are shared and evaluated by all TSOs of the CWE region

From NTC to ATC:• Coordinated ATC = Coordinated NTC – Netted Long Term nomination

Business Process Step Deadline

Deadline for submission of Long Term nominationsby Market Participants at the TSOs

Belgium : 08:00France : 08:15Germany : 08:15The Netherlands : 09:00

08/10/2010 12


1. NTC determined like today1. NTC determined like today

2. NTC shared between all TSOs2. NTC shared between all TSOs

3. Use of a common grid model3. Use of a common grid model

4. NTC verification4. NTC verification

5. NTC coordinated adjustment5. NTC coordinated adjustment

7. Publication of ATC7. Publication of ATC

6. Calculation of ATC6. Calculation of ATC

D-2 19:00

D-1 10:30

D-1 09:30

08/10/2010 13


• To improve the security of supply in the region

• Common grid model:– TSOs share regional data (transmission grid topology, the consumption pattern, the injection

of production on the grid for the whole region)– TSO coordinate on potential problems on a daily basis

• Better linked to actual grid conditions:– NTCs are expected, where grid conditions are comparable, to be similar to today on most days

(i.e. non-stressed days)– NTCs can be lower in stressed cases, maintaining required security of supply

• Step towards the Flow Based target: daily use of a common base case is a keyelement of the fine-tuning of the Flow Based method

• Experimentation of this coordinated process in real operational timings duringseveral months

• Commitment by the TSOs to deliver the ATCs at that fixed target time, which isactually 1h30 before the gate closure times of the power exchanges

08/10/2010 14

CWE MC: Role Model

Pre-Coupling

Post-Coupling

Congestion Revenue Distribution

Capacitycalculation

Capacityallocation

Back-Office

Coupling

Settlement of Cross Border Shipment


ATCs

Net Positions Prices

Flows

Cross Border Nominations

08/10/2010 15

High Level ArchitecturePre-coupling

PXs Systems

TSOCommon System

1. Grid forecast2. ATC

calculation

3. ATC values

3. ATC publication

TSOs Systems

PX MCSystem

MarketParties EMCC

3. ATC values

08/10/2010 16

High Level Architecture:Coupling

PXs Systems

TSOCommon System

8. MCOs

4. Orders

9. OBKs *6. OBKs

5. Ordersaggregation

TSOs Systems

PX MCSystem

MarketParties EMCC

7. Calculation

* OBKs incl. MCOs from EMCC

08/10/2010 17

High Level Architecture:Coupling

PX MCSystem

14. Check and confirmation of finalnet positions10. Calculation

11. Check of preliminary results andconfirmation of rounded final prices

15. TCOs

12. Results allocation

* Preliminary results become final after step 14

TSOs Systems

TSOCommon System

EMCCMarketParties 13. Publishing

preliminaryindividual results*

PXs Systems

08/10/2010 18

High Level Architecture:Post-Coupling

TSOs Systems

TSOCommon System

PX MCSystem

PXs Systems

16. Cross BorderExchanges calculation

17. Cross Border Exchanges17. Cross Border

ExchangesCongestionRevenue

DistributionSystem

CCP System

18. Final Results

18. Final Results

19. Crossborder tradeconfirmation

20. Tradereport

21. Cross border nomination

17. Cross BorderExchanges

08/10/2010 19


This example illustratesthe scenario wherethere is a flow from NLto BE & from BE to FR.For simplicity Germanyis excluded from thisexample. However thesame principle appliesto the borders withGermany.

400

MW

500

MW

400

MW

08/10/2010 20


NL - Tennet

BE - Elia

FR - RTE

Belpex

APX CCP

ECC XBSHIP

Market participants

Market participants

ECC CCP Market participants

100MW

Net position: -400MW

Net position: -100MW

Net position:+500MW

APX XBSHIP

APX XBSHIP

ECC XBSHIP

400 MW

This example illustratesthe scenario wherethere is a flow from BEto NL & from FR to BE.For simplicity Germanyis excluded from thisexample. However thesame principle appliesto the borders withGermany.

08/10/2010 21

CWE-ITVC: Operational Processes andTimings - Overview

Exceptional procedures

13:05 14:00 15:30

Fallback

Goal:Publish CWE MC results before14:00

Fallbackpreparation

Normal businessrun

10:30 12:30

ATC calculation

LT Nomination12:00

MPsintroduce

bids

D-2

MPs regular information

08/10/2010 22

Fallback = Shadow Auctions

Backup #1Backup #1 Backup #2Backup #2

ShadowAuctions

Allocation byEqual Share

CWE MarketCoupling

On allCWE

borders

In case ofCWE

decoupling

• Bids submitted through the Shadow Auctions Interface are defaultbids

• They are valid for every day of the year, for a specific border,direction and an hourly period

• Participants can update their default bids at any time before thefreezing of the Data Base when Shadow Auctions are run

• Possibility to register only for Shadow Auctions, with a ‘lighter’status: Participant to Shadow Auctions Only

08/10/2010 23

Normal process timeline after go-live

08/10/2010 24

Normal process timeline after go-live

• ATC published at 10:30 on CASC website

• PX gate closure time at 12:00

• Publication of market results between 12:53 and 13:05

• Cross border nomination deadline– FR, NL at 14:00– GE, BE at 14:30

08/10/2010 25

Process Delayed (slight delay)

Due to technical problems in EMCC or CWE calculation, theprocess remains the same but actions are delayed in time

ATC valuesOBKs open

ITVC Process CWECalculation

MRspubli.

BE, DE, FR, NLnom.

ATCs OBKs Market CouplingOrders

Tradeconfirmation

Marketresults to

MPs

Cross BorderNominations

10:30

12:00

13:0012:05

14:30

EMCC

Bids fromMPs Communication of

delay to MPs

13:05

Technical problem

13:30

08/10/2010 26

Process (slightly) delayed:Impact on Market Parties

Timing Message Additionalactions for MPs

Market resultsPublicationdeadline

Cross bordernominations

deadline

13:05 Market resultspublication delay 1

13:30 14:30

08/10/2010 27

Process Delayed (major delay)

Due to technical problems in EMCC or CWE calculation, theprocess remains the same but actions are delayed in time

ATC valuesOBKs open

ITVC ProcessCWE Calculation

MRspubli.


Tradeconfirmation

Marketresults to

MPs


10:30

12:00

13:0012:05

14:00 15:00

EMCC


delay to MPs

13:05

Communication ofdelay to MPs13:30

SA

SA = Shadow Auction

Technical problem

BE, DE, FR,NL nom.

13:40

08/10/2010 28

Process Delayed (major delay):Impact on Market Parties




deadline


13:30 14:30


Bids update inthe ShadowAuction system

14:00 15:00

08/10/2010 29

CWE Special Routine

Due to thresholds detected in CWE’s prices after EMCC calculation,the order books are reopened to market parties and a second EMCCcalculation is performed

ATC valuesOBKs open

ITVCProcess

CWECalculation

MRspubli.

BE, DE, FR,NL nom.

ATCs OBKsMarketCouplingOrders

Tradeconfirmation

Marketresults to

MPs

10:30

12:00

until13:1512:05

13:40 15:00

EMCC


reopening of OBKs

Communication ofdelay for publication13:05

OBKsopen

ITVCProcess

2nd OBKs

13:15

Thresholds reached

Communication ofdelay for publication13:30


08/10/2010 30

Special Routine:Impact on Market Parties

Timing Message Additionalactions forMPs

Marketresults

Publicationdeadline


deadline

Around 12:30 Price thresholdsreached: reopeningof the OBKs

OBK openfor 10minutesaftermessage


13:30 14:30


Bids updatein theShadowAuctionsystem

14:00 15:00

Not always

08/10/2010 31

ITVC Decoupling

Due to a technical problem in the ITVC process, ITVC is decoupled.Coupling between CWE and Nordic is performed through explicitallocation (by Shadow Auction)

ATC valuesOBKs open

ITVC Process CWECalculation

MRspubli.

ATCs OBKs

Marketresults to

MPs

10:30

12:00

13:0012:05

14:00 15:00

EMCC

Bids fromMPs Communication of decoupling

and reopening of the OBKs

13:05

OBKsopen

13:40

ITVC Decouplingdeclared Communication of

delay for publication13:30

BE, DE, FR,NL nom.


08/10/2010 32

ITVC Decoupling:Impact on Market Parties


Marketresults

Publicationdeadline

Crossborder

nominationsdeadline

13:05 ITVC decoupling,reopening of theOBKs

OBK openuntil 13:15

14:30

13:30 Market resultspublication delay


14:00 15:00

08/10/2010 33

ITVC Decoupling + CWE Second Auction

After an ITVC decoupling, price thresholds are reached during CWEcalculation. Order books are reopened to market parties, a secondCWE calculation is performed.

ATC valuesOBKs open

ITVCProcess

CWECalculation

MRspubli.

ATCs OBKs

Marketresults to

MPs

10:30

12:00

13:0012:05

14:00 15:00

EMCC

Bids fromMPs

Communication ofdecoupling and

reopening of the OBKs

13:05

OBKsopen

13:30


BE, DE, FR,NL nom.OBKs

open

2nd CWECalculation

13:15

Communication ofdelay for publication

Communicationof 2nd Auction

SA

ITVC Decouplingdeclared

Price thresholdsreached

08/10/2010 34

ITVC Decoupling+CWE Second Auction:Impact on Market Parties


Marketresults

Publicationdeadline

Crossborder

nominationsdeadline

13:05 ITVC decoupling,reopening of theOBKs

OBK openuntil 13:15

14:30

13:30 Market resultspublication delay


14:00 15:00

ASAP whenthresholdsobserved

Thresholds reached inCWE, reopening ofthe OBKs

OBK open for10 minutes

14:00 15:00

08/10/2010 35

CWE Decoupling

Due to a technical problem in CWE, no market results can beprovided by 14:00 and CWE countries coupling is performed throughexplicit allocation (Shadow auction)

ATC valuesOBKs open

ITVCProcess CWE Calculation


10:30

12:00

12:2512:05

EMCC

Bids fromMPs

Communication ofdelay to MPs

13:05


SA

SA = Shadow Auction

Technical problem

13:40 MRspubli.

Market resultsto MPs

14:00 15:30


OBKsopen

PXscalc.

14:30

BE, DE, FR,NL nom.

Trade confirmation

Communication ofCWE decoupling14:05

CWE decoupling

14:20

08/10/2010 36

CWE Decoupling:Impact on Market Parties




deadline


13:30 14:30


Bids update inthe ShadowAuction system

14:00 15:00

14:05 CWE decoupling,reopening of theOBKs

OBK open atlocal PX for 10minutes

14:30 15:30

08/10/2010 37

CWE Decoupling + 2nd auction Belpex

Due to a technical problem in CWE, no market results can beprovided by 14:00 and CWE countries coupling is performed throughexplicit allocation (Shadow auction)

ATC valuesOBKs open

ITVCProcess CWE Calculation


10:30

12:00

12:2512:05

EMCC

Bids fromMPs

Communication ofdelay to MPs

13:05


SA

Technical problem

13:40 MRspubli.

Market resultsto MPs

14:00

15:30Cross BorderNominations

OBKsopen

PXscalc

14:45

CWEXB

nom.

Tradeconfirmation

Communication ofCWE decoupling14:05

CWE decoupling

2nd

auction

BEgennom

BE generationNominations

15:45Price threshold reached

SA = Shadow Auction

PXscalc

New since mid September 2011

08/10/2010 38

CWE Decoupling + 2nd auction Belpex:Impact on Market Parties

15:30*14:45OBK open for10 minutes

Threshold reachedin Belpex,reopening of theOBKs

ASAP whenthresholdobserved




deadline


13:30 14:30



14:00 15:00

14:05 CWE decoupling,reopening of theOBKs

OBK open atlocal PX for10 minutes

14:30 15:30

* BE generation nomination deadline at Elia: 15:45

New since mid September 2011

08/10/2010 39

Impact on Market Parties:Examples of messages

Market results publication delay 1 – message CASC

08/10/2010 40


Market results publication delay 1 – message Elia

08/10/2010 41


Market results publication delay 2 – message CASC

‘The CWE MC process has been delayed due to technical reasons or market issues.Therefore the publication of CWE market results has been delayed.

In order to prepare Fallback, the shadow explicit auctions based on the ATC values forCWE Market Coupling may start in parallel as of 13:40 [link towards ATC values ofMC displayed on CASC website]. As security measure, we would advise you to verifythe need for updating your shadow bids at CASC EXAU platform in case this situationshould end up in CWE full decoupling.’

08/10/2010 42


Market results publication delay 2 – message Elia

08/10/2010 43


Reopening of the order books – threshold reached duringEMCC calculation - message Belpex

‘Due to crossing the threshold during the EMCC calculation, the CWE order books willreopen again.

Seller/Buyer required on XX (BE, DE, FR, or NL) markets on hour(s) Hxx, Hyy,...The order books will reopen again at 12.XX and close at 12.XX.’

08/10/2010 44


Market results publication delay – reopening of CWE orderbooks - message Belpex

‘The CWE MC process has been delayed due to EMCC decoupling. Therefore thepublication of CWE market results has been delayed.

As a consequence of the EMCC decoupling, the CWE order books will reopen again at13:XX and close at 13:XX.’

08/10/2010 45


Market results publication delay – reopening of CWE orderbooks - message CASC

‘The CWE MC process has been delayed due to EMCC decoupling. Therefore thepublication of CWE market results has been delayed.

Please be aware that the shadow explicit auctions based on the ATC values for CWEMarket Coupling [link towards ATC values of MC displayed on CASC website] mightbe triggered at 13:40 if no CWE market results are published. Therefore, we wouldadvise you to verify the need for updating your shadow bids at CASC EXAU platform.’

08/10/2010 46


Market results publication delay – reopening of CWE orderbooks - message Elia

08/10/2010 47


Reopening of the order books – threshold reached during CWEMC calculation - message Belpex

‘Please be aware that during the CWE MC calculation a peak price has been reached.

Seller/Buyer required on XX (BE, DE, FR, or NL) markets on hour(s) Hxx, Hyy,...The order books will reopen again at 12.XX and close at 12.XX.’

08/10/2010 48


CWE full decoupling - message CASC

‘CWE Full DecouplingDue to technical problems, the CWE Market Coupling cannot be run for delivery date:

[DD/MM/YYYY].APX, Belpex and EPEX are decoupled.

Please refer to the website of CASC CWE to get the auction specifications and results ofthe CWE Shadow Auctions.’

08/10/2010 49


CWE full decoupling - message Elia

Update since mid September 2011

08/10/2010 50

Nomination deadlines atELIA

Nomination deadlines @ Elia for normal business run:• HUB1: 14:00• cross-border + load + injection + HUB2: 14:30• generation: 15:00

Nomination deadlines @ Elia in case no MR before 13h05:• HUB1: 14:15• cross-border + load + injection + HUB2: 14:30• generation: 15:00

Nomination deadlines @ Elia in case no MR before 13h30:• HUB1: 14:45• cross-border + load + injection + HUB2: 15:00• generation: 15:30

Nomination deadlines @ Elia in case no MR before 14h00 full decouplingduring daily session:

• HUB1: 15:15• cross-border + load + injection + HUB2: 15:30• generation: 15:30*

* In case of second auction Belpex, Elia generation nomination deadline becomes 15:45

Update since mid September 2011

08/10/2010 51

Rollback

Backup #1Backup #1 Backup #2Backup #2

ShadowAuctions

ShadowAuctions



ShadowAuctions


TLC with CWEMC timing

CWE MarketCoupling

In case ofRollback

Mode

FR-BE andBE-NL

borders

FR-DE andDE-NL

borders

On allCWE

borders

In case ofCWE

decoupling

Overview of the downgraded modes:

08/10/2010 52

Rollback

If after CWE decoupling if it is not possible to return to a normalsituation within a reasonable timeframe, we can revert to TLC

and explicit allocation on the German borders.

1. Who decides?Joint decision by the Project Partners

2. Activation period?2 months after launch

3. Time needed to Rollback?5 to 7 days to setup, during this period the daily explicit auctions will beheld with the Shadow Auction System

4. Three main differences compared to current processes :• GCT remains at 12:00• No negative prices• Shadow Auctions for GE borders

08/10/2010 53

Shadow auctions

• In special cases we can have decoupling of CWE-MC

• Reasons for decoupling:– CWE is not able to calculate the results before 14:00 due to technical failure

• This means that there will be no market coupling

• The shadow auction system is a parallel daily process, ready to be runeveryday in case CWE-MC, due to technical reasons, cannot deliver results by14:00.– CASC-CWE will perform the shadow auction– It runs a parallel explicit auction system (shadow auction), based on bids sent by

Market parties– Shadow auctions are triggered at 13:40 if no market results are available– Market Parties may send default bids– Compliant with each TSOs rule, market parties will send their cross-border

nominations

08/10/2010 54

Agenda

1. Introduction


~~ Lunch ~~





7. Conclusion

08/10/2010 55

Agenda

1. Introduction


~~ Lunch ~~

3. Contractual impactsMartine Verelst




7. Conclusion

08/10/2010 56

ARP-contract: Nomination deadlines

OLD Nomination deadlines @ Elia for normal business run:• Wind generation: 10:30• HUB1: 13:00• cross-border + load + injection + HUB2 + generation: 14:00

NEW Nomination deadlines @ Elia for normal business run:• Wind generation : 11:30• HUB1: 14:00• cross-border + load + injection + HUB2: 14:30• generation: 15:00

08/10/2010 57

ARP-Contract: Shipping Agent

New definition:

‘Shipping Agent’: a company responsible for the treatment ofNominations in the framework of Market coupling

May obtain a seperate balance perimeter if the participant hasalready other activities at Elia

Example: ‘ECC’ and ‘ECC CWE’

08/10/2010 58

CWE auction Rules Version 2.2

Improvements brought to the Auction Rules:– Evolution of the auction rules modification procedure and modalities for Market

Parties consultation– Review of the suspension conditions and procedure– Compensation at market spread on the France-Belgium border– Clarification of the firmness article– Balanced conditions for payment incident

Compulsory changes due to the launch of Market Coupling:– Suppression of the Daily Auctions– Modification of the Use It or Sell It valuation for the German borders– New downgraded Mode for daily capacity allocation: Shadow Auctions– Focus on Rollback Mode– Timing details– Bids submission modalities - an improvement for Market Parties– Possibility to register only for Shadow Auctions, with a specific status– Payment modalities and financial aspects

This new version of the Auction Rules will enter into force with the launch of CWE MC

08/10/2010 59

Registration and Entitlement

• Participants already registered at CASC, with a business account,willing to participate to CWE LT Auctions, CWE MC, ShadowAuction, Rollback:

Complete and send Appendix 5 of CWE Auction Rules to indicateon which borders you want to participate in Shadow Auctions andfor Rollback mode.

The «Declaration Of Acceptance» remains valid (Appendix 1 ofCWE Auction Rules)

08/10/2010 60


• Participants already registered at CASC, only willing toparticipate in fallback situations of Market Coupling:

Option 1: Keep your business account Complete Appendix 5 to indicate on which borders you want

to participate in the Shadow Auctions and for the Rollbackmode. The ‘Declaration Of Acceptance‘ remains valid

Option 2: Close the business account and terminate the ‘Participant’s

Financial Agreement’. Sign a new ‘Declaration of Acceptance’ to register as

Participant to the Shadow Auctions Only.

08/10/2010 61


• Participants which are not registered at CASC, depending on thestatus chosen:

- Participant: sign the ‘Declaration of Acceptance’, the ‘Participant’sFinancial Agreement’ and open a business account

- Participant to Shadow Auctions Only: Sign the ‘Declaration ofAcceptance’

08/10/2010 62

Agenda

1. Introduction


~~ Lunch ~~

3. Contractual impactsRob Loos




7. Conclusion

08/10/2010 63

Belpex Market Rules & Procedures

Market Rules• Ministrial Decree

• 4 March 2010: updated for CWE MC– Possibility to have profiled block orders– Possibility to publish preliminary results of the MC– Possibility to have negative prices– Generalization of the “Request for Quotes” procedure

Market Procedures• More detailed, within framework set out by MR

• Aligned with MR (30 April 2010)

• Updates with concrete info for CWE: October 2010- Contents: next slide

08/10/2010 64

Belpex Market Procedures

Recent changes• Alignment with MR

– Procedures version 30 April 2010

• Inclusion of daily settlement– Start 26 October 2010– Communicated 4 October 2010

Future changes• Inclusion of CWE MC practicalities

– Start 9 November 2010– Communication at the latest two weeks before launch– Changes

» Gate Closure Time» Rollback» ...

08/10/2010 65

Agenda

1. Introduction


~~ Lunch ~~


4. Negative prices at BelpexRob Loos



7. Conclusion

08/10/2010 66

Negative prices: intro

Day-ahead market– Hourly bids with price limits: supply & demand curve

– Currently 0.01 €/MWh - 3000 €/MWh– Intersection curves = Market Clearing Price

Demand

Offer

MarketClearingPrice

08/10/2010 67


Day-ahead balance obligation for ARPs• May lead to sales/purchases ‘at any price’• 0.01 €/MWh for seller; 3000 €/MWh for buyer

Low demand possibly not all offers at any price accepted• Curtailment because of technical constraint Floor of 0.01 €/MWh leads to ‘wrong’ results

Demand

Offer

08/10/2010 68


Introduction of negative prices• Absence of curtailment: no offers at any price rejected• Leads to correct price• Better price signal to the market

Demand

Offer

08/10/2010 69


Offer at negative price• Supplier willing to pay to inject electricity

Why?• Generation cost structure, e.g. oversupply of baseload units• Green energy support marginal production costs negative

Potential impact of negative prices• Curtailment at 0.01 €/MWh occured in 31 hours in 2009 on Belpex

DAM• = 0.35 % of hours in 2009

08/10/2010 70


Neighbouring countries:• Germany:

– Negative prices exist already– [-3000 €/MWh – 3000€/MWh]

• France and The Netherlands– Will adopt negative prices as of CWE launch– [-3000 €/MWh – 3000€/MWh]

• CWE Market participant survey– Preference for harmonization at -3000 €/MWh

Negative prices available on CWE MC launch date

Belpex’ adoption of negative prices ensures harmonized priceboundaries in CWE Region

08/10/2010 71

Negative prices at Belpex

Contractual impact

• Market Rules & Procedures ready for negative prices• New price boundaries will be announced by means of a binding

Communication

Practical impact

• Memo containing today’s explanation will be made available• CSD available to answer questions regarding invoices/selfbills with

negative prices

08/10/2010 72

Qualify eachtransaction realized

on Belgian Hub

Aggregatetransactions per

qualification

Determine processfor billing

Process

Output

Identify case basedon MCP

4 qualifications:offtake/delivery atpositive/negativeprice

Aggregatetransactions perqualificationincluding variablefee

Taxable Basis (TB)calculated based onaggregated values:+ or -

Based on sign of TBand type ofparticipant “Invoice” process or“Selfbill” process

Documents justifyingthe payment to/tobe received fromParticipant

1 2 3

Negative prices at BelpexInvoicing process

08/10/2010 73

Step 1: Qualify each transaction realized on Belgian Hub

MCP >/= 0

MCP < 0

Demand side Offer side

Offtake atpositive price

Delivery atpositive price

Delivery atnegative price

Offtake atnegative price


VAT reasons: no netting of sales (or purchases) at positiveand negative prices

08/10/2010 74

Offtake

Participant A – Positive price

Delivery

Participant A – Negative price


-518.4 €Taxable Basis:

-7 €50 MW * 0.14 €/MWhAssociated fees:

-500 €50 MW @ -10 €/MWhTransaction 2:

-1.4 €10 MW * 0.14 €/MWhAssociated fees:


+126 €Taxable Basis:

+7 €50 MW * 0.14 €/MWhAssociated fees:

+5 €50 MW @ 0.10 €/MWhTransaction 2:


+100 €100 MW @ 1 €/MWhTransaction 1:

Invoice

Invoice

Step 2: Aggregate transactions per qualification

EXAMPLE

08/10/2010 75


Delivery

Participant A

Delivery

Participant B

EXAMPLE







84 €Taxable Basis:





Invoice

Selfbill

08/10/2010 76

Offtake

Participant A

Offtake

Participant B

EXAMPLE


+1.14 €Taxable Basis:


-5 €50 MW @ -0.10 €/MWhTransaction 2:

+0.14 €1 MW * 0.14 €/MWhAssociated fees:


-84 €Taxable Basis:


-5 €50 MW @ -0.10 €/MWhTransaction 2:



Invoice

Selfbill


08/10/2010 77

Step 3: Determine process for billing

TaxableBasis

>/= 0?

SelfbillInvoice


YesNo

08/10/2010 78

TaxableBasis <

0?

SelfbillInvoice

YesNo



08/10/2010 79

MCP >/= 0

MCP < 0

Demand side Offer side

Offtake atpositive price

Delivery atpositive price

Delivery atnegative price

Offtake atnegative price

Invoice

TB>/= 0Invoice

TB < 0Self bill

Invoice

TB>/= 0Selfbill

TB < 0Invoice



08/10/2010 80

In practice:• Offtake at negative prices: ‘invoice’ converted to selfbill• Delivery at negative prices: ‘selfbill’ converted to invoice

Conversion by means of offsetting on the ‘original’ invoice/selfbill• Creating new chargeline making the sum of the original invoice/selfbill

zero• Adding the opposite chargeline to the new selfbill/invoice

Two documents created!• Original selfbill + converted invoice or• Original invoice + converted selfbill


08/10/2010 81

Offtake


Delivery













“Selfbill”, converted to Invoice

Invoice

Example case 1: 1 participant buying at positive prices and selling atnegative prices

08/10/2010 82

Invoice:• Energy Purchases: 105 €• Transaction Fee Energy Purchases: 21 €• Negative Energy Sales: 510 €• Transaction Fee Negative Energy Sales: 8.4 €

‘Selfbill’:• Energy Sales: 0 €• Transaction Fee Energy Sales: 0 €• Results from offsetting the original selfbill by an opposite transaction• Detailed info on Back-office Website


Example case 1: 1 participant buying at positive prices and selling atnegative prices

08/10/2010 83

Offtake


Offtake






+1.4 €10 MW * 0.14 €/MWhAssociated fees:







‘Invoice’, converted to Selfbill

Invoice

Example case 2: 1 participant buying at positive and negative prices

08/10/2010 84

Invoice:• Energy Purchases: 105 €• Transaction Fee Energy Purchases: 21 €→ Results from offsetting the original invoice containing [105 € - 510 €]

by an opposite transaction for 510 €→ Detailed info on Back-office Website

“Selfbill”:• Negative Energy Purchases: 510 €• Transaction Fee Negative Energy Purchase: -8.4€


Example case 2: 1 participant buying at positive and negative prices

08/10/2010 85

Negative prices: Summary

Invoices and selfbills: aggregated info

• Energy Purchases• Transaction Fee Energy Purchases• Energy Sales• Transaction Fee Energy Sales

• Negative Energy Purchases• Transaction Fee Negative Energy Purchases• Negative Energy Sales• Transaction Fee Negative Energy Sales

All detailed info on transactions available via Back-office website

• Results ofoffsettingchargeline

08/10/2010 86

Agenda

1. Introduction


~~ Lunch ~~


4. Negative prices at BelpexElia’s Balancing :Thomas Yseboodt



7. Conclusion

08/10/2010 87

Ensure that imbalance price is always worse than Belpex prices forboth long and short positions

With energy available at negative prices in neighbouring countriesEurope: risk that ARPs import long imbalances in Belgium

Present mechanism – Example with Belpex = -50€

Elia => ARP54€ or less

Elia => ARP54€

ARP Short

ARP => Elia46€

ARP => Elia46€ or more

ARP Long

Elia shortElia long

Betterthan

Belpex

Need for Negative Imbalance Prices(1/2)

08/10/2010 88

In case of large positivezone imbalance, imbalancetariffs need to provideadequate incentives• (see 21/3)

Need for Negative Imbalance Prices(2/2)

08/10/2010 89

For hours with positive prices• No change needed

For hours with negative prices• Change of formulas

Via a parameter change Within the current philosophy of imbalance tariffs

Change

08/10/2010 90

ARP -> EliaMax[*WAUP;WAUP+*(HUP-WAUP)]

(2)

ARP -> Elia

θ 1,08 * market priceARPshort

Elia -> ARP

0,92 * market price

Elia -> ARPMin[*WADP;WADP+*(LDP-WADP)]

(1)

ARPlong

Elia shortNRV >0

Elia longNRV < 0

(1) the price (0,92 * market price if this one is positive and 1,08 * marketprice if this one is negative) is an upper bound for the price for imbalance(2) the price (1,08 * market price if this one is positive and -1,08 * marketprice if this one is negative) is a lower bound for the price for imbalance = 0,92 if WADP > 0 and = 1,08 if WADP < 0 = min (1;GDV/450) = 1,08 = min (1;GUV/450)η = 0,92 if market price is positive, η = 1,08 if market price is negativeθ = 1,08 if market price is positive, θ = 0,92 if market price is negative

New Imbalance Tariffs

08/10/2010 91


ARP => Elia54€

ARP Short

Elia => ARP46€

Elia => ARP*46€ or lessARP Long

Elia shortElia long


Elia => ARP46€ARP Short

ARP => Elia54€

ARP => Elia54€ or moreARP Long

Elia shortElia long

Belpex DA = 50€

*In general. If regulation prices go negative, ARP=> Elia.

Belpex DA = -50€

New Imbalance Tariffs

Numeric example

08/10/2010 92

Impacts of the NewImbalance Tariffs

• New imbalance tariffs in application on 1 November 2010

• Will have potential effects from the start of negative Belpex prices

• Will have concrete effects only during hours with negative Belpexprices

08/10/2010 93

Agenda

1. Introduction


~~ Lunch ~~



5. Transparency and Member TestingThomas Oldenhove


7. Conclusion

08/10/2010 94

Transparency

Hourly Congestion income of the CWEATC MC by TSOs

CASC websiteYes, CWE TRref 4.2.13

C. RevenuesShared byTSOs

Gross hourly congestion income of theCWE ATC MC (including UIOSI)


TotalCongestionIncome

Shadow auctions: results of auctions;programming authorizations per marketparticipants;


Shadowauctions(decoupling

Bilateral Exchanges between TSOs foreach hour (commercial flows in implicitallocation schemes)


AllocatedCapacity(Coupling)

ATC values for each hour, on eachborder and for each direction.


Daily ATC

NTC values for each hour, on eachborder and for each direction

CASC websiteYes, ERGEGGL 2010

Daily NTC

DescriptionPublishedon

RegulatoryReportData

08/10/2010 95

Transparency

08/10/2010 96

Transparency

08/10/2010 97

CWE ATC MC – Member testing

Test Contact:CASC

CWE decoupling – Shadow auctions29/10/10

Test Contact:BELPEX

Normal day (Nordic and CWE coupling)28/10/10

Test Contact:BELPEX

Decoupling of Nordic and CWE areas.Coupling of CWE area

27/10/10

Test Contact:BELPEX

Special day simulated by PEXs(CWE second auction)

26/10/10

Test Contact:BELPEX

Normal day (Nordic and CWE coupling)25/10/10

RemarkScenariosDates

08/10/2010 98


* differencebetweensimulation timeand productiontime

03:00around 16:05around 13:05EMCC websitePublication of CBF (DK1, DK2, Baltic cable) andprice deviation (DE-DK)

03:00around 16:05around 13:05CASC-CWE websitePublication of cross-border exchanges, capacityvalues

03:00around 15:55around 12:55PX Trading SystemCWE Market Results publication

03:0015:0012:00PX Trading SystemGate Closure Time

03:0014:00NAPX Trading SystemOBK opening

03:0013:3010:30EMCC websiteATC publication (DK1, DK2, Baltic cable)

03:0013:3010:30CASC-CWE websiteATC publication (CWE interconnectors)

Delta*Simulation timeProduction timeSystemDescription

Normal Day

08/10/2010 99


02:0016:0014:00CWE Decoupling

02:0015:4013:40CASC-CWE EXAUplatform

Start parallel run of Shadow ExplicitAuctions

02:0015:3013:30EmailExternal Communication - information onMarket Results publication delayed,reminder to update Shadow bids

02:0015:0513:05EmailExternal Communication - information onMarket Results publication delayed,reminder to update Shadow bids


03:0014:00NAPX Trading SystemOBK opening

03:0013:3010:30EMCC web siteATC publication (DK1, DK2, Baltic cable)

03:0013:3010:30CASC-CWE web siteATC publication (CWE interconnectors)

Delta (difference betweensimulation time andproduction time)

Simulationtime

Productiontime

SystemDescription

CWE Decoupling (1/2)

08/10/2010 100


02:0016:0514:05EmailExternal Communication -information on CWE decouplingand OBK reopening

02:0016:0514:05CASC-CWE EXAUplatform

Shadow Explicit Auction resultspublication

02:00around 16:40around 14:40EMCC web sitePublication of CBF (DK1, DK2, Balticcable) and price deviation (DE-DK)

02:00around 16:40around 14:40CASC-CWE web sitePublication of cross-borderexchanges, capacity values

02:00around 16:30around 14:30PX Trading SystemCWE Market Results publication


Delta (differencebetween simulationtime and productiontime)

Simulation timeProduction timeSystemDescription

CWE Decoupling (2/2)

08/10/2010 101

Persons to contact

Member Testing:

Belpex Customer Service DeskPhone: +32 2 546 7040E-Mail: [email protected]

CASC-CWE Operations TeamPhone +352 27 62 38 38E-Mail: [email protected]

CWE Market Coupling Project:

Key Account Manager Belpex: Rob LoosKey Account Manager Elia : Erik De Schrijver

08/10/2010 102

Agenda

1. Introduction


~~ Lunch ~~




6. CWE flow based Market CouplingRaphaël Bourgeois

7. Conclusion

08/10/2010 103

Flow Based MC - Context

MoU: 6 June 2007

Signed by CWE partners: TSO, PEX, REG,…

Commitment to:1) Enhance Security of Supply2) Launch a Flow-Based Market Coupling

08/10/2010 104

FRM :Flow ReliabilityMargin

Fmax

Fref (incl. LT)

Marginavailable to themarket

NTC

LT Nom

TRM :TransmissionReliability Margin

AvailableTransferCapacity

Capacity by Border Margin by electrical branch

Philosophy ATC - FB

08/10/2010 105

FB Principles

• Every import/export bid must be translated in a physical flow onthe electrical branches

• Exchange bids will be accepted by the algorithm until a CBreaches the Fmax value (N-1 principle)

• Available remedial actions are taken into account! (// ATC)

• Only real physical congestions will limit the market domain…

08/10/2010 106

CB: Critical Branches

TSO A

TSO C

TSO B

N

CB if significantly impacted by the source to sink (cross-border) trade

Need for selections of Critical Branches

Each TSO selects the critical branches in its system, basedon harmonised principles

N-1

08/10/2010 107

D2CF

D-2 Congestion Forecast => 24 merged files/day

Each TSO makes 24 base cases/day containing the bestestimate for 2 days ahead– Topology– Load distribution– Generation distribution– Wind generation

Agreement on the reference day– Usually D-1– Gives exchange programs assumption

Need for a common grid model at CWE level

08/10/2010 108

GSK: Hub to Node

Need to translate an incrementalcross-border exchange intoincremental nodal injections

GSK: Generation Shift Keys

+100 MW -100 MW

~

~

~~

~

~

~

~

~

5 MW

25 MW

25 MW

10 MW

15 MW

20 MW

~

~

~

TSO C

TSO A TSO B

Each TSO determines the key whichmaps an import / exportposition to an generationpattern

08/10/2010 109

Calculated by Load Flows:100 MW

Fref

PTDF: Node to CB

20 MW 10 MW16 MW

a.o. ...

Need to translate a nodal injection into flows on the Critical Branches

PTDF: Power Transfer Distribution Factors

Additional Flow

08/10/2010 110

=> FB offers more tradingopportunities with thesame level of security ofsupply

-400

-300

-200

-100

0

100

200

300

400

-400 -300 -200 100 200 300 400-100 0

security domainconstraints polyhedron

Exchange (A>C)

Exchange (A>B)

NTC/ATC Flow-based

In FB, capacity split is not achoice of the TSO, but ismarket driven (at the timeof allocation)

Resulting Flow-Based Domain

08/10/2010 111

Market Coupling Algorithm

Order books+ 24 D2CF + CB list + GSK + PTDF

Individual bid

Impact on Nodes

Impact on Flows

Impact on each Critical Branch

Optim

isation by Cosmos

08/10/2010 112

Flow-Based main advantages

• FB offers more trading opportunities with the same level ofsecurity of supply

• Closer to the reality of the grid:– inter-dependency of cross-border exchanges are reflected

• Direct allocation to the physical margins available on the grid– The congestions in the grid are clearly identified, allowing enhanced

use and development of grid infrastructures

• Increased coordination and information exchange:– transparency on capacity calculation

• For some TSO, FB simplifies the capacity computation processsince no more capacity split between borders is necessary

08/10/2010 113

Project Status

TSO-Experimentation restarted since end of 2009=> monthly ex-post process with detail analysis and improvementloops

Positive results=> improvements in terms of market domain space (remedialactions), detailed process description, FB calculation prototype,…

Next steps:

• Confirmation of relevance of the model for market by usingrealistic order books (// run, after ATC launch)

• Statistical analysis to further tune the model and the process

08/10/2010 114

Agenda

1. Introduction


~~ Lunch ~~





7. Conclusion

08/10/2010 115

Abbreviations + definitions

Abbreviation Term Definition

ACK Acknowledgement Technical acknowledgement materialized by a message sent by the"receiving" system to the "sending" system.

ATC Available Transfer Capacity

BUP Backup procedure

BRP Balance Responsible Party Entity engaged in a contract with the national TSO(s) for thebalancingof the network;

BEC Bilateral exchangeCalculation

Cross-border physical flow calculated by the CWE TSO CommonSystem (Post Coupling module) and used as input for theProgrammingauthorizations;

CCP Systems Systems hosted and maintained by the Clearing houses (APX & ECCCWE). These systems are used to process the nominations;

CASC Capacity Allocation ServiceCompany

Capacity Allocation Service Company for the Central West EuropeanElectricity market. CASC-CWE is a service company which, on behalfof the Transmission System Operators involved, will act as a singlepoint to implement and operate services related to the auctioning ofpower transmission capacity on the common borders between thefive countries;

CRDS Congestion RevenueDistribution System

CPCS Cross PX Clearing Systems

08/10/2010 116

Abbreviations+definitions

Time identified for the closure of the order book. This is the lastmoment for a participant to enter a bid in the trading platform(Eurolight or ETS);

Gate Closure TimeGCT

Operator responsible of the operations of the MC System. This rolewill be shared between EPEX SPOT and APX-Endex.

Functional System OperatorFSO

European Trading platform is the trading platform used by EPEXSPOT to operate the French and the German markets within theCWE MC;

European Trading PlatformETS

The trading platform used by APX-Endex to operate the Dutch andtheBelgian markets within the CWE MC;

Eurolight

Member of CASC taking part of the Shadow Explicit Auction. Thisincludes BRP’s being participant or not on the Exchange(s);

CWE CASC participant


CWE TSO CS CWE TSO Common System(Pre + PostCoupling module)

EMCC PP EMCC Performing Party EMCC Performing Party will be responsible for the operations of theEMCC System. This party will inform the CWE parties in case anissue has been identified at EMCC side which could potentially delaythe publication of results at CWE side;

ECP Energy CommunicationPlatform

Communication platform designed and built by the TSOs tocommunicate with the MC System;

08/10/2010 117

Order BookOBK

Trade ConfirmationTCO

Market Coupling OrderMCO

Net Transfer CapacityNTC

Database being part of the Shadow Auction System. This databaseis accessible until the decoupling declaration for the CWE CASCparticipant registered at CASC;

Shadow Auction DBSA DB


MC System Market Coupling System

Nominating Agent Entity engaged in a contract with the national TSO(s) for thebalancing of the network having another type of contract than aBRP;

Nomination deadline Last time possible to enter the daily nomination. The deadline couldbe different per Hub and per type of nomination (Hub or Cross-border);

PX Trading Systems Systems hosted and operated by EPEX and APX for the Hubsinvolved in the CWE Market Coupling (namely ETS and Eurolight forEPEX and APX respectively). APX will be responsible for the Belgianand Dutch markets where EPEX will be responsible for the Frenchand German markets;

PX SO PX System Operator Person responsible of the operations of the PX Trading Systems.Thisoperator will be the SPOC in case of technical problem in the MCprocess;

Abbreviations+definitions

products-and-

Documents

results of market coupling

market coupling7

cwe flow

germanspot market

status of cwe

cwe nordic itvc tsos

emccs market couplingis

nordic andcwe