EuroPEXAssociation of European

Power Exchanges

EuroPEXAssociation of European

Power Exchanges

Development and Implementation of a Coordinated Development and Implementation of a Coordinated Model for Regional and Inter-Regional Congestion Model for Regional and Inter-Regional Congestion

ManagementManagement

María Luisa Huidobro

Member of the EuroPEX Steering Committee

EuroPEXAssociation of European

Power Exchanges

EuroPEXAssociation of European

Power Exchanges

BackgroundBackground to joint work on: to joint work on:

”Development and Implementation of a Coordinated Model for ”Development and Implementation of a Coordinated Model for Regional and Inter-Regional Congestion Management”Regional and Inter-Regional Congestion Management”

EuroPEXAssociation of European

Power Exchanges

EuroPEXAssociation of European

Power Exchanges

Challenge from Florence Forum

‘The Forum requested ETSO and EuroPEX to write a common discussion paper before March 2008 to address the implementation of regional and interregional capacity allocation methods, in particular the governance of the bodies running the system and to address the technical, legal and commercial challenges implied by the Consentec target model. Other stakeholders were invited to contribute to the discussion and ETSO and EuroPEX were invited to take particular account of the work so far done by EFET.’

◆ Joint Action on ETSO and EuroPEX from the Florence Forum

EuroPEXAssociation of European

Power Exchanges

EuroPEXAssociation of European

Power Exchanges

Terms of Reference

◆ A working group from ETSO & EuroPEX established in November 07

◆ Terms of Reference identified 5 broad areas of work1. Flow based capacity calculation methods

2. Long Term & Secondary Market Timeframe

3. Day Ahead Timeframe

4. Intraday Timeframe

5. Legal and Regulatory Issues

◆ Original schedule was to deliver the result in April 2008

◆ Timescale not realistic – Therefore a two stage approach adopted with Interim in April and Final in November 2008

EuroPEXAssociation of European

Power Exchanges

EuroPEXAssociation of European

Power Exchanges

Glidepath Approach

EuroPEXAssociation of European

Power Exchanges

EuroPEXAssociation of European

Power Exchanges

Market Perspectives – Criteria for success

EuroPEXAssociation of European

Power Exchanges

EuroPEXAssociation of European

Power Exchanges

Implementation approaches

LOW

MED to LOW

HIGH to MED

HIGH

Developments initiated by TSOs and PXs at regional level with the appropriate cooperation and support from regulators and market parties;

Developments facilitated by TSOs and PXs at regional and inter-regional level, but with a clear mandate provided regulatory authorities and the EC.

Formal and coordinated (European) approach via the establishment of market codes and rules (potentially binding) such as envisaged in the EC’s 3rd package proposals;

Imposed by new EU legislation

’BOTTOM UP

’TOPDOWN’

Need for centrally driven EU-initiative

Implementation Approaches High-level strategy

EuroPEXAssociation of European

Power Exchanges

EuroPEXAssociation of European

Power Exchanges

Congestion Management Model Options

EuroPEXAssociation of European

Power Exchanges

EuroPEXAssociation of European

Power Exchanges

DOME COUPLING

EuroPEXAssociation of European

Power Exchanges

EuroPEXAssociation of European

Power Exchanges

Industry consultation done in June Individual responses (10+) and summary are

published on EuroPEX & ETSO homepages

Survey within EuroPEX & TSO about regional/inter-regional development plans & prospects

Roadmap alternatives Describe paths and issues from

bilateral to regional, to inter-regional and European scale for:• Day Ahead• Intra Day• Forwards (Long Term)

Deliver Report and presentation at 15th Florence Forum late Nov. ‘08

Key work towards Final Report

EuroPEXAssociation of European

Power Exchanges

EuroPEXAssociation of European

Power Exchanges

Challenge for next phase of project

◆ Elaborate on the choices for the way forward (Day Ahead, Forwards, Intraday)What the different approaches can deliver: speed of

implementation and geographic extent, European harmonisation, quality of solution, etc

What they require: implementation organisation and direction, enduring governance and regulation, etc

Feasible glidepath

EuroPEXAssociation of European

Power Exchanges

EuroPEXAssociation of European

Power Exchanges

Implementation Issues

Relatively few parties involved

Common interests, clear regional benefits

Bottom-up / evolutionary processes

SUCCESSFUL REGIONAL PROGRESS TO DATE:

Many more stakeholders involved

More divergent interests, wider benefit distribution

A consensual approach more difficult

CHALLENGES AHEAD FOR INTER-REGIONAL DEVELOPMENTS:

Increasing need for more ‘Top Down’ initiatives?

EuroPEXAssociation of European

Power Exchanges

EuroPEXAssociation of European

Power Exchanges

Day Ahead Market (DAM)

1. Unified Pan-European solution2. Horizontal Integration3. Dome coupling

Key features to assess:• Efficiency• Complexity• Implementation challenges• Degrees of centralisation• Governance issues

OPTIONS CONSIDERED:

METHODS• Explicit auctions of physical

transmission rights (PTRs)

• Implicit auctions

CAPACITY ASSESSMENT• Flow based ATC• Bilateral ATC

ALLOCATION :

EuroPEXAssociation of European

Power Exchanges

EuroPEXAssociation of European

Power Exchanges

Forward Cross Border Market

Transmission Rights (TR):

• PTR with UIoLI• PTR with UIoSI• Financial Transmission Right (FTR)

Energy derivatives:

• Contract for Difference (CfD)

OPTIONS CONSIDERED:

More implicit auctions in DAM

PTRs with UIoSI

PTRs may evolve towards FTRs

Market players want liquidityin a secondary market

Development of CfD-markets areindependent of TR-solution

DEVELOPMENT PATHS:

EuroPEXAssociation of European

Power Exchanges

EuroPEXAssociation of European

Power Exchanges

Intraday Market

Explicit capacity auctions

Implicit auctions

First-come-first-served access to capacity obligations

Continuous trading

OPTIONS CONSIDERED:

Ensure liquidity and market depth

Ensure competition

DEVELOPMENT PATH:

Regional solutions appear to be more important than inter-regional solutions at current stage